Responsible Funds, Aug. 4: NZ’s Kiwi Wealth exits weapons, tobacco and whaling companies

The latest responsible funds news.

Kiwi Wealth, a provider of KiwiSaver funds – New Zealand’s voluntary, work-based savings initiative – has said it will exit investments in weapons, tobacco and whaling companies as part of a new responsible investment strategy. It comes a year after Radio NZ and the Herald newspaper highlighted controversial investments made by KiwiSaver providers. Kiwi Wealth, which has NZ$3bn (€1.8bn) in assets and which is a sister company to Kiwibank, said it had designed a new fund built and directed by its in-house investment team.

Staying in New Zealand, Mercer has announced that it is divesting its funds in the country from tobacco. After consultation with its Responsible Investment team, the firm reportedly instructed its managers to divest from companies manufacturing tobacco products in June – this process is expected to be completed in the next few months.

Canada’s BMO Global Asset Management has reportedly launched a smaller companies fund as part of its emerging markets offering. Managed jointly by Portfolio Managers, Irina Hunter and Claire Franklin, the fund aims to deliver long-term capital growth by investing in smaller companies either based in, or deriving significant income and profit from, emerging market countries. The Ireland domiciled fund will be available to both institutional and retail investors.

Hampshire College – touted as the first US academic institution to divest fossil fuels – has reported better five-year investment returns (6.4%) than the average return of the more than 800 colleges tracked by both NACUBO Commonfund Study (5.4%) and Bloomberg Endowment Index (4.5%). The college has published an ESG Investment Policy to manage its investments using positive screens since 2011.

Listed wind farm fund Greencoat UK Wind (UKW) has announced that it will make a further £38.3m investment in Scotland’s Clyde Windfarm – with an option to buy a further 8.4% (£114.2m) between 1 April 2018 and 30 June 2018. The acquisition, which is expected to complete in late August 2017, will be funded by UKW’s revolving credit facility.
GLIL Corporate Holdings Limited, a local authority pension funds infrastructure investment vehicle, also increased its investment in the windfarm by £29.5m and similarly has the option to increase its investment later by 6.5% (£88m).

Glanbia MilkFlex Fund has won Finance Dublin’s ‘Financial Services Most Innovative Deal of the Year’. The fund, a collaboration between Rabobank, the Ireland Strategic Investment Fund, Finance Ireland and Glanbia Co-Operative Society, was the first of its kind to offer Irish farmers access to finance through non-traditional lending structures. By including inbuilt ‘flex’ triggers that adjust repayment terms in line with movements in the milk price the fund aimed to help shelter Glanbia milk suppliers in Ireland from the impact of dairy market price volatility.Baillie Gifford, the Edinburgh based investment management partnership, has launched a new fund – seeded with £5m of its own capital – designed to “contribute to a more sustainable world for future generations”. The Positive Change Fund, which will invest in companies that keep sustainability at the core of their business, will be managed by Investment Manager, Lee Qian and aims to outperform the MSCI ACWI by 2% annually.

Impax Environmental Markets, the environmental trust managed by Impax Asset Management, the £6.7bn green specialist, says it has out-performed its global comparator index, the MSCI All Country World Index (ACWI), by some 2% over the first six months of 2017. Net asset value (NAV) total return per share rose 9.3% and net assets ended the period at £475m.

Net inflows into US ESG funds (Jan – Jun 2017) has reportedly already surpassed the year totals of 2014 and 2015 – despite the election of Donald Trump – and are on course to surpass the 2016 total of $4.8bn, according to Morningstar’s Director of Sustainability Research, Jon Hale. He also said that 45% of sustainable US large-cap blend funds outperformed the S&P 500 during the first half of 2017, compared with only 28% of large-cap blend funds overall. And amongst the 17 funds focused on renewable energy, water, and clean tech, 14 have outpaced the S&P 500 so far this year, with a dozen posting double-digit returns.

The European Supervisory Authorities (The European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority) has advised the European Commission to set minimum requirements for manufacturers of packaged retail and insurance-based investment products with environmental or social objectives. It advocates that such requirements are needed to ensure the products offered meet the retail investors’ needs.

US based online impact investing platform OpenInvest has launched a new investing category that aims to end forced labour and human trafficking in corporate supply chains. Relying on data and analysis provided by US non-profit JUST Capital, 20 S&P 500 listed companies were identified as having demonstrated the highest commitment to fighting forced labour in supply chains, including tech giants: Microsoft, Apple, and Intel.

Germany’s European Energy Exchange has announced its partnership with US financial markets ‘incubator’ IncubEx to develop and expand its global environmental and commodity markets. The nascent partnership aims to eventually create a global trading network but will initially focus on developing the European and US markets before expanding out.