Fund Solutions

This Week’s Fund News: Federated Hermes Targets Nature Impact

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including Federated Hermes, Finance Earth, BlackRock, SSEF, Advantage Capital and the IKEA Foundation.  

Investment manager Federated Hermes and environmental impact investment advisor Finance Earth are collaborating on a UK Nature Impact Investment Strategy. The blended finance approach will focus on addressing the climate and biodiversity crises in the UK’s natural capital markets, targeting high-integrity nature-based solutions (NbS) across land, coasts, rivers and sea in the UK. It will also will invest in impactful businesses operating across the nature restoration value chain. The strategy, which is expected to launch in 2023, aims to support key targets and objectives set out by the UK government, including protecting 30% of UK land by 2030, unlocking infrastructure and housing developments, and creating skilled green jobs across rural areas and coastal communities. The UK Department for Environment, Food and Rural Affairs (Defra) plans to invest £30 million investment to raise private capital over and above the public commitment. Eoin Murray, Federated Hermes’ Head of Investment, said: “The aim of our UK Nature Impact Investment Strategy will be to drive long-term sustainable returns for investors, whilst helping to accelerate the recovery of nature in the UK and support key targets and objectives set out by the UK government.” 

BlackRock, the world’s largest asset manager, has launched the BlackRock Global Funds (BGF) Impact Bond Fund. It will invest at least 80% of its total assets in securities which have been classified according to measurable and material benefits for society or the environment. The strategy leverages impact research to target labelled green, social, and sustainable bonds, as well as impact mortgage-backed securities (MBS) and impact municipal investments. The fund looks to generate strong financial returns across various market environments, while supporting positive environmental and social outcomes, in accordance with the UN Sustainable Development Goals (SDGs). Ronald van Loon, BGF Impact Bond Fund’s Co-Manager, said: “The BGF Impact Bond Fund taps into the growing investor interest in driving positive social and environmental impact within a fundamental active global bond portfolio, leveraging BlackRock’s proprietary impact research with its macro global investment views.” 

Energy efficiency fund Solas Sustainable Energy Fund (SSEF) has announced its final close, with €220 million in institutional investor commitments. The fund has been backed by key investors, including MEAG and the European Investment Bank, and is supported by the EU LIFE Programme. Labelled as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR), the fund has exceeded its target size of €200 million and its investments will generate energy savings of roughly 600 gigawatt –hours (GWh) per year. SSEF supports energy-saving business models focusing on the renovation of existing infrastructure, particularly buildings, by using more energy efficient technologies, such as rooftop solar panels, LED lighting, heat pumps, combined heat and power units, and building fabric. By end of 2022, SSEF expects to have signed financing agreements worth €50 million to support energy efficiency projects across the EU. Kadri Simson, European Commissioner for Energy, said: “Initiatives like the Solas Sustainable Energy Fund help to make sure that we have the necessary funding for these investments. The more efficient we become, the more we can reduce energy consumption and energy bills, decrease our greenhouse gas emissions, and phase out our dependence on Russian fossil fuels.” 

US-based venture capital firm Advantage Capital has added three additional limited partners to the Empower the Change Fund, a fund investing in minority business enterprises (MBEs) to close the racial wealth gap. Advantage Capital has partnered with the NMSDC Business Consortium Fund (BCF), and will provide flexible risk capital to support and upscale minority-owned businesses. New capital commitments have come from entities including Deere & Company, Enterprise Bank, and UMB Bank, with the fund expected to make its first investments later this month. Across its 30-year history, Advantage Capital has invested US$260 million in more than 70 MBEs. Sandra Moore, Advantage Capital’s Chief Impact Officer, said: “With this second close, we are thrilled to continue working toward our ambitious goals and intended outcomes. Since we announced the fund in February, we have been laser-focused on securing capital we can deploy to minority-owned businesses and communities.” 

The IKEA Foundation has made a US$1.2million commitment to the Global Cities Fund (GCF) for Migrants and Refugees. With this new funding commitment, the GCF will expand its direct support to the six new cities. In Casablanca, Morocco, the fund will establish its first Souk of African Solidarity, which will provide migrants and asylum seekers that have been impacted by the climate crisis with a space to set up green businesses. In Durban, South Africa, the fund will employ migrants and displaced people in the city’s recycling programme and establish an online CARE portal to link service providers with people who need access to critical services, both before and after climate disasters. It will also fund projects in Dar es Salaam in Tanzania, Hargeisa in Somaliland, Nairobi in Kenya and the Nyamagabe District in Rwanda. Per Heggenes, IKEA Foundation’s CEO, said: “We recognise the importance of funding cities directly so that they can address the mounting challenges faced by urban migrants and refugees as a result of climate change. We are excited to contribute to the GCF for Migrants and Refugees to ensure cities most impacted by climate disasters can build resilience, opportunity, and social cohesion for all.” 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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