Friday Funds: Ilmarinen puts €170m into new Axa fund

The latest developments in ESG-related funds

Ilmarinen has become a seed investor in AXA Investment Management’s low-carbon bond fund, making a €170m investment. The new fund focuses on the carbon and water intensity scores of issuers, with sectoral exclusions of weapon and tobacco industries.

BlackRock’s Carbon Transition Readiness ETF is packed with oil and gas companies including Exxon and Chevron, despite claiming to “tilt toward companies that are better positioned to benefit from the transition to a low-carbon economy”, according to research from US non-profit As You Sow. The fund broke trading records on its debut, attracting $1.5bn in investment. As You Sow CEO, Andrew Behar, said: “If this ETF is really named ‘Carbon Transition Readiness’ then I have to ask what we are transitioning to and what we are getting ready for”.

The New York State Pension Fund has announced a $400m investment in two funds as part of its sustainability strategy. It has invested $300m in the Copenhagen Infrastructure Partners IV fund, which invests in European renewable assets and infrastructure, and $100m in the Excelsior Renewable Energy Investment Fund I, which invests in North American renewable power assets. 

Mirova has taken a minority stake in solar producer and storage operator Corsica Sole, making the first investment by its Energy Transition V fund. Mirova also said that it was setting up a bond financing programme for a total investment that could reach €80m.

Tikehau Capital has launched a North America private equity decarbonisation fund, with $300m of capital already committed in partnership with Total. The fund will invest in “leading companies in the field of energy transition”.

Global climate-themed fund assets tripled in one year, with $177bn in assets at the end of December 2020, according to research from Morningstar. 400 funds had climate change as their key theme, of which 282 were located in Europe, accounting for $136bn in assets. The next largest market was the US, with 42 funds and $21bn in assets, and China, accounting for $17.1bn in assets. While clean energy and tech focused funds accounted for a third of assets, they also carried the highest carbon risk, as many also invest in transitioning companies in carbon-intensive sectors.

Hargreaves Lansdown has added two further responsible investment funds to its ‘wealth shortlist’, a list of funds chosen by its analysts which it thinks have high performance potential. The Trojan Ethical Income and James Henderson UK Responsible Income funds join three other responsible investment funds on the 71-strong list. According to figures from Hargreaves Lansdown, inflows into responsible investment funds by its clients in 2020 were up 4,000% against 2016.

Invesco has launched what it claims is the first ETF for green buildings. The Invesco MSCI Green Building ETF will track the MSCI Global Green Building Index, and invest in real estate companies with high energy efficiency and that use environmentally friendly construction materials, as well as companies involved in design, construction, redevelopment or retrofitting of green-certified properties.

Eurazeo has launched a sustainable maritime infrastructure fund, aligned with Article 9 of the EU’s new Sustainable Finance Disclosure Regulation, aimed at funds with green objectives. The fund will invest in ships equipped with advanced environmental harm reduction technologies, harbour infrastructure and offshore renewable development assets, and has a target size of €300m. 

Via Asset Management has created carbon-neutral share classes for its Smart-Equity Europe fund. Under the new share classes, VIA will compensate for portfolio emissions through offsetting programmes as well as delivering benefits against a wider set of ESG criteria such as funding anti-poverty projects. Management fees will increase by 0.05% to compensate, and VIA will reduce its margin line by the same amount.