Friday Funds: Singapore Exchange to launch futures on Nikkei 225 Climate Change 1.5C Index

The latest developments in ESG-related funds: Euronext launches gender equality indices; Invesco revises investment methods to consider ESG.

The Singapore Exchange (SGX) is set to launch futures on the Nikkei 225 Climate Change 1.5C Target Index. The index, which was brought to market earlier this year, will need to meet the EU’s Paris Aligned Benchmark requirements to initially reduce the intensity of its parent index’s carbon emissions by 50 percent. An annual intensity reduction of 7 percent follows. The Tokyo-based benchmark is part of a suite of three PAB regional indices developed by Nikkei, Hong Kong’s Hang Seng Indexes and Wilshire.

Euronext has launched two indices based on workplace gender equality themes. The Euronext Equileap Gender Equality Eurozone 100 and Euronext Equileap Gender Equality France 40 indices offer exposure to companies with gender balance across leadership and workforce, equal compensation, gender-focused policies and transparency. Companies will be assessed by Equileap based on the UN Women’s Empowerment principles. The index will screen constituents for controversial activities and UN Global Compact non-compliance.

Invesco has revised its investment methodologies across five corporate bond and emerging market ETFs to factor in ESG considerations. These include investing in securities outside of the parent index based on ESG factors, applying exclusions to nuclear and sin stocks, and excluding securities without an MSCI ESG Rating or MSCI Impact Score, as well as those with an MSCI ESG Rating below BB. Shareholders were informed of the decision earlier in November.

Manulife has launched a forest climate fund targeting $500 million. The investment manager is seeking backing from investors to join its parent company, Toronto insurance and financial-services firm Manulife Financial Corp, to buy sustainably-managed forests. The fund will buy up and protect forests to generate carbon offsets. Manulife “reserves the option” to offset the portfolio emissions of its parent, it stated. Manulife is the latest manager to branch out into carbon markets. In November, Oak Hill Advisors paid $1.8 billion for 1.7 million acres of forests to harvest carbon offsets and last year, JPMorgan Asset Management bought timberland manager Campbell Global.

The FNG-seal – the quality standard for sustainable investment in German-speaking countries – has seen more than 300 funds apply for assessment this year. A total of 310 funds, ETFs and asset management companies applied, which is a 10 percent increase on last year. In August, it became mandatory to ask investors about their sustainability preferences. The FNG-seal has given sustainable funds credibility among growing concerns about greenwashing from investors.

Eurazeo has made the first close of its transition infrastructure fund on €210 million. The Article 9 fund will support the transition to a low-carbon economy through investment in transition infrastructure including the energy and digital transition, clean transport and circular economy. The European Investment Fund, backed by the InvestEU programme, made a cornerstone investment of €75 million.

Schroders has launched a UK Real Estate Impact Fund, which will look to deliver on social impact outcomes as well as address social inequality in deprived parts of the country. A spokesperson for Schroders said the fund will “seek to address social challenges faced by a range of beneficiaries, including low-income families, community groups, social enterprises and SMEs”. Each of the fund’s assets will have environmental targets aligned with Schroders’ net-zero 2050 plan.