Germany’s Versorgungsanstalt des Bundes und der Länder (VBL) has revealed it has exceeded its target of reducing the CO2 intensity of its equities and corporate bonds by 25 per cent by the end of 2025, compared with the end of 2021.

VBL has instead achieved a reduction of around 31 per cent.

Its overall aim is to achieve greenhouse gas neutrality across its investment portfolio by 2025.

Detailing how it reached its CO2 target, the public sector pension fund said it used a combination of exclusion criteria, ESG integration, engagement and impact investments.

“We are very pleased that the result is six percentage points better than our targeted reduction of 25 per cent in CO₂ intensity. But we do not intend to rest on this achievement,” VBL executive board member, responsible for investments, Dr Michael Leinwand, said.

Furthermore, VBL plans to "further intensify" its efforts in sustainable investing with a new goal to ensure greenhouse gas neutrality of its portfolio by 2050.

At present, VBL is focused on the asset classes of equities, corporate bonds, and real estate. In addition, targeted impact investments will be made to reduce greenhouse gas emissions in the real economy.

To track whether it is on the right path toward the targeted greenhouse gas neutrality, VBL has initially defined two interim targets.

Firstly, compared with the end of 2021, emissions attributable to the portfolio of equities and corporate bonds are to be reduced by 50 per cent by the end of 2030.

This, it said, will be supported by the continuous consideration of ESG criteria in the investment process, investments in sustainable equity and corporate bond mandates, and the critical assessment of individual investments.

Secondly, for the real estate asset class, VBL is aiming for a 40 per cent reduction in emissions by the end of 2035 (relative to the end of 2025).

VBL is hoping to achieve this through a stronger focus on energy-efficient refurbishments of existing properties and through investments in carbon risk real estate monitor (CRREM|) compliant buildings.

It said its new targets demonstrate the responsibility it takes in the area of sustainability and sends a clear signal of continuity.

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