Responsible Funds, December 6: BlackRock, RIAA, Cornerstone, La Française, Circulate Capital, SSGA, Eurex, Nordea

The latest responsible funds news

BlackRock has reached a record $1bn first close for its third-vintage global renewables fund with commitments from over 35 institutional investors in North America, Europe and Asia. Global Renewable Power III fund (GRP III) seeks to invest across the spectrum of climate infrastructure assets, with a focus on renewable power generation, and energy storage and distribution. BlackRock manages a $5.5bn renewable power platform with $5.5bn that has invested in more than 250 wind and solar projects globally on behalf of 150 investors.

Australian superannuation funds that comprehensively engage in responsible investment are, on average, outperforming their peers over one, three and five-year time frames – according to the Responsible Investment Association Australasia’s new Responsible Investment Super Study 2019. The study, now in its third edition, shows the results of an annual survey of Australia’s 57 largest asset owners – accounting for A$1.75trn (€1trn) in assets.

Cornerstone Capital, the sustainable boutique founded by former UBS executive Erika Karp, has launched an impact fund. The Cornerstone Capital Access Impact Fund (CCIIX) is an all-cap, diversified equity fund that allocates assets among multiple managers, with each focusing on a particular impact theme. The fund is fossil fuel free, tobacco free, and does not invest in controversial weapons or small firearms for civilians. The fund is currently available to those who use BNY Mellon/Pershing as a custodian.

La Française Asset Management, the Paris-based group, has launched a target-dated bond fund with a low carbon focus. The La Française Carbon Impact 2026, which aims to invest in 120-200 companies that “show real ambition towards energy transition”, will use ESG screening and then thematic integration linking carbon analysis to financial analysis to construct its portfolio. The fund aims to have a weighted average of greenhouse gas emissions at least 50% lower than that of a comparable investment universe.

Investment boutique Circulate Capital has launched a $106m fund, which it says is the first dedicated to preventing plastic from entering the Asian oceans. The Singapore-based Circulate Capital Ocean Fund (CCOF), one of the ten largest ASEAN-based Venture Capital Funds in the market, is targeting its first investments by early 2020. 

Private equity giant KKR has launched a new platform intended to promote water quality in partnership with XPV Water Partners. The wastewater treatment platform has made its first acquisitions, of two nutrient management technology providers, with the aim of addressing nutrient contamination of water. The investment is part of KKR’s Global Impact strategy, which is focused on advancing the United Nations Sustainable Development Goals.

State Street Global Advisors (SSGA) has launched an exchange traded fund that screens the S&P 500 for ESG exclusions. The SPDR S&P 500 ESG Screened Ucits ETF will track the newly-launched S&P 500 ESG Exclusions II Index, which uses Sustainalytics data to exclude companies on ESG grounds. A fast exit feature also means companies flagged by ESG data provider RepRisk can be removed from the index within two business days. The fund has a total expense ratio of 0.10% per annum.

California pension giant CalPERS has fired 18 of its 22 equity managers, after allocation for traditional and emerging equity management was slashed from $33.6bn to $5.5bn, according to media reports citing fund documents. CIO magazine quoted an internal memo saying the move was necessary because of long-term underperformance, with CalPERS’ Chief Investment Officer Ben Meng putting a “renewed focus on performance and our ability to achieve our 7% assumed rate.” The memo notes that the move terminating emerging managers, who are often minority-owned or women-owned enterprises, “could receive media or legislative attention.”

Derivatives exchange Eurex will expand its ESG equity index-linked product suite during the first quarter of 2020. With the introduction of derivatives on sustainable versions of various regional and global benchmarks, Eurex said it would achieve “global coverage with its ESG offering”. It marks the next step in Eurex's ESG strategy, which kicked off in February 2019 with the introduction of the first European ESG derivatives product suite, a segment that has traded nearly half a million contracts so far this year.

Nordea has launched a range of Sustainable Balanced Funds that combine sustainable equities and fixed income. Sara Mella, Acting Head of Personal Banking, said the Nordic group expects “significant inflows” into the new offerings. The funds are available for the three most popular risk/return profiles: Moderate, Balanced and Growth and the weight between equities and fixed income instruments varies between the profiles.

UniCredit has helped close a €1bn ESG-linked revolving credit facility for longstanding client LANXESS, the Cologne-headquartered chemicals producer, acting as coordinators, sustainability and documentation agent, bookrunner and mandated lead arranger. The facility, which was oversubscribed and signed by a club of 12 banks, incorporates a sustainability-linked margin adjustment based on two KPIs: the company’s Scope 1 CO2 emissions; and a diversity target based on the percentage of women in management functions.