Friday Funds: Brunel confirms £800m+ sustainable infra mandate

The latest developments in ESG-related funds

The UK’s Brunel Pension Partnership has appointed StepStone Infrastructure and Real Assets to run its Cycle 2 Brunel Infrastructure Portfolio. The strategy includes a £470m renewables fund and a £370m ‘generalist’ fund to invest in sustainable infrastructure, including transport, heating and power.

Lombard Odier has become the latest investment house to launch a dedicated natural capital fund. The global equity strategy has been created in partnership with the Circular Bioeconomy Alliance and will invest listed companies that are set to benefit from trends around circular bio-economy, resource efficiency and waste reduction. It will hold 40-50 small to mid-sized public companies in North America, Europe and Asia.

AMP Capital will close its 19-year old Sustainable Share Fund due to “declining assets under management, and in addition to the team's longer-term expanded global remit”, according to a spokesperson. The fund took a hit in August when its portfolio managers, Genevieve Murray and Emily Woodland, announced their resignations. The investment manager says it will build a new ESG team over next 12-18 months, whose remit will include Australian equities, global equities and fixed income. It will appoint a Head of ESG and Investment Stewardship, with Karin Halliday, current Manager of Governance and Sustainable Investment, assuming the role of Senior Manager, ESG and Investment Stewardship.

The Green Climate Fund has put $150m into a new infrastructure collaboration between BNP Paribas, Pegasus Capital Advisors, the International Union for Conservation of Nature, Gold Standard, and R20 (Regions of Climate Action). The Sub-national Climate Finance Initiative will run an equity fund investing in mid-sized infrastructure projects in developing countries that support climate resilience – including clean energy and regenerative agriculture. The GCF will take a first-loss position on the fund to encourage private capital into the strategy. Technical assistance will also be provided as part of the initiative.

Incubation specialist and majority-black owned asset manager Thuso Incubation Partners has selected Prescient Fund Services as administrator to its fund of funds. Thuso, which is backed by South African private equity specialist Ke Nako Capital, aims to generate returns for its investors by incubating South Africa’s next generation of black-owned asset managers.

Impact investing platform Bamboo Capital Partners has been appointed by the Government of Madagascar and the World Bank to manage the Off-Grid Market Development Fund, a $40m renewable energy access fund. Société Générale Madagasikara will host the funds and provide the financing. 

M&G Investments has launched a climate-focused equity strategy that will invest in around 30 clean energy, green technology and/or circular economy-related companies. 

HSBC Investment Trust has launched an ESG US Equity Index Fund – Japan’s first US equity index fund to incorporate ESG. The fund will invest in ETFs and use the FTSE USA ESG Low Carbon Select Index as a benchmark.

Zadig Asset Management’s OYSTER Sustainable Europe fund has bagged a French government-issued Sustainable and Responsible Investment (SRI) label following an assessment by EY.

Invesco has repurposed its Invesco US Equity Flexible Fund into the Invesco Global Thematic Innovation Equity Fund as the trend for rejigging conventional investment strategies to turn them into ESG funds continues. The updated vehicle will now invest in companies that enable, drive or stand to benefit from innovations within three overarching ‘megatrends’: technological evolution, demographic and societal change, and the protection of the environment and resource scarcity. The Luxembourg-domiciled SICAV, is available to both retail and institutional investors in the UK and across Europe.

Fidelity International has launched three Luxembourg-domiciled regional portfolios: the Sustainable Asia Equity Fund, the Sustainable European Smaller Companies Fund and the Sustainable Japan Equity Fund. Alongside this, two thematic funds will be launched in early 2021: the China Innovation Fund and the Global Thematic Opportunities Fund.

Limited partners have criticised ‘superficial’ ESG reporting by private equity funds in a survey by Brackendale Consulting. The Private Equity ESG LP sentiment survey 2020 found that respondents gave ESG a score of 7.5 out of 10 in terms of importance, and said they want ESG reports to include KPIs, concrete measures and tangible and evidenced improvements being made by the GP.

Amundi has partnered with colleges at Cambridge and Oxford universities to develop a low-carbon ESG index fund that will be open to other charities and endowment funds. The Amundi ESG Global Low Carbon Fund tracks the MSCI ACWI while removing all fossil fuels reserves, significantly improving green revenues, and reducing the risk of exposure to controversies. BlackRock recently created the iShares Developed World Fossil Fuel Screened Equity Index Fund for Oxford University Endowment Management.  

Blue and circular economy specialist Circulate Capital has partnered with Aavishkaar Capital, the impact investing arm of the Aavishkaar Group, to inject $18m into Nepra Resource Management to expand its work managing dry waste in India.

PensionBee, which offers Brits a way to put all their pension funds in one place, plans to roll out a fossil fuel-free fund developed with Legal & General by the end of this year after receiving £31m in fund commitments from customers in under a week. Once it reaches its £100m target, the fund will ban companies with proven or probable reserves in fossil fuels, tobacco and weapons companies, and persistent violators of the Global Compact. It will increase investment in companies that are aligned with the Paris Agreement.