Fund Solutions

This Week’s Fund News: NJ Scheme to Invest in Paulson’s US$5 Billion Climate Fund

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including TPG Climate Rise, Lyxor, Bridgewater, Brunel PP, Neuberger Berman, Oaktree, CQS, M&G, GSAM and more.

The US state of New Jersey’s US$93 billion public-sector employee pension fund is expected to invest up to US$200 million in TPG Rise Climate, a private-equity fund led by former US Treasury Secretary Hank Paulson. The fund is bidding to raise US$5 billion to invest in firms positively impacting the environment, using a combination of growth equity, private equity and value-added infrastructure strategies. Its main areas of focus are “clean energy, enabling solutions, decarbonised transport, greening industrials, and agriculture and natural solutions,” according to proposal documents. The Washington State Investment Board committed US$400 million to the fund last month. The New Jersey State Investment Council, which supervises the seven pension funds of the New Jersey Pension Fund and the State of New Jersey Cash Management Fund, met this week to discuss the proposed investment. The New Jersey fund, which supports 800,000 active and retired beneficiaries, invested US$100 million in Stonepeak Global Renewables, a New York-based private-equity fund, last year. TPG Capital co-founded The Rise Fund, an impact investment fund, in 2016, in collaboration with former eBay President Jeff Skoll, and U2 singer Bono, who later approached Paulson to head TPG Rise Climate.

European asset manager Lyxor and US hedge fund Bridgewater Associates have jointly launched the Lyxor/Bridgewater All Weather Sustainability Fund, a multi-asset sustainability strategy for investors seeking to achieve both financial and sustainability goals at scale. The strategy leverages Bridgewater’s systematic research process to assess and select public market assets aligned to the UN Sustainable Development Goals (SDGs) and utilises the portfolio engineering of its ‘All Weather’ asset allocation framework. The fund, available in a UCITS format with daily liquidity, is managed by Lyxor and sub-advised by Bridgewater. “I am thrilled that Lyxor, relying on its strong ability to innovate and design transparent investment solutions, is expanding its fruitful 15-year relationship with Bridgewater into the field of sustainable investing,” said Nathanael Benzaken, Lyxor’s Chief Client Officer.

The £30 billion-plus AUM Brunel Pension Partnership has launched a £2.1 billion multi-asset credit fund aligned to its climate change policy. The UK-based partnership’s 10 member local government pension schemes will invest in three sub-funds, managed by Neuberger Berman (60%), Oaktree Capital Management (20%) and CQS (20%). The portfolio will invest in a variety of fixed income sectors, including high-yield corporate bonds, bank loans, asset-backed securities and emerging market debt, with the aim of providing diversified, moderately high returns. Brunel said fulfilling the ambitions of its climate change policy was a fundamental theme in its manager selection process. “We only considered managers who showed awareness of whether companies are aligned with the Paris Agreement. We also questioned them closely to ensure they knew where carbon data was weak in specific bond sub-sectors, and how they could work towards meeting Paris alignment despite these issues,” said Daniel Spencer, Senior Investment Officer, Brunel. The performance objective is to outperform SONIA by +4-5% over a rolling 3-5-year period. Neuberger Berman said the £1.3 billion directed to its climate transition-related multi-asset credit strategy would be invested largely invested in sub-investment grade instruments, aligned with the Paris Climate Agreement.

M&G is investing in two carbon capture and storage technology firms via the £143 billion Prudential With-Profits Fund, in line with the UK-listed manager’s ambition to achieve net-zero portfolio emissions by 2050. The first investment is in Storegga Geotechnologies, a UK-based company pioneering carbon reduction and removal projects, and the lead developer of the Acorn Carbon Capture and Storage and Hydrogen Project in North East Scotland, designed to capture CO2 from industrial operations, storing them under the sea bed using existing offshore pipelines. The second investment, by M&G’s Alternatives team through an external partner, is in Summit Carbon Solutions, a company which aims to lower the carbon footprint of ethanol biorefineries and other industrial emitters in the US Midwest.

Goldman Sachs Asset Management (GSAM) has expanded its suite of thematic ETFs with the actively managed Future Planet Equity (GSFP) fund. It will invest in companies that seek to provide solutions to environmental problems aligned with five key themes: clean energy, resource efficiency, sustainable consumption, the circular economy and water sustainability. GSFP will conduct active, bottom-up security selection to target companies with the potential to drive more sustainable practices and deliver strong returns across various sectors, geographies and market capitalisations. “Governments, corporates and consumers are all aligned in driving a global sustainability revolution, but the scale of the challenge is so large that a holistic approach is necessary,” said Alexis Deladerrière, portfolio manager of GSFP and Head of International Developed Equity Markets for GSAM’s Fundamental Equity team. “GSFP will seek to invest in companies providing solutions to a variety of environmental challenges that are critical to supporting our planet for future generations.”

Female-led, green FinTech iClima has launched its first US-listed ETFs: the iClima Global Decarbonization Transition Leaders ETF (CLMA); and the iClima Distributed Renewable Energy Transition Leaders ETF SHFT). Both new ETFs are based on a “robust” methodology that quantifies the CO2e impact by calculating the potential emissions avoided for each equity holding and for their underlying index as a whole. Designed to be a core holding, CLMA holds stocks that generate revenue from providing climate change solutions from sectors including green energy, green transportation, water and waste improvements, decarbonisation enabling solutions and sustainable products. SHFT is conceived as a satellite holding within a diversified portfolio, offering exposure to green solutions that are updating and ultimately replacing traditional energy grids.

Lombard Odier has partnered with Swiss foundation Access To Water to offer a new impact investment solution to support water accessibility and quality in rural Senegal. Access To Water aims to improve access to drinking water in regions hit by water stress and supports research and development of ecofriendly water solutions in partnership with Ecole Polytechnique Fédérale de Lausanne. The new solution aims to support the distribution of 60 million litres of clean water per year, fulfilling the daily needs of over 83,500 people, providing water efficiency, better resource management, improved sustainable water practices and better sanitation. “We must transition to a more sustainable and regenerative future based on a Circular, Lean, Inclusive and Clean model. Our partnership with Access To Water directly supports this aim, by helping to achieve the universal human right of clean and accessible water,” said Stéphane Monier, CIO at Lombard Odier.

 

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