Friday Funds: Dutch pension fund claims almost half assets are SDG-aligned after BlackRock/FTSE allocation

The latest developments in ESG-related funds

Pensioenfonds Detailhandel has allocated €3bn to a BlackRock bond fund focused on the Sustainable Development Goals, in a move the €32bn Dutch retail pension scheme claims brings almost half its assets in line with its priority SDGs. The fund tracks a custom-made benchmark from FTSE covering fixed-rate investment grade Euro-denominated bonds weighted according to their contribution to four SDGs: decent work and economic growth; responsible consumption and production; climate action; and peace, justice, and strong institutions. The index is further tilted towards green bonds, resulting in a 69% increase in allocation to green bonds versus the parent index. The resulting index also has 69% lower emissions than the parent, and a 62% reduction in fossil fuel reserves. It is the pension fund’s third SDG-aligned benchmark focused on its credit portfolio and is part of its wider aim to develop a “full suite of next generation sustainable fixed income indices.”  

In the first quarter of 2021, just over 70% of funds categorised as ‘Article 9’ under the EU’s Sustainable Finance Disclosure Regulation were equity funds, compared with 30% of the wider market, according to a study by the European Fund & Asset Management Association. The €340bn in Article 9 funds – which have explicit sustainability objectives – accounted for 2% of the European fund market, while Article 8 funds – which have sustainability characteristics – accounted for 22% of the market, with €3.7tn in assets. Luxembourg, France and the Netherlands were the three largest countries by Article 9 fund assets, with Luxembourg accounting for more than half of total Article 9 funds. 

BNP Paribas Asset Management has launched a social bond fund, which will invest at least 75% of its capital in labelled social or sustainable bonds. The remaining funds will be allocated to non-labelled notes from companies classified as “socially responsible” by an in-house ratings model, and microcredit instruments which provide access to financial services to small businesses and individuals in emerging markets. It is the fourth social bond fund to be created, after launches from Columbia Threadneedle and Amundi. 

The UK Government has seeded an investment trust focused on financing sustainable energy infrastructure in emerging mamrkets in Asia. ThomasLloyd is seeking to raise up to $340m from its planned ‘energy impact’ vehicle, for which it published the prospectus this week. 

UOB Asset Management has launched Asia’s first green real estate investment trust exchange-traded fund. The fund, listed on the Singapore Stock Exchange, tracks the iEdge-UOB APAC Yield Focus Green REIT index, which covers 50 high-yielding REITs across the region which display “relatively better” environmental performance based on GRESB data.  

Bluebay has launched a new ESG multi-asset credit fund. The fund, categorised as Article 8 under the SFDR, will use in-house BlueBay research to exclude investments with “excessive ESG risks”. Oil sand and arctic drilling will be excluded, as will sovereigns which have not ratified the Paris agreement and companies which gain more than 5% of their revenues from thermal coal or have more than 10GW of installed thermal coal capacity. The fund will be seeded by Lloyd’s of London. 

Aviva Investors has partnered with housing developer Packaged Living to launch an affordable rental housing ‘platform’. Under the partnership, the two firms will acquire and fund energy efficient ‘build-to-rent’ properties, with an expected initial allocation of 1,000 homes.  

French sustainable finance house Mirova has participated in a $6m fundraise by ‘shrimptech’ firm JALA Tech, alongside Japanese venture investor Real Tech Fund and Deliberate Capital’s coastal ecosystem fund, the Meloy Fund. The Indonesian-based firm, which seeks to improve the sustainability of shrimp farming, said it planned to develop environmentally friendly aquaculture systems and oxygenators in the future. 

$600m Singapore-based impact investment group Milltrust International has sold its UK-based agricultural investments subsidiary to Future Planet Capital for an undisclosed sum.  

Atrato Onsite Energy has raised £150m by floating on the London Stock Exchange. The commercial rooftop solar firm said the listing was several times oversubscribed, and is targeting a 5% yearly dividend. At the time of writing, shares were trading at 108.5p. Fellow UK solar developer Elgin Energy has raised £25m from an oversubscribed fundraise through Focus Capital Partners, which it will put towards its aim of reaching 5GW solar and storage capacity by 2025. 

S&P Dow Jones Indices has launched climate transition and Paris-aligned versions of its S&P Eurozone 50, S&P France 20 and S&P EuroUSAJapan 100 indices. S&P said that it planned to launch further Paris-aligned and climate transition equivalents of its other widely used regional benchmarks.