Friday Funds: NY State pension fund commits $2bn to climate transition index

The latest developments in ESG-related funds

New York State Pension Fund has announced it will allocate $2bn to a FTSE Russell climate transition index. The index tracks large cap US companies, adjusting weighting or excluding companies based on their ‘transition readiness’, calculated using fossil fuel reserves, emissions, green revenues, management quality and carbon performance. 

Vanguard has launched three actively managed sustainable equity and bond funds and a sustainable equity fund. All four funds will be managed by Wellington Management, and contain standard exclusions, as well as excluding companies with poor governance practices and taking ESG characteristics into account when selecting investments.  

UK pension pool London CIV has launched a Paris-aligned equity fund with £520m seed investment from two of its clients. The fund, managed by State Street, tracks an S&P Paris-aligned index covering large and mid-cap companies in developed markets countries excluding Korea. Companies are selected and weighted to be in line with a 1.5C scenario. 

Invesco has launched four ESG ETFs offering exposure to global, Japan, Europe and US equities. The ETFs will track 1.5C-aligned indices from MSCI which aim to reduce exposure to transition and physical risk, as well as maximising the weight of companies “with the highest exposure to climate transition opportunities”. 

KGAL’s ESPF5 renewable energy fund has raised €260m of equity at its first close, more than half its total target. KGAL said it expected to invest almost 20% of capital committed to the fund – which invests in European renewables projects – before the end of the year. The first fund investment is in a late-stage solar farm in Sicily with a planned capacity of 100MW. 

The ThomasLloyd Energy Impact Trust has raised $150m from its IPO on the London Stock Exchange, falling short of its previously reported target of $340m. The trust, which was seeded with $25m by the UK government, will invest in sustainable infrastructure in emerging markets in Asia.