Friday Funds: Allianz repositions 74 funds as sustainable, launches climate engagement strategy

The latest developments in ESG-related funds

AllianzGI has repositioned 74 funds, running some $84bn, as sustainable products, and has launched a new climate engagement strategy. Under the strategy, fund managers will engage with the 10 biggest emitters in their funds, and will consider divesting from companies that do not positively engage with climate targets. 

ETF provider Lyxor plans to double its ESG assets by the end of 2021, switching several existing funds to ESG indices. It is seeking SRI Label certification for all 30 of its ESG funds, and plans to expand its thematic offering by covering clean tech and healthcare.

Seven of Eurazeo’s investment funds have been awarded the LuxFLAG ESG label, which requires funds to screen 100% of their invested portfolio according to a LuxFLAG recognised ESG strategy.

Capricorn’s Sustainable Investors Fund has invested in carbon offset finance house Respire to help it expand its portfolio-based carbon offset operations.

Aegon Asset Management’s £534m Diversified Growth Fund will change its investment policy to focus on sustainable businesses that align with one of Aegon’s six sustainability themes, including climate change and resource efficiency. The fund aims to return 4% over inflation. 

Yorkshire and Clydesdale Bank Pension Scheme and the pension plan of chemicals company Croda Pension are among the latest Solactive and climate metrics provider ‘right.’ have launched three 2°C-aligned indexes for developed markets. The best-in-class indices calculate the climate contribution of companies until 2050, favouring those aligned with a 2°C or 1.75°C scenario. Solactive has also developed two new quant-based indices for Spanish bank BBVA – one focused on companies supporting the Sustainable Development Goals, and the other centred on corporate governance and board diversity. 

Assets in the world’s ESG-oriented Money Market Funds are up some 50% to €123bn, according to Fitch Ratings. Its new report found that most of the growth was driven by funds transitioning to an explicit ESG approach, but that ESG growth outstripped overall growth, which was only 20%.

The number of European investors planning to increase their allocation to ESG ETFs has declined by 6% from last year, according to a survey from Brown Brothers Harriman. The 2021 Global ETF Survey, which surveyed 382 financial professionals, found that 67% of European investors planned to increase allocation, with 80% of US investors and 92% in Greater China, an increase on last year of 11% and 13% respectively. 

UK social impact investor Resonance has launched a homelessness property fund. The ‘Everyone In’ strategy has raised £12.5m from investors including Greater London Authority and Big Society Capital, and has a target of £15m. It will focus on purchasing around 50 affordable homes in London to provide housing for people sleeping rough. 

Aberdeen Standard Investments has partnered with social campaigner The Big Issue Group to launch a multi-asset fund investing in firms generating more than half their revenues from climate change solutions. It will exclude fossil fuels, tobacco, weapons, companies involved in child labour and high emitters. 20% of the fund’s net revenue will be reinvested into the Big Issue to support its anti-poverty mission.

Neuberger Berman has launched global and European sustainable equities funds. The two funds, managed by Hendrik-Jan Boer, Alex Zuiderwijk and Jeroen Brand, will hold from 30-60 stocks in companies where “sustainability reinforces returns”. The funds will seek a share of greater than 75% in portfolio companies to allow it to actively engage with the management.

La Française Asset Management has said that 76% of its open-ended funds are aligned with the EU’s new Sustainable Finance Disclosures Regulation, which came into force this week. Franklin Templeton said that 29 of its strategies were compliant with the rules. The SFDR covers both the active promotion of environmental or social characteristics through investments and strategies with sustainable finance as their objective. 

Wealth manager Quilter Cheviot has launched a new ‘Positive Change’ investment strategy. The strategy holds several sustainable funds through managers that engage with companies across industries on sustainability issues.

SIX has launched a Gender Equality Index including companies with between 20% and 80% women on the board of directors, and between 15% and 85% women on the management board.

Private equity investor Abris Capital has launched a new ESG strategy, which commits it to achieving a carbon-neutral portfolio by 2025. The ‘ESG Universe 2023’ strategy is composed of 17 initiatives concerning governance, standards, education and carbon neutrality, and aims to put in place net-zero action plans for individual portfolio companies. The firm also aims to create an ‘ESG knowledge database’ for its investment team and portfolio managers.

NEI has merged nine of its funds with their ‘Responsible Screen’ equivalents, which exclude companies with involvement in tobacco, weapons, nuclear power, gambling and pornography. The funds closed to new investments on March 9th, and the merger will be completed by April 16th for two funds and April 23rd for the remaining seven.