Friday Funds: BMO claims more than half its portfolio is aligned with SDGs

The latest developments in ESG-related funds

51.5% of BMO Global Asset Management’s portfolio is positively aligned to the Sustainable Development Goals and underlying targets, it claims in its ‘Responsible Global Emerging Markets Equity Strategy: ESG Profile and Impact Report 2020.’ However, 11% of the asset manager’s portfolio was negatively aligned, and 31.5% was neutral. The findings are based on the revenue streams of the companies it holds.

Domini Impact Investments’ Impact Equity Fund has been placed in the top 1% of the US Fund Large Blend category of mutual funds by Morningstar. The US impact specialist allocates around 90% of the fund to mid- and large-cap companies with strong social and environmental performance relative to peers and 10% to ‘solution-oriented’ companies across the full market capitalization spectrum. 

Edmond de Rothschild Asset Management will launch a new equity fund that will tap the ‘Green New Deal’ by allocating to companies that are contributing to the energy transition and have strong green credentials. 

Inflows into ESG ETFs grew at a record pace in June, gathering €3.7bn of inflows, according to Lyxor ETF. The subsidiary of Société Générale said in its monthly ‘Money Monitor’ that the inflows were predominantly into equities. 

Green Ash Partners has launched its inaugural ESG product, the Green Ash Sustainable Short Duration Credit fund, with $20m in assets under management. The open-end fund, incorporated in Luxembourg, is actively managed and does not use a benchmark. Its objective is to invest in investment grade and high yield bonds that demonstrate 'best in class' ESG criteria within their sectors. 

Bank of the West has collaborated with 1% For The Planet, an organisation whose members contribute at least 1% of their sales to environmental causes, to launch its first checking account designed for climate action. Features include a carbon tracking tool detailing the carbon impact of every purchase made, and a biodegradable debit card. Additionally, the subsidiary of BNP Paribas will donate 1% of net revenues generated from the account to environmental NGOs. The first recipient of any funds generated by the initiative will be Protect Our Winters, a non-profit that focuses its efforts on legislation regarding climate change.

Japan’s Nikkei has launched a Real Estate Investment Trust index comprising ESG-focused REITs listed on the Tokyo Stock Exchange.

HSBC Global Asset Management has introduced three ETFs focusing on sustainable investments in Europe, Japan and the US. All three have sustainability criteria including the exclusion of companies with significant business activities in nuclear energy, tobacco, coal for power stations and military or civil weapons. They also exclude those with principles that violate the United Nations Global Compact.

Rathbone Unit Trust Management has received ‘transparency accreditation’ from Eurosif, the European Sustainable Investment Forum, for its Rathbone Global Sustainability Fund. The European SRI Transparency logo demonstrates that the asset manager commits to providing accurate, adequate, and timely information to enable stakeholders to understand SRI policies and practices relating to the fund.

BNP Paribas Asset Management (BNPP AM) has adjusted the portfolio allocation of its BNP Paribas Easy Low Carbon 100 Europe UCITS ETF to align with the new Paris Aligned Benchmark standard from EU regulators. Prior to the methodology change, the Euronext Low Carbon 100 Europe index was aligned with the objectives of the Paris Agreement, but not through regulatory definitions.

Nuveen has secured $150m in commitments in the initial close of its Global Impact Strategy, which has a $400m target. The strategy seeks to drive positive change in two critical sustainable development challenges: inclusive growth and resource efficiency. The investment manager of TIAA will pursue direct private equity investments across both themes, focusing on developed markets.

In its inaugural year, the assets of the BlackRock Institutional Cash Series Liquid Environmentally Aware Fund series have hit $14bn. The series favours securities with higher relative environmental scores, and 5% of net revenue is used to retire carbon offsets creating a tangible impact. BlackRock said that in 2019, this led to the purchase of 16,000 tonnes of carbon offsets.

Microsoft has committed $50m to Venture Capital firm Energy Impact Partners  in the first investment of its $1bn Climate Fund. The investment will help EIP to back new technologies for greener energy and transportation systems. The software corporation’s fund aims to invest in ways to reduce and remove carbon emissions.

Federated Hermes has launched a US High Yield Credit Fund with ESG analysis baked in “to identify potential sources of tail risk”. “The team will also be engaging directly with the management teams of the companies they invest in, and drawing upon knowledge from EOS, Federated Hermes’ stewardship and engagement team, to gain a more comprehensive view of long-term structural ESG risks”, the firm said in a statement.The UCITS will be managed by Mark Durbiano, Senior Portfolio Manager at Federated Hermes.

Al Gore’s Generation Investment Management has released its ‘Sustainability Trends Report 2020’. Gore said: “New political, economic and social realities have made it ever more urgent to push ahead with the global sustainability revolution. With today’s report, we have shed further light onto our shared sustainability challenges: the interlocking nature of our climate and health crises; the vulnerability of our societies; the hugely unequal access to high-quality healthcare; and the critical importance of science, institutions and international cooperation to succeed.”