German pension provider Versorgungsanstalt des Bundes und der Länder (VBL) has awarded a €1.25bn mandate to Nordea Asset Management (NAM), as part of its responsible investment strategy.

In line with VBL's commitment to support the global climate goals of the Paris Agreement, the European equity portfolio will be managed relative to the MSCI Europe Climate Paris-aligned benchmark.

The portfolio is expected to have a positive impact on the overall carbon footprint of VBL's investments from the outset, as VBL is targetting an "ambitious" CO2 reduction path, which is expected to reduce greenhouse gas emissions by seven per cent annually.

Highlighting climate change as one of the greatest global risks, VBL explained that it aims to consider both financial aspects and climate protection in its investment strategy as part of its fiduciary duty.

Some progress has already been seen as a result of this, as the emissions from VBL's equity and corporate bond portfolio are currently below the target set for 2025.

However, VBL chief investment officer, Michael Leinwand, said that the mandate with NAM will also help the provider to meet its target to be below 92 tons of CO2 equivalent per million euros of turnover by the end of 2025, offering "long-term opportunities for a further reduction of our carbon-footprint".

"Over the past three years, we have already reduced the CO2-intensity of our equities and corporate bonds by more than 25 per cent. It is now important for us to continue on this CO2 reduction path," he continued.

VBL said that, with the Nordea European Stars Equity Strategy, NAM has a proven track record in choosing companies that are industry leaders in CO2 reduction and that offer innovative products contributing to a low-emission economy.

Given this, it suggested that both an attractive return relative to the MSCI Europe Climate Paris-aligned benchmark can be expected, whilst also helping to deliver a more sustainable economy.

NAM global head of distribution, Christophe Girondel, added: "The fact that we can support VBL in the implementation of its sustainability strategy confirms to us that we are on the right track with our approach of reconciling climate objectives and investment performance."

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