Responsible Funds, Dec. 11: Mirova teams up with UN on land degradation mitigation fund

The round-up of the latest responsible funds news

The United Nations Convention to Combat Desertification (UNCCD), through its operational arm – the Global Mechanism – together with Mirova, the responsible investment arm of France’s Natixis, have agreed to structure the first global fund dedicated to achieving Land Degradation Neutrality – the LDN Fund. French state investor the Caisse des Depôts is supporting the initiative and the LDN Fund will be launched in December 2016.

Australian super fund LGS Super’s high carbon negative screen has reportedly led to a 16 basis point positive impact on the A$8.9bn (€4bn) fund for the year. Investment Magazine quoted LGS Super’s Head of Sustainability Bill Hartnett as saying it was a “very beneficial move in terms of decent returns” with “minimal” extra risk. The screen was set up 12 months ago, the report said, to cut the fund’s exposure to firms with carbon operations surpassing 33%.

Italian-US asset management joint venture UBI Pramerica Sgr has launched a new ethical multi-asset fund. The Luxembourg-domiciled offering is called UBI SICAV Social 4 Future and will invest according to international ESG standards. The company also said 4% of both launch and management fees, across the life of the fund, will be donated to charities such as UNICEF. UBI Pramerica is a joint venture between Italy’s UBI Banca and US US-based Pramerica Financial, part of US giant Prudential. Home page

The United Nations Office for Project Services (UNOPS), the UN’s operational arm, is reportedly readying a $1bn impact infrastructure fund targeting institutional capital. UNOPS social investments specialist Meredith Sanna was quoted by Infrastructure Investor (in an article posted to the UNOPS website) as saying the fund would focus on environmental and social infrastructure projects.

Microfinance and social investment specialist Oikocredit has been selected by Canada’s Vancity credit union to invest a portion of the proceeds of the credit union’s member Shared World fixed term deposits into Oikocredit International Share Foundation (OISF). The funds will be used to support Oikocredit’s global loans and investments with nearly 800 partner organizations in more than 60 countries in the developing world.

FNG, the sustainable investment forum (SIF) for Germany, has announced that 34 sustainable funds distributed in the market have qualified for certification as such. Four were rejected in the certification process, which was conducted by Novethic, the Paris-based sustainability think-tank. Of the 34 sustainable funds, five products from Erste Asset Management – the most of any fund company – were certified. Erste AM was followed by Deka of Germany (4); Triodos of the Netherlands (also 4); and C-Quadrat, a peer of Erste AM’s in Austria (3). FNG certification means that the fund is not invested in nuclear power or weapons and targets companies that uphold the principles of the UN’s Global Compact.A project to create the world’s first climate rating for investment funds involving the CDP, South Pole Group, the UK’s University of Reading and Climate-KIC, the European Union’s main climate innovation initiative, was launched at COP21 in Paris this week. The goal of the tool, dubbed CLIMPAX, is to rate all investment funds according to their climate impact and the project is looking for interested parties to get involved. At the launch, French and German officials Anne Guillou and Franzjosef Schafhausen spoke about their countries’ initiatives in engaging investors with tackling climate risk. A series of roundtables for beta testing of CLIMPAX is planned for January 2016. Link

Allianz Global Investors (AGI) of Germany has launched a fund that targets green bonds issued mainly from European corporates. In a statement, AGI said fund managers Hervé Dejonghe and Julien Bras would select companies on the basis of planned green project finance as well as performance against other ESG (environmental, social and governance) criteria. Along with the green corporate bonds, the Luxembourg-based fund would invest in green sovereign debt or those issued by other government agencies. According to AGI, since their start in 2007, green bonds had developed into a mainstream asset class, with a market worth more than $90bn. Link to AGI statement (German)

The Irish government has ratified the European long-term investment fund (ELTIF) regulations – designed to promote ‘patient capital’ – according to reports. Ireland’s Minister for Finance Michael Noonan has confirmed the country is now ready to accept ELTIF applications, European Pensions reported.

Japanese insurer Dai-ichi Life has acquired
$100m (€91m) worth of microfinance bonds issued by the European Bank for Reconstruction and Development (EBRD). According to Dai-ichi, the proceeds will be used to support the EBRD’s loan programme to micro and small enterprises (MSEs) based in eastern European and central Asia. “It is very meaningful to us to become the first institutional investor to provide financial support to EBRD’s Microfinance Bond Program through these bonds,” said Kazuyuki Shigemoto, General Manager at Dai-ichi Life. The bond was underwritten by Crédit Agricole’s investment banking division.

US wood pellet producer Enviva is setting up a fund to protect forests in northeast North Carolina and southeast Virginia. The Enviva Forest Conservation Fund is a $5m, 10-year program that will be administered by the U.S. Endowment for Forestry and Communities. Announcement

The Swedish government has reportedly cancelled its reforms of the country’s AP buffer fund system after widespread resistance from opposition parties and the funds themselves. IPE quoted a spokeswoman for Financial Markets Minister Per Bolund as confirming that the closure of two of the AP funds had been “cancelled”. The move would have resulted in the closure of AP6 and one other fund.