Friday Funds: NYS allocates $1.3 billion to sustainable investment programme

The latest developments in ESG-related funds: Scottish Widows adds £1.4bn environmental fund suite; Schroders Capital launches first UK LTAF.

The New York State Common Retirement Fund has committed a further $1.3 billion to its sustainable investments and climate solutions programme. The allocation takes the public pension fund to less than $2 billion short of its 2019 goal to invest $20 billion in climate solutions within a decade. The $233 billion fund invested $1 billion in funds tracking the MSCI World ex-USA Climate Change Index, and last year committed $300 million to the Carval Clean Energy Fund II, a credit fund focusing on opportunities in North America and Europe.

Scottish Widows has launched a suite of environmental and climate investment funds to direct pension investment into companies that provide environmental solutions, including GHG emissions, food security, pollution prevention and biodiversity loss. The four strategies, which apply to £1.4 billion ($1.73 billion, €1.59 billion) worth of assets, are led by the Global Environmental Solutions Fund and were developed alongside Schroders. They will invest in companies that derive a minimum of 50 percent of their revenues from goods and services that facilitate sustainable solutions to climate change. Companies that direct at least 20 percent of capital expenditure to the circular economy are also eligible. The strategies will track the FTSE Emerging markets Paris-aligned index, the FTSE Developed world Paris-aligned index, and the FTSE All Share Climate Transition index.

Schroders Capital, the UK manager’s specialist private markets division, has launched a climate change long-term asset fund (LTAF) for UK pensions. Regulatory approval was given this month to launch the UK’s first LTAF. UK master trust Cushon will be the founding investor. The fund will look to support the net-zero transition by contributing positively to climate change and supporting the transition to net-zero economies through its investments. The strategy will aim to invest across four long-term themes including climate mitigation, climate adaption, biodiversity and natural capital, and social vulnerabilities.

Federated Hermes has launched a Sustainable Global Investment Grade Credit fund, with CCLA Investment Management as cornerstone investor. The Article 9 fund seeks to deliver a total return with a reduced environmental footprint compared with the benchmark, measured using carbon, water and waste footprint metrics. As well as using an exclusions framework, the fixed-income fund employs a high barrier to entry for names entering the portfolio using a scoring model and engagement expertise. It will be co-managed by senior portfolio managers Nachu Chockalingam and Orla Garvey.

IDB Invest, a member of the Inter-American Development Bank Group, has approved an anchor investment of up to 25 percent of capital commitments in the first private credit finance fund in the Latin America and Caribbean region. Managed by Darby International Capital, the DIC Latin American Fund IV is targeting $400 million. IDB is contributing 25 percent, with a cap of $50 million. The fund will finance solutions to underserved mid-market enterprises for climate investments to mitigate and adapt to climate change impacts across the regions, in line with several of the SDGs. It will also support companies’ sustainable growth, job creation and expand sales or operations on a regional basis.

Allianz Global Investors has made the first close of its Global Infrastructure and Energy Transition Debt Fund on €220 million, two months after launch. The Article 8 fund is the manager’s first of the kind and has a target of €750 million. It looks to invest across regions and infrastructure sectors that focus on the energy transition.

Thomas Schumann Capital has launched a Natural Resources Fund to acquire and monetise Arctic freshwater exploration rights. The Luxembourg private fund is looking to acquire freshwater exploration rights in Greenland and Alaska of more than 150 trillion litres for 20 years. It will look to monetise the assets through long-term water purchase agreements with corporates in drought-stricken regions, in alignment with SDG 6.