Friday Funds: Border to Coast to launch £1.3bn alternatives fund to support energy transition

The latest developments in ESG-related funds

UK local government pension pool Border to Coast will launch a £1.3bn listed alternatives fund early next year, investing in “vital infrastructure, including those essential for the net zero energy transition”.  The portfolio will incorporate renewables, energy storage and healthcare. It will aim to outperform the MSCI All Country World Index over five years.  

BlackRock has announced that it will incorporate ‘climate transition benchmarks’ into its $9bn iShares ESG ETF range. From December, the family’s benchmarks will meet the EU’s requirements for Climate Transition Benchmarks, making the funds eligible under Article 9 of the Sustainable Finance Disclosure Regulation. BlackRock will also update its exclusions policy for the ETFs, axing controversial weapons providers and “unconventional” oil and gas firms. From November 2022, an environmental harm screen will be applied. 

Morningstar has also launched a global index aligned with the EU’s Climate Transition Benchmark, alongside another based on the bloc’s more ambitious Paris Aligned Benchmark methodology.   

Digital wealth manager Moneyfarm has launched a range of ‘socially responsible’ ETF portfolios. Funds are selected based on manager voting policies, carbon emissions, involvement in controversies and ESG-related risk exposure. 

L’Oreal’s nature impact fund, which it runs through Mirova, has made its first investment. The €50m vehicle has taken a minority stake in the Real Wild Estates Company, for an undisclosed sum. The firm finances rewilding projects in the UK.  

Data provider TP ICAP and environmental risk management firm Speedwell have partnered to launch an index that uses global weather data to track the impacts of climate change. The providers claim that the index allows financial risk related to the rate of climate change to be traded for hedging purposes, and will allow investors to “transact tailored structures relating to climate change using over-the-counter futures and options”. 

Invesco has launched an exchange-traded fund tracking the ESG version of the Nasdaq 100. The fund, which Invesco says is the first of its kind in Europe, excludes companies involved in controversial activities including alcohol, small arms and thermal coal, and weights the remaining firms by market cap and their Sustainalytics ESG risk rating. 

Circulate Capital’s LAC Ocean Fund has secured $4m in backing from the Inter-American Development Bank’s innovation lab, to provide finance and expertise to SMEs and start-ups dealing with ocean plastic in the Caribbean.