ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including BNPP AM, Nuveen, Varma, SSgA, Thematics, Fidelity, Gresham House and iClima Earth.
BNP Paribas Asset Management has launched a thematic fund offering exposure to companies engaged in the restoration and preservation of global ecosystems and natural capital. The announcement of the BNP Paribas Ecosystem Restoration fund coincided with the launch of the United Nations’ Decade on Ecosystem Restoration on World Environment Day, aimed at highlighting the urgent need to protect natural capital. The Ecosystem Restoration fund will invest in listed global equities of varying size that offer environmental solutions contributing to the restoration of ecosystems. Investments will focus on three main themes: aquatic ecosystems (water pollution control, water treatment and sustainable packaging, aquaculture, efficient irrigation systems and flood control solutions); terrestrial ecosystems (technologies relating to alternative protein, sustainable agriculture, forestry and plantations); and urban ecosystems (environmental services, green buildings, recycling, waste management and alternative modes of transport). The fund consists of a high conviction portfolio of 40-60 holdings selected from 1,000 global companies, diversified by geography, size and sector, with technology, industrials and materials well represented. Designed to contribute to six of the United Nations Sustainable Development Goals, the fund is jointly managed by Edward Lees and Ulrik Fugmann, who co-head BNPP AM’s Environmental Strategies Group and manage the long-only BNP Paribas Energy Transition fund and the long-short BNP Paribas Environmental Absolute Return Thematic fund. “The restoration of aquatic, terrestrial and urban ecosystems offers significant investment opportunities, and by supporting and engaging with those companies providing solutions to protect our natural capital, we aim to meet investor requirements for financial returns combined with a positive environmental impact,” said Fugmann.
US-based investment manager Nuveen (over US$1.2 trillion AUM) has launched its Global Core Impact Bond fund. Launching with US$25 million of seed capital, the UCITS-compliant fund aims to provide an actively managed, multi-currency bond portfolio spanning global fixed income markets, allocating up to 40% in emerging markets and 15% in high yield. The fund will direct capital across impact themes such as renewable energy, climate change, natural resources and affordable housing. “Significant investment is needed to combat some of the key issues our society faces, including climate change, global inequality and chronic houses shortages across the world. We firmly believe public markets, and in particular the fixed income space given its size, can offer investors attractive risk adjusted returns, while ensuring they have a measurable societal and environmental impact,” said the fund’s portfolio manager, Stephen Liberatore.
Varma, a Finland-based pension insurance company, has invested €230 million in State Street Global Advisors’ (SSgA) Sustainable Climate Corporate Bond Funds. SSgA is the asset management business of State Street Corporation. The funds invest in European and US corporate bonds and aim to help investors achieve a significant reduction in their exposure to carbon emissions while supporting the transition to a low carbon economy. “Mitigating climate change has been one of the main goals of Varma’s responsible investment for several years now. These index funds gave us the opportunity to increase our climate allocation also in corporate bond investments. The Sustainable Climate Corporate Bond Funds are well aligned with Varma’s climate-related targets. In terms of mitigating climate change, we aim for a carbon-neutral investment portfolio by 2035,” said Petri Ala-Härkönen, Director of FICC at Varma.
Thematics Asset Management, an affiliate of Natixis Investment Managers, has launched the Thematics Wellness Fund. Supporting United Nations Sustainable Development Goal 3, the fund will invest in companies providing products, services and technologies to consumers seeking to ensure their long-term physical and mental wellbeing. It also complies with Article 9 of the Sustainable Finance Disclosure Regulation (SFDR), meaning it has sustainability goals as intended objectives. “Individuals are increasingly focused on being healthy in body and mind, a long-term trend we anticipated some time ago and that has rapidly accelerated due to the global health pandemic. This new theme has great potential for long-term growth, with the rise of health-conscious consumers who are actively seeking to make healthier choices regarding exercise, diet, self-care and looking after their mental health,” said Thematics CEO Mohammed Amor.
Fidelity International has launched its Sustainable Multi-Asset Fund range, consisting of three OEICs: Fidelity Sustainable Multi-Asset Conservative Fund, Fidelity Sustainable Multi-Asset Balanced Fund and Fidelity Sustainable Multi-Asset Growth Fund. Combining Fidelity’s focus on active engagement with an enhanced exclusion framework, the funds will maintain a minimum of 70% of net assets invested in securities with sustainable characteristics. “With increased regulation and growing client demand, we recognise the importance to the UK adviser market of building sustainability considerations into suitability assessments and their fund section process. That’s why for those clients who require an enhanced ESG screening, we are pleased to offer a growing selection of funds in our Sustainable Family of Funds spanning our equity, fixed income, ETF and now multi asset franchises, providing a wide ranging but universal and robust approach to sustainable investing,” said John Clougherty, Head of UK Wholesale at Fidelity International.
Gresham House, the UK’s largest commercial forestry manager, has unveiled a forestry and carbon credits strategy. The Gresham House Forest Growth & Sustainability strategy aims to deliver sustainable capital growth through new productive woodland creation, whilst also providing exposure to income generating existing forestry. Returns will be generated through the sale of timber and the capital growth of land and trees from existing forests. Meanwhile, the creation of more than 10,000 hectares of new productive woodland will enable the sequestration of carbon and generation of carbon credits, in addition to delivering sustainable capital growth. Investors will receive distributions in the form of verified carbon credits that can be retained for ‘insetting’ purposes – to address carbon emissions in their sphere of influence or portfolio – or sold to provide income.
Environmental impact fintech iClima Earth is set to launch the iClima Distributed Renewable Energy UCITS ETF on the HANetf platform. Expected to be listed on the London Stock Exchange later this month, the ETF will provide exposure to companies promoting the decentralisation of energy generation. It will track the iClima Distributed Renewable Energy Index, providing exposure to 50 companies. This follows the launch of the iClima Global Decarbonisation Enablers UCITS ETF which provides exposure to companies offering products and services enabling carbon emissions avoidance. “Our aim is to redefine climate change investments by shifting the focus from companies’ emission reduction actions, to organisation offering products and services that enable C02e avoidance solutions. These ‘climate champions’ are companies delivering impactful solutions measured by potential avoided emissions of their products,” said iClima Earth CEO Gabriela Herculano.