Friday Funds: NZ Super shifts €14.9bn to low-carbon indices

The latest developments in ESG-related funds: EIP raises €390m for climate tech fund, S&P launches new 'carbon budget’ index family.

The NZ Super Fund has shifted NZ$25 billion (€14.9 billion; $14.9 billion), around 40 percent of its overall investment portfolio, to Paris-aligned benchmarks based on MSCI emerging markets and MSCI world. In addition to further reducing the fund’s exposure to carbon emissions, they will also decrease the number of publicly listed companies the fund owns. NZ Super first lowered its exposure to carbon emissions and reserves in 2017 and is a signatory to the Paris Aligned Investment Initiative’s Net Zero Asset Owners Commitment.

Energy Impact Partners has raised €390 million for a European Climate Tech Fund, with commitments from Microsoft’s Climate Innovation Fund, the Abu Dhabi Investment Authority, EDP Pulse Ventures and Shell Ventures. It is aimed at investing in climate tech companies which are accelerating the net-zero transition. The fund will target growth and venture investments across Europe and seek “mission-driven companies” across the energy transition spectrum. It is structured to allow the firm to support entrepreneurs in their growth while also offering European companies access to market expansion and exit opportunities in the US, according to EIP.

S&P Dow Jones Indices and S&P Global Sustainable1 have launched a new family of climate-focused benchmarks. The S&P Net Zero 2050 Carbon Budget Indices are based on the S&P 500, S&P Global BMI, S&P Europe BMI, S&P Developed BMI and S&P Emerging BMI, using a methodology based on the most recent 2021 Intergovernmental Panel on Climate Change (IPCC) report. The indices will seek to decarbonise by 10 percent each year, but this will be adjusted according to their remaining carbon budget.

Invesco has launched a Wind Energy ETF and Hydrogen Economy ETF. The company says that both ETFs will offer investors targeted exposure to “two of the most important solutions” for achieving a net-zero carbon economy. They will track the WilderHill Wind Energy Index and WilderHill Hydrogen Economy Index through full physical replication. The constituents in both indices, around 50 in each, are equally weighted in “order to provide more meaningful exposure across the index rather than the high concentration in the largest names”.

Two sustainable trusts are listing on the London Stock Exchange. Sustainable Farmland Trust, which is seeking to raise £200 million, will mostly invest in a portfolio of US farmland assets held in the IFC Core Farmland Fund, an existing private fund managed by IFC’s management team.

Independent Living REIT, advised by Atrato Partners, is targeting £150 million to the support housing shortage in the UK. It is looking to address the lack of high-quality accommodation and will target specialised supported housing for those with mental health issues or physical disabilities, “extra care” primarily for older people, and homeless accommodation.