Friday Funds: BlackRock launches two active ‘climate action’ funds

The latest developments in ESG-related funds

BlackRock has launched a multi-asset and an equity ‘climate action’ fund. The asset manager has classified the two funds – both of which are actively managed – as Article 9 under the EU sustainable finance disclosure regulation, meaning they pursue sustainability as an objective. The multi-asset fund will seek to deliver a lower carbon intensity score than its equity and bond benchmarks, and will invest across equities, fixed income and alternatives, while the equity fund will invest in companies adapting to climate change as well as those “providing solutions for the mitigation of or adaption to climate change”. 

BlackRock also saw $135.4bn of inflows into its US and EMEA sustainable ETFs in 2021, a 62% increase on 2020. Over 70% of the inflows came in EMEA, with $12bn in December alone. The most popular funds were BlackRock’s ESG best in class strategies, followed by ESG optimised or tilted funds. 

Taiwan’s largest pension fund is due to issue a tender for a $2.3bn climate-focused equity mandate, according to reports in Reuters. The $199bn Bureau of Labor Funds will expect managers to deliver a 0.5% outperformance of a selected index, according to its Deputy Director General, with the fund likely using the MSCI ACWI Climate Paris Aligned Index as a benchmark. 

The government of Tokyo has launched a new sustainable energy fund, operated by Looop. The government has invested ¥1bn (€7.6m) in the fund, which will invest in renewable power generation and clean energy hubs, and aims to grow it to ¥10bn with the help of private sector investment. 

PGIM has announced the launched of a hard currency ESG debt fund investing in emerging markets. The fund, which it classifies as Article 8 under the EU sustainable finance disclosure regulation, takes into account ESG ratings and material risks and opportunities arising from ESG factors in its investment process.  

Newton Investment Management has launched a sustainable emerging markets strategy. The actively managed strategy – Newton’s eighth in the UK – invests in firms that are “proactively seeking to manage social and environmental factors”, as well as those where Newton believes it can promote sustainable business practices through engagement. Firms with ESG issues “intrinsic to their business models” will be excluded. 

£740m UK master trust Cushon has appointed Wellington Management and Lombard Odier to manage the corporate bonds segment of its new investment strategy. The pair will be allocated 10% of the strategy to invest in listed bonds issued by companies “accelerating towards net zero”. Wellington will manage impact bonds with a climate and social focus, while Lombard Odier will manage bonds focussed on a positive climate impact, and funding companies “working towards a green society”. 

Nordea Asset Management has announced it will offer two of the US bond funds in its ‘ESG STARS’ range to international clients. The two funds – a corporate bonds fund with $1.4bn in assets and a high yield fund with $757m in assets – had previously only been available to Nordea’s Nordic clients. The funds use an ESG best in class approach. 

State Street has launched three new ESG ETFs, covering US small-cap, developed markets ex-US and emerging markets equities. The three ETFs track indexes from S&P and Bloomberg respectively, investing in companies which “exhibit certain ESG characteristics”. 

Private equity investor Verdane has announced the final close of its growth impact fund Idun I at its hard cap of €300m with investments from AP3 and Mercer. The fund, which targeted a raise of €225m and which Verdane claims is Europe’s largest growth impact fund, is classified as Article 9 under the EU’s sustainable finance disclosure regulation. It will invest in “technology-enabled” businesses based in Europe, and has already made three investments in a workplace wellbeing services firm, a “digital enabler of grassroot sports and physical health” and an as-yet unannounced company. 

Gresham House has made a £164m investment in UK rural broadband provider Borderlink from its strategic investment and sustainable infrastructure funds. Gresham House said the investment would enable Borderlink to improve access to fibre optic internet in underserved communities. 

NextEnergy Capital, the renewable energy investor, has announced the sale of the entire portfolio of Italian solar projects owned by its NextPower II fund. The portfolio, one of the largest in Italy, covers 149MW of solar projects across the country. NextEnergy declined to give a figure for the deal. 

Legal & General Capital and UK bank Hodge have made a £5.5m investment in housing technology and services company Sero Technologies. According to Legal & General, “Sero has developed industry leading digital tools and expertise to design and deliver cost effective low carbon solutions for both new build and existing homes”.