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Friday Funds: Boom continues for Paris-aligned benchmarks and funds

The latest developments in ESG-related funds

BT Funds Management New Zealand has invested NZ$200m (€122m) into a ‘Paris-aligned’ climate fund run by Legal & General Investment Management, which tracks a developed markets (ex-Australia and New Zealand) equity index from Solactive. The index is tilted towards companies with a high ESG rating and includes a UN Global Compact and fossil fuels filter. 

Intercontinental Exchange has announced the launch of four index futures contracts based on MSCI’s Paris-aligned indices. The contracts, which will be available from January next year, will be based on MSCI’s world, USA, Europe and emerging markets indexes. 

NZ Super has made a $100m commitment to a climate technology fund managed by venture firm Fifth Wall, bringing its total raise to $300m out of a $500m target. The fund will invest in new technologies which help decarbonise the real estate industry. 

Japanese energy supplier Idemitsu Kosan has said it will invest $25m in an energy transition fund run by Azimuth Capital Management. The Azimuth V Energy Evolution Fund will invest in “technology-advanced sustainable energy assets”, seeking to generate measurable CO2 mitigation. Example investments include low-emission hydrogen, sustainable lithium production and waste plastic recycling. 

Finance in Motion and Santander Asset Management have launched a new Latin America green bond impact fund, seeded by the EU and German government. German development KfW initiated the launch of the fund, which will invest in corporate and SSA green bonds and plans to provide technical support to new issuers. 

The German government has announced a further €150m commitment to help developing countries adapt to climate change. The Federal Ministry for Economic Cooperation and Development will allocate $100m to the Least Developed Countries Fund, run by the Global Environment Facility, which provides financing to climate change adaptation projects in the world’s least developed countries. The Federal Environment Ministry will commit $50m to the Adaptation Fund, which finances climate change adaptation measures.  

Federated Hermes has launched a new high-yield credit fund investing in companies managing the climate transition. The fund, which it will categorise as Article 9 under the EU’s Sustainable Finance Disclosure Regulation, will invest in between 100 and 150 issuers which are “adapting to reduce their climate impacts”. It will seek a lower carbon footprint than its benchmark, the ICE BoA Global High Yield Constrained Index, and to outperform it by 1.5% over three years.