Fund Solutions

This Week’s Fund News: Varma Backs BlackRock’s Paris-Aligned Bond ETF

ESG Investor’s weekly round-up of news about funds designed to meet sustainable investing criteria, including BlackRock, Invesco, Franklin Templeton, SUSI Partners, AXA IM Alts, Octopus, KGAL and M&G. 

BlackRock, the world’s largest asset manager, has launched the Paris-Aligned iShares UCITS Fixed Income ETF with a €50 million seed investment from Finnish pension insurance company Varma. The ETF aims to mitigate exposure to transition and physical climate risks while capturing opportunities in the transition to a low-carbon economy. Tracking a new Bloomberg MSCI index, companies involved in oil and gas, thermal coal, controversial weapons, high-carbon electricity generation and social normal violations will be screened out. Ann Brännback, Senior Portfolio Manager at Varma, said: “The dual purposed features of both meeting Paris Aligned Benchmark regulatory standards and ESG integration make the ETF very interesting for our credit portfolio.” BlackRock now has US$1 billion in combined AUM in sustainable strategies focused on lowering emissions across equity and fixed income. Manuela Sperandeo, BlackRock’s EMEA Head of Sustainable Indexing, said: “The transition will require investors to embrace new strategies, and ETFs are playing a central role as foundational building blocks for people seeking out affordability, transparency, and convenience.” 

US-headquartered investment management firm Invesco has announced the launch of a Net Zero Global Investment Grade Corporate Bond Fund for European investors. Categorised as an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation (SFDR), the fund’s primary objective is to contribute to the goal of achieving net zero emissions by 2050 by offering exposure to a global portfolio of corporate credits, focusing on high-quality issuers meeting its net zero framework. The fund will be managed jointly by Lyndon Man, Luke Greenwood, Michael Booth and Matthew Henly, drawing on support from Invesco’s Global ESG team of 174 investment professionals currently managing £404.3 billion in assets globally. Man, Invesco’s Co-Head of Global Investment Grade Credit, said: “The transition to net zero is a global initiative, impacting all sectors and geographies. Our approach acknowledges this and will individually assess corporates we invest in on their alignment with the objective of achieving a successful transition to net zero.”

Franklin Templeton, an US-based international investment management firm with US$1.45 trillion in AUM, has launched its MSCI China Paris-Aligned Climate ETF for European investors. The ETF is part of the firm’s Franklin LibertyShares range and is the firm’s third EU SDFR Article 9 compliant Paris-Aligned climate strategy in the range. It will track the EU Climate Paris-Aligned Benchmark and MSCI’s China Paris-Aligned Indices and aims to support investors seeking to reduce their exposure to transition and physical climate risks. Caroline Baron, Franklin Templeton’s Head of ETF Business Development, said: “The ETF is a natural extension of the Paris-Aligned Climate ETF product range we launched two years ago and provides exciting growth opportunities in Chinese stock markets by investing in securities transitioning to a low carbon economy. Aligned with the EU Climate Benchmark Regulation, it will additionally offer investors key standardisation, transparency and reporting benefits and should appeal to a wide range of European investors seeking more sustainable investment solutions.” 

SUSI Partners, a Swiss fund management firm with €1.7 billion in capital commitments, has launched the SUSI Energy Efficiency and Transition Credit fund (SEETCF). The Article 9-compliant fund aims to contribute towards climate change mitigation, while supporting the long-term development of economies through sustainable infrastructure and the provision of clean, affordable energy. SUSI’s credit platform has invested more than 80% of the second energy efficiency fund’s capital commitments, and the launch of SEETCF will provide a transition into the deployment of this third-time fund. The new fund also aims to build a diversified portfolio across investment opportunities in the energy transition offers. 

AXA IM Alts, a global alternative investments fund with €188 billion in AUM, has announced a US$15 million investment in Greenstruxure, an American energy supply and services company. AXA IM Alts’ investment aims to support the continued development of GreenStruxure’s renewable energy microgrids, which provide affordable, decarbonised energy, bill optimisation and sustainability credits. AXA IM Alts joins impact investment partners Huck Capital and Inclusive Capital Partners and technology partner Schneider Electric in supporting GreenStruxure’s expansion and development. Jonathan Dean, AXA IM Alts’ Head of Impact Investing, said: “GreenStruxure provides a clear opportunity to displace fossil fuel-based grid energy. This investment reinforces our continued commitment to climate action, namely our impact goals of evolving resource efficiency and providing sustainable solutions to the global market”. 

British renewable energy group Octopus Energy has signed its first renewable energy deal in Germany. The deal will see ten wind turbines built and in be operation by the end of 2023. The 35 megawatts (MW) onshore windfarm will generate almost 100,000 MWh, powering nearly 40,000 households a year and annually offsetting up to 60,000 tonnes of CO2. Fifty-five percent of Germany’s gas imports in 2021 came from Russia, and this deal is the latest effort from the German government to increase energy security though renewable sources. Peter Dias, Investment Director of the fund management business for Octopus Energy Generation, said: “There’s a significant investment opportunity to accelerate the transition to a future powered by renewable energy. We’re delighted to be working with institutional investors to help pension savers’ money make a positive difference.”    

German asset manager KGAL has secured approval for three-large scale solar PV projects in Italy. The solar parks will be built in the Lazio region and in Sicily, with a total output of up to 380 MWp and, in combination with other KGAL solar and wind projects, will have a capacity of more than 1.2 gigawatts (GW). The Italian government is actively seeking to expand renewable energy production, with the share of green energy within total energy consumption on track to increase from 20% in 2020 to 30% in 2030. KGAL’s combined 1.2 GW projects could supply as many as 600,000 homes with green electricity. Michael Ebner, KGAL’s Managing Director of Sustainable Infrastructure, said: “The approval procedures have become much simpler and faster. KGAL is benefitting from the growing momentum with its renewable energy funds and is, in turn, making a significant contribution to achieving the expansion targets.” 

UK-based M&G Investments has made a US$50 million investment in global freight booking and payment platform Freightos Group. Freightos offers a digital platform that allows real-time global freight rate comparison, booking and shipment management, connecting clients across the international freight ecosystem, including airlines, ocean liners, and trucking companies. The digital platform provides freight forwarders, importers and exporters with carbon calculator tools to understand and compare the emissions for specific shipping routes, driving more informed and sustainable booking decisions while improving emissions tracking across multiple modes. Zvi Schreiber, Freightos Group’ CEO, said: “Global freight moves the world. Last year, US$22 trillion worth of goods crossed borders, but we have all witnessed what happens when shipping doesn’t run smoothly, creating inventory shortages and increasing prices that challenge businesses and consumers globally. Through this investment and by accessing public markets for the first time, we can continue to scale the platform and provide new opportunities for the Freightos team to grow around the world.” 

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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