Friday Funds: BNP Paribas launches long/short green strategy

BNP Paribas Asset Management has launched an equity long/short alternative UCITS strategy called BNP Paribas Environmental Absolute Return Thematic fund (EARTH). “The team takes long positions in the most promising and innovative companies globally within the energy, materials, agriculture and industrials markets that are providing solutions to environmental challenges,” said BNP in a statement. “These are paired with short positions in companies with unsustainable or technologically inferior business models vulnerable to transition risk.” The fund will be jointly managed by thematic specialists Edward Lees and Ulrik Fugmann, who also manage BNP Paribas Energy Transition fund. 

Aberdeen Standard Investments’ is under fire again for its ‘sustainable' investments – this time because its Ethical Corporate Bond fund has the UK’s Heathrow Airport as its fifth largest holding, according to consultancy firm Plan Work. Last week, the investment house divested fashion company Boohoo from its UK Impact Employment Opportunities fund after it was alleged that the firm’s supply chains exposed workers to illegal conditions. M&G Global High Yield ESG Bond fund also holds Heathrow, according to Plan Works, which will release its full research in the coming weeks.

Octopus Renewables has acquired two UK operational onshore wind farms with a combined capacity of 16.8MW, in its first deal by its £185m Renewable Energy Income Partnership III fund. 

Phoenix Group, a savings and retirement corporation, has agreed a £70m private placement with the UK housing association Network Homes. The funding will be used to support the development of social and affordable housing.

Komaza has secured a first close of $28m of its planned $33m Series B equity financing. The sustainable forestry company plans to leverage its Series B funding to expand across East Africa, investing in additional wood manufacturing facilities to make sustainable building materials. This financing round was co-led by Novastar LPs AXA Investment Managers (through the AXA Impact Fund for Climate & Biodiversity), and the Dutch development bank FMO, with further participation by Mirova’s Land Degradation Neutrality Fund.

Investment advisor Vanguard plans to launch an ESG US Corporate Bond ETF in September, tracking the Bloomberg Barclays MSCI US Corporate SRI Select Index and investing in USD-denominated, investment-grade, fixed-rate, taxable bonds with maturities of more than one year that are screened by MSCI against certain ESG criteria. Vanguard says the fund will have an estimated expense ratio of 0.12%, compared with the average expense ratio for ethically themed strategy fixed income funds of 0.72%.

NEI Investments has launched a Global Impact Bond Fund, which it claims makes it the first Canadian investment manager to offer an impact solution for each major asset class. The fund, which is fossil fuel free, invests in corporate and sovereign bonds from around the world. Issuers' products, services or funding objectives must be designed to address prevalent social and environmental issues to be included. Wellington Management Canada will sub-advise the fund.

Alternatives giant KKR has invested in Australian natural resource project development and environmental markets platform GreenCollar through its Global Impact Fund. Greencollar uses mechanisms such as carbon markets to enable landholders, especially farmers, to implement projects that generate revenue and reduce greenhouse gas emissions. 

German savings bank, Deka has launched five climate change ETFs, each targeting a different geography – Germany, the eurozone, Europe, the US and the world. The ETFs will track MSCI climate change indices, which include companies with lower emissions than MSCI’s threshold and that are adapting to climate change. The range is listed on the Stuttgart Stock Exchange and Xetra with total expense ratios ranging between 0.2% and 0.25%.

Northern Trust has launched two sustainability-focused fixed income strategies which aim to provide investors downside protection at a time of market turbulence. Both the strategies, the Global High Yield ESG Bond Index Strategy and Euro Investment Grade Corporate ESG Bond Index Strategy, seek to improve their overall ESG scores relative to an index through a combination of portfolio optimisation and active engagement. Northern Trust Investment Strategist Valeria Dinershteyn told RI that backtesting suggested that issuances from higher rated ESG firms had tighter spreads.

American Century Investments launched two active ESG ETFs: the American Century Sustainable Equity ETF and the American Century Mid Cap Growth Impact ETF. The former invests in large-cap stocks with improving business fundamentals and sustainable corporate behaviours, while the second invests in high-quality mid-cap growth-oriented companies believed to offer a positive impact on society.

The LGBTQ100 ESG index is now tradable. It represents the top 100 LGBTQ equality-driven US companies and was created by index provider C8 Technologies and diversity and inclusion data firm LGBTQ Loyalty Holdings.

Total capital raised by gender lens funds topped $4.8bn in 2019, according to a new report from Wharton Social Impact Initiative. This is more than double the $2.2bn it reported in the year before. The school is part of the University of Pennsylvania, and the report was done in collaboration with consultancy firm Catalyst at Large. It also found 61% of the funds were first-time funds, and their geographic diversity is increasing.