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Friday Funds: Sustainable investments triple market share in Germany

The latest developments in ESG-related funds: Qantas Super announces A$2bn sustainable mandate; Robeco launches quant SDG strategy

Responsibly managed investments tripled their market share in Germany in 2021, reaching 9.4 percent of the market, according to national sustainable investment industry body FNG. In its 2021 state of the market report for Germany, Austria and Switzerland [in German], FNG found that €2.2 trillion was invested with managers that integrate ESG into their investments, of which €501 billion is in dedicated sustainable funds classified as either Article 8 or Article 9 under SFDR. The most common exclusions for sustainable funds were human rights issues, corruption and labour rights issues, with nuclear energy in eighth place. Much of the growth in Germany was due to increased enthusiasm from retail investors, FNG said. Retail investment in sustainable products jumped by 230 percent last year.

In Austria, sustainable funds accounted for a third of all assets under management by the end of December. Investment in Article 8 and 9 funds grew by 62 percent year-on-year to a record €63 billion, again driven in large part by rising retail enthusiasm. Growth was more muted in Switzerland, where assets in sustainable funds or mandates or sustainable internally managed investments by asset owners increased by 30 percent last year to  SFr2.0 trillion ($2.0 trillion; €1.9 trillion).

Qantas airline’s superannuation fund has announced a A$2 billion ($1.4 billion; €1.3 billion) allocation to sustainable equities, to be split equally between Goldman Sachs Asset Management and Calvert. Qantas Super declined to provide more information on the mandate, which it said would reduce carbon intensity across its Australian and global equity portfolios. The mandate represents just under a quarter of the fund’s assets.

Robeco has launched a new quantitative credit strategy focusing on the SDGs and climate. The fund, classified as Article 9 under SFDR, will invest in companies which make a “measurable positive contribution” to the SDGs under Robeco’s framework, as well as reducing ESG risk, water use and waste generation. It will aim to outperform the Solactive Paris-Aligned Global Corporate Index by 50 basis points over a full economic cycle.

Impax Asset Management saw assets under management grow by 26.7 percent to £38 billion ($47 billion; €45 billion) over the 12 months to the end of March, according to its interim results. The firm increased its revenue by 46 percent and operating profits by 64 percent.

Neuberger Berman has said its global high yield fund will start “engaging systematically” with issuers on topics relating to the SDGs. The rebranded Neuberger Berman Global High Yield SDG Engagement Fund will be only be available to UBS clients in Switzerland and a number of other countries for six months, after which it will be opened to the wider market.

M&G has launched a new sustainable corporate bond fund, investing in ESG-themed bonds or companies which act as enablers or solution providers addressing sustainability challenges. The fund, which can invest across GSS and sustainability-linked bonds, aims for an improved climate profile and “ESG quality uplift” against the global universe.

The Downing Renewables and Infrastructure Trust, an LSE-traded investment trust investing in renewables across Northern Europe, is looking to raise £50 million from the issue of new shares. The Article 9 fund currently owns £253 million of assets including 19 hydropower plants and 18 solar projects with a generation capacity of 179MW.