Responsible Funds, February 15: ESG funds see record inflows — Morningstar

The latest responsible funds developments

ESG funds saw record inflows for the third consecutive year in 2018, taking $5.5bn while mutual funds overall performed negatively, according to a new report authored by Morningstar’s Global Head of Sustainability Research, Jon Hale. The Morningstar 2018 Sustainable Funds US Landscape Report, which looked at open-ended and exchange-traded sustainable funds for US investors, found that sustainable funds outperformed in 2018, with 63% finishing in the top half of their respective categories.
The Nanuk New World Fund, an equity fund investing in companies involved in environmental sustainability, returned 4.9% in January, outperforming the MSCI ACWI, which returned 4.2%.

The Danish SDG Investment Fund, which supports the UN Sustainable Development Goals through commercial investments in developing countries, has obtained capital commitments from three additional private investors in a second and final closing. This increases the total commitment just under DKK5bn (€670m). The three new investors are SEB Life & Pension, Secure SDG Fund and Chr. Augustinus Fabrikker Akts. The fund was launched with an agreement with PKA, PensionDanmark, PFA, ATP, JØP/DIP, PenSam and Navest. In January, the fund announced investments in African blueberry producer Mbiza and a 19.1MW Ukrainian solar park.

Spain’s CaixaBank is launching a €30m credit line through the EIB’s climate financing programme, to promote projects helping to combat climate change. The eco-loans target individuals – a first for CaixaBank – as well as the self-employed, SMEs, mid-caps and public sector bodies. The credit limit has been set at €12.5m for SMEs and individuals, and a maximum of €25m for mid-caps, with a maturity period of 2-8 years.

CaixaBank also signed a €35m operation with the European Investment Bank to finance the Goya wind energy project, contributing to the construction of nine wind farms in Aragón with a total installed capacity of 303 MW. The EIB is helping to finance this project with a €50m loan to Spanish firm Forestalia Renovables.Finland’s Ilmarinen says that at the end of 2018, the carbon intensity of its direct listed equity portfolio was 265 tonnes of carbon dioxide equivalents per million euros of net sales. “This was 31% less than the benchmark index,” it said in 2018 report on operations, adding that the carbon footprint of the direct listed corporate bond portfolio was 316 tonnes of carbon dioxide equivalents per million euros of net sales.

The Pengana WHEB Sustainable Impact Fund has sold out of its position in gym equipment maker Nautilus, which was part of its Wellbeing theme, after revenues failed to meet market expectations and the share price fell sharply. “We like Nautilus’ exposure to the trend towards healthier lifestyles, but have underappreciated the importance of product cycles in the fitness industry. As a result, we have lost our conviction on the company’s long-term competitive position and sold out our position,” it said in a new monthly report.

CalSTRS has reportedly provided $250m in anchor funding to Impactive Capital, an ESG hedge fund founded by ex-Blue Harbour managers Lauren Taylor Wolfe and Christian Asmar. The activist fund expects to start trading next month. CalSTRS will invest in Impactive for six years, around three-times longer than the average hedge fund industry investment.

KKR has acquired a 60% stake in environmental services provider Ramky Enviro Engineers Limited (REEL) for around $510m. The investment, made through the KKR Asian Fund III, is part of KKR’s Global Impact strategy, which focuses on investing in businesses with measurable positive social or environmental impact in line with the UN’s SDGs. The acquisition was made via a combination of primary and secondary investments.
Finnish state-backed VC fund Tesi will reportedly invest €75m in a new responsible investment strategy using both direct investments and fund stakes. The investments will include €50m in Finnish companies active in the circular economy.
PG Impact Investments has closed its first social impact fund, exceeding its $150m target to raise $210m. The fund, PG Impact Investments I, invests in financial inclusion, affordable housing, energy access, agriculture/food, health and education, and is already committed to 19 investments in Africa, Latin America and Asia.