ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including KGAL Investment Management, JP Morgan Asset Management, Stafford Capital Management, Northwestern Mutual, Hartford Funds and Manulife.
KGAL Investment Management has launched one of the first impact funds to achieve an EU Sustainable Finance Disclosure Regulation (SFDR) rating of Article 9 (the highest in terms of sustainability). Its renewable energy impact fund, KGAL ESPF 5 is designed to enable institutional investors to simultaneously pursue their financial goals and to have a positive impact on the global environment, said the firm. The predecessor fund, KGAL ESPF 4, closed at the end of 2019 with €750 million in equity commitments. “For investors, sustainability and impact measurement are increasingly essential,” said Christian Schulte Eistrup, Head of KGAL’s international institutional business. Multidimensional diversification across power generation technologies, geography and asset lifecycles will be central to KGAL ESPF 5’s investment strategy. The fund will invest in renewable energy generation through photovoltaics, onshore and offshore wind power, and hydropower. Investments in other renewable energy generation and storage technologies as well as grid infrastructure will also be considered. The fund aims to achieve a target return of 7-9 % over its 10-year term.
Specialist real assets and private markets manager Stafford Capital Partners has completed its largest fundraise, attracting US$695 million for its Stafford International Timberland Fund IX (SIT IX). This brings the manager’s total timberland assets under management to $US2.9 billion. SIT IX invests in high-quality timberland assets globally, primarily through the secondaries market. The aim of the fund is to build a diversified portfolio mainly in existing softwood, hardwood and eucalyptus plantations. The fund has made eight investments to date, committing 33% of capital contributions in a yielding portfolio of 22 timberland assets and seven fund vintages. Stephen Addicott, Co-Managing Partner of Timberland, said: “To have reached this milestone amongst a global pandemic is a testament to the resilience of the global timberland market and Stafford’s diverse investment approach including secondaries, co-investments and primary fund commitments.”
Northwestern Mutual has launched a US$100 million impact investing fund focused on addressing inequality and the racial wealth gap in the US. The fund will direct investments to black and African-American communities in the US, focusing on physical and social infrastructure, access to capital for individuals and businesses, and healthy sustainable neighbourhoods and communities. “The Impact Investing fund is intended to make measurable improvement in racial equity, while also generating a positive financial return for our policy owners,” said Ray Manista, Executive Vice-president and Chief Legal and Compliance Officer at Northwestern Mutual. The fund is part of Northwestern’s US$15 billion socially responsible investing (SRI) portfolio within its general account, which focuses on socio-economic and green investments broadly. Other investments include the US$20 million Future Ventures fund, which to date has made investments in five companies founded by black entrepreneurs, and the Black Founder Accelerator, which aims to close the funding gap for black company founders.
JP Morgan Asset Management has launched the US Sustainable Equity Fund, a SICAV incorporated in Luxembourg. The US$10.04 million fund invests at least 67% of assets in equities of US sustainable companies or US companies that demonstrate improving sustainable characteristics. The asset manager defines sustainable companies as those with effective governance and superior management of environmental and social issue. The fund falls under Article 8 of SFDR, as it incorporates strategies that promote social and/or environmental characteristics, but does not have sustainable investing as a core objective.
Hartford Funds has launched its first ESG-focused ETF, which will be sub-advised by Schroders Investment Management. Looking to outperform against the Russell 1000 Index, the Hartford Schroders ESG US Equity ETF (HEET) will invest in a diversified range of US equities and equity-related securities that meet the firm’s ESG criteria. Adopting the ESG screening process developed by Schroders, companies will be quantitatively assessed on their ESG criteria, including the strength of their environmental practices, climate change impact and positive stakeholder relationships. “We believe that applying ESG principles to an ETF, and leveraging Schroders’ quantitative investing expertise and proprietary approach to ESG investing, can provide stronger returns and make for a better investor experience on multiple levels,” said Vernon Meyer, Hartford Funds CIO.
Manulife Investment Management has made an impact-first investment in 89,800 acres of timberland in the US through its subsidiary company Hancock Natural Resource Group. The acquisition will serve as an opportunity for the firm to better integrate nature-related solutions into its investment decisions. As a method of storing carbon, the asset manager reserves the option to sell the resulting carbon credits from the timberlands as offsets or to use the carbon removals as insets to contribute to its net zero target. “We are well-positioned to seek positive climate impact and to invest in assets to create carbon sequestration and other conservation opportunities derived from forests for the benefit of our clients. We believe impact-first investments can meet the needs of those who are interested in offsetting carbon emissions and who may value other positive environmental or social impacts as well as generating financial returns,” said Tom Sarno, Global Head of Timberland Investments at Manulife Investment Management.