Responsible Funds, April 29: BlackRock, CalPERS, FTSE Russell, STOXX, BMO Global Asset Management

The latest responsible funds news

Funds giant BlackRock has expanded its suite of socially responsible exchange treaded funds (ETFs) with the launch of the iShares Sustainable MSCI Global Impact ETF (MPCT). It aims to help investors use their investment portfolios to target companies that enable positive social and environmental change. The new offering seeks to track the investment results of the MSCI ACWI Sustainable Impact Index, a new index constructed by MSCI, which is comprised of companies that derive a majority of their revenue from products and services that address at least one of the world’s major social and environmental challenges, as identified by the United Nations Sustainable Development Goals. Some of the impact themes targeted in this index include energy efficiency, sustainable water, sanitation, nutrition, and education. Announcement

Diverse corporate boards and companies that embrace diversity lead to better financial performance, according to data presented to the California Public Employees’ Retirement System’s (CalPERS) Investment Committee. It said that globally, companies with one or more women on the board have seen an excess share price Calculate Compound Annual Growth (CAGR) of 3.4% over the past 11 years. Companies with male-only boards have seen share prices lose 1.2% on average per annum over the same period based on analysis by Credit Suisse. In addition, companies that support lesbian, gay, bisexual, and transgender (LGBT) rights have seen average returns 10% or higher. The report, titled ‘Diversity and Inclusion: Evidence on Corporate Performance’, was prepared by Dr. Akosua Barthwell Evans of The Barthwell Group and Julia Dawson of Credit Suisse.

Swiss asset manager re:cap says its Luxembourg-based institutional fund targeting wind energy has taken in €125m in assets from European investors, including pension funds and banks. Including debt finance for the sake of leverage, re:cap says its ‘FP Lux Investments SICAV’ has reached a volume of €500m. Commenting on the inflows, re:cap Managing Director Thomas Seibel said they reflected that onshore wind was an attractive asset class in this era of persistently low bond yields. FP Lux Investments aims to provide returns of 6% pro annum, re:cap said, adding that another closing for the fund was planned later this year.

BMO Global Asset Management has added environmental, social and governance (ESG) screening to its BMO Responsible Global Emerging Markets Equity Fund, according to reports. Managed by BMO GAM’s emerging markets manager, LGM Investments, it will complement the firm’s global emerging market equities suite of funds range, said International Adviser.

Billionaire investor Jeremy Grantham has said his foundation is aiming for a 40% allocation to venture capital tackling climate change, according to Institutional Investor. The Grantham Foundation for the Protection of the Environment launched in 1997 to concentrate on climate change and agriculture.Index firm FTSE Russell has launched a new index that reduces exposure within the index to companies associated with fossil fuels while also increasing exposure within the index to companies engaged in the transition to a green economy. To gain this exposure, the FTSE Divest-Invest Developed 200 Index incorporates data captured by FTSE Russell’s innovative new green revenue data model, called LCE, which is set to launch publicly in the coming months. BNP Paribas has licensed the new index to create swaps and structured products.

STOXX, the Zurich-based index provider, has launched a third sustainable equity index together with SD-M GmbH, a German investment consultancy. The third index is called the ‘iSTOXX Europe 600 SD-KPI.’ Instead of excluding stocks, it starts with all constituents of the STOXX Europe 600, but underweights or overweights them according to sustainability metrics, or so-called KPIs [key performance indicators], developed by SD-M. “In this way, we can demonstrate how true integration of ESG factors is done,” said Axel Hesse, SD-M’s Managing Director. The two other indices launched by STOXX and SD-M in 2013 are the ‘EURO iSTOXX 50 SD-KPI’ and the ‘iSTOXX Europe 50 SD-KPI.’ Fact sheet

The Nature Conservancy Australia has launched the Australian Balanced Water Fund, the first impact investment-driven solution to use water markets to balance the water needs of farmers, communities and nature. The A$27m (€17.9m) offering was developed by the Conservancy’s Global Water program, its Australian division along with the Conservancy’s local partner the Murray Darling Wetlands Working Group (MDWWG) and NatureVest, the Conservancy’s impact investment unit which was established in 2014 with founding support from JPMorgan Chase & Co. Under the management of Kilter Rural, an Australian based asset management firm, the Fund will work proactively with farmers to acquire and hold a portfolio of permanent water rights.

The shareholder proposal on climate change reporting filed by NEI Investments at Suncor Energy was approved with 98.18% of shares represented at the Canadian oil and gas firm’s annual meeting in Calgary on April 28 voting in favour (see RI article by NEI’s Jamie Bonham). Suncor, Canada’s biggest energy company and the largest oil sands operator in the world, said another proposal calling for annual disclosure of lobbying-related matters was not approved with 60% of shares voting against. Link

Philippe Desfossés, chief executive of ERAFP, France’s €24bn pension scheme for civil servants, has been quoted by the Financial Times as saying that many European pension funds “will implode” in the next few years if the European Central Bank’s low interest rate policy continues. He was quoted as saying the ECB’s unconventional monetary policy is “weighing heavily on the pension fund industry” – something he reckons has been overlooked as policymakers have been distracted by the challenges facing banks and insurers.