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Friday Funds, Feb. 14: Aviva and KKR smash €1bn mark on ESG funds + launches from NNIP, Lyxor and more

The latest responsible funds news

KKR announced the final close of its KKR Global Impact Fund SCSp, a $1.3bn fund investing in firms providing solutions to an environmental or social challenge, after the fund saw “strong backing” by public pensions, family offices, high net worth individual investors and other institutional investors. KKR will invest more than $130m of its own capital into the fund, which will invest across the Americas, Europe and Asia in private equity opportunities that contribute measurable progress toward one or more of the SDGs. KKR has identified macro themes it believes will contribute towards progress on the SDGs, including climate change mitigation and adaptation, clean water and workforce development.

Aviva Investors’ Climate Transition European Equity Strategy has hit €1bn in assets, having launched six months ago with €100m in seed money from external clients and Aviva France. The strategy, which invests in businesses that support the transition to a low-carbon economy, is managed by Françoise Cespedes and Rick Stathers, the former Schroders and CDP executive who is a senior global responsible investment analyst and climate change specialist at Aviva.

Lyxor has launched three new sustainable High Yield bond ETFs. The three ETFs – covering USD High Yield, EUR High Yield, and Global High Yield – use Bloomberg Barclays MSCI Sustainable SRI indices, which apply sustainability filters to the bond universe to reduce exposure to controversial and low-ESG-rated issuers. All three will be listed in EUR on Borsa Italiana and the USD High Yield and the Global High Yield ETFs were listed in USD on London Stock Exchange yesterday. The funds have a TER (Total Expense Ratio) of 0.25%.

BNY Mellon has launched a sustainability-focused version of its long-running Global Real Return fund to “meet changing client needs”. The BNY Mellon Sustainable Global Real Return will invest across asset classes while adhering to Newton’s sustainable investment criteria. The fund is managed by BNY Mellon's subsidiary Newton Investment Management, which also runs the existing strategy, and aims to achieve a total return in excess of a cash benchmark of 1-month Euribor (Euro Interbank Offered Rate) +4% per annum over an investment horizon of 3-5 years before fees.

BlackRock will stop investing in tar sands and thermal coal through its four iShares ESG Aware equity funds (formerly the iShares Sustainable Core funds). All iShares’ Sustainable Core ESG ETFs have been rebranded as the Aware Range. iShares also plans to debut three fossil fuel-screened ETFs under an Advanced Range, that will track indices with extensive screens, including palm oil, for-profit prisons, controversial weapons, and increased controversy score requirements.

BNP Paribas and the European Investment Fund – part of the European Investment Bank – are launching the BNP Paribas European Social Impact Bond Fund co-investment fund in anticipation of the pair developing and co-investing in social impact bonds in the EU, with a particular emphasis on France. Three initial SIBs have already been financed by the fund, with several others in the pipeline.

The Guernsey Green Fund regulatory ‘kitemark’ is integrating the EU sustainable taxonomy into its rules. The accreditation was developed by the Guernsey Financial Services Commission in 2018 and stipulated 75% of a fund’s assets should meet specified green criteria. Now, the EU taxonomy will be incorporated as a permitted standard. Over the past year, five funds with a combined AUM of $4bn have been registered.

Macquarie’s Green Investment Group (GIG) and waste management firms Covanta and Biffa have reached financial close on an energy-from-waste facility in the UK. GIG and Covanta will together own 50% of the Newhurst facility in Leicestershire, while Biffa will own the other half and act as the facility’s primary waste supplier. It is the third of four initial development projects GIG has closed with Covanta.

Derivatives exchange Eurex has launched the first of a series of new ESG derivatives. The STOXX® USA 500 ESG-X Index Futures is the first exchange-listed derivative that covers the US market while excluding thermal coal extraction and coal-fired power plants. Other regions and markets will follow in early March with the launch of further ESG contracts.

£338bn US asset manager Barings has converted its dedicated charity fund, the Barings Targeted Return Fund, to a Charity Authorised Investment Fund – move it said has contributed to management fees being cut by a third.

Mirova has invested in SafetyNet Technologies, a UK company which specialises in sustainable technologies for the fishing industry. Conservation International Ventures and Mustard Seed VC also invested in the £1.1m ($1.5m) convertible note.

NN Investment Partners has launched three new thematic impact equity funds that will invest according to specific SDGs: NN (L) Health & Well-being, NN (L) Climate & Environment, and NN (L) Smart Connectivity.

SIS Ventures, the impact investment arm of Social Investment Scotland, is seeking £3.7m for the second fundraising round of its Impact First Fund, which invests in high impact enterprises in Scotland. In its first fundraise, the Impact First Fund attracted around £1.3m from 25 UK-based private investors. Eight enterprises have secured or are in active discussion about investment.

Neuberger Berman is launching a high yield fund focusing on corporate credit securities that meet sustainable investment criteria. The Global High Yield Sustainable Action fund will target best-in-class issuers through systematic evaluation of ESG factors and negative exclusion criteria, emphasising active engagement with issuers on ESG factors. Chris Kocinski and Joseph Lind will run the fund.

Microwd, a firm specialising in microcredit, has launched a fund to support female entrepreneurs in Latin America. Named Microwd FICC, the fund initially aims at reaching the €10m mark and will be open to professional investors. It is targeting returns ranging from 5.25% to 9% during the first five years. The fund expects to grant 40,000 loans and create 100,000 jobs.