Responsible Funds, April 27: ‘World’s first regulated green investment fund product’ out for consultation

The latest ESG fund launches and market news, bite-sized.

Guernsey – a self-governing island off the coast of the UK – is to launch what it claims is “the world’s first regulated green investment fund product”. The Guernsey Financial Services Commission, its regulator, has published a set of draft green fund rules for consultation. They will allow fund managers to “apply for a green label for their funds if they can demonstrate compliance with defined green rules”. There will be different levels of certification available. “This move is part of our strategy to be the leading jurisdiction for green investment, offering the most comprehensive product, and we believe this is a world-first,” said Dr Andy Sloan, Acting Director of Strategy at the industry promotional agency Guernsey Finance. He added that the label would “assure investors that their investments are being used for environmental purposes which are established and monitored against a reliable set of standards”. 
The London Collective Investment Vehicle (LCIV) has launched the LCIV RBC Sustainable Equity Fund, the latest in a range of funds available to London local authorities (LLAs) through the pooling vehicle. The fund will be managed by RBC Global Asset Management (UK) Ltd (RBC GAM). With £66m in the fund, the London Borough of Merton Pension Scheme will be the fund’s seed investor ahead of a larger transition of assets into the LCIV. Another LLA is also set to invest £180m. LCIV has a range of fixed-income strategies, including global bonds and private debt, in the pipeline, with the first – a multi asset credit fund – scheduled to be seeded in June.
NN Investment Partners (NN IP), the Dutch sustainable investment house, has raised $250m for its NN-FMO Emerging Markets Loan fund – a partnership with Dutch development bank FMO. Swedish pension giant Alecta, one of the backers, told RI it committed $100m to the fund for its first close, and a further $100m as part of its second fundraising round, “subject to conditions”. The fund invests in corporate loans in emerging markets, focusing on sustainable development projects.
NNIP also signed a Memorandum of Understanding with one of China’s largest asset managers, China Asset Management Co., Ltd. (ChinaAMC), to act as an an advisor to integrate ESG factors into the latter’s investment processes. In return, the CEO of ChinaAMC said that the partnership is hoped to “increase the international institutions’ understanding of the Chinese capital markets” and provide more opportunities to participate in China’s development. Through the MoU, both companies expect to collaborate significantly on OBOR (One Belt One Road) opportunities.
The Australian government this week closed its call for applications for trustees of a new impact investment fund. The selected trustee for the Emerging Markets Impact Investment Fund (EMIIF) will enter into an Investment Management Agreement with an Investment Manager, still to be selected. Australia’s Department of Foreign Affairs and Trade (DFAT) is planning for the program to commence by June 2018.
The University of California will gradually reduce fossil fuels investments, according to UC Office of the President Chief Investment Officer Jagdeep Singh Bachher. During a speech the UC Regents Investments Subcommittee meeting in March, Baccher revealed that the UC is not making any new investments in oil and gas assets, additionally existing holdings will be reduced in the long-term due to financial risks for the UC General Endowment Pool and the UC Retirement Plan. A year ago, the UC divested $150m from fossil fuels as a result of a campaign by Fossil Free California.BNP Paribas has launched two new ETFs providing exposure to European and Japanese equities with strong ESG characteristics. The BNP Paribas Easy MSCI Europe SRI UCITS ETF (ZSRI GR) tracks the MSCI Europe SRI Index, which is constructed by applying a combination of values-based exclusions (such as nuclear power, tobacco, and military weapons) and a ‘best-in-class’ selection process to companies that make up the MSCI Europe Index. The BNP Paribas Easy MSCI Japan SRI UCITS ETF (JSRI GR) tracks the MSCI Japan SRI Index. Both funds are available to trade on Xetra and Börse Frankfurt.
The International Fund for Agricultural Development (IFAD), a UN agency, and Ant Financial Services Group, a provider of inclusive digital financial services, has signed a Joint Declaration of Intent to explore the promotion of economic development in rural areas and the reduction of rural poverty in China and other developing countries. Areas of proposed collaborations include using e-commerce platforms to improve market access for rural producers and value-chain financing for agribusinesses.The
The Sustainability | Finance | Real Economies fund, also known as the SFRE Fund (pronounced Sapphire), has invested over £6m (€6.9m) in Unity Trust Bank (Unity), a values-based bank located in Birmingham, UK. It is the fund’s second investment in a financial institution in the developed markets since its launch by the Global Alliance for Banking on Values in March 2015. A business bank that lends to commercial firms and organisations who aim to maximise positive social impact as well as profit, Unity has attracted over £11m (€12.6m) of new investment from existing shareholders and SFRE since the year end.
Foresight Group, a UK Venture Capital Trust, has announced its acquisition of renewable energy manager, Belltown Power Limited’s 111mW wind and solar portfolio. The UK-based portfolio, which has been operating between one and three years, is made up of four onshore wind projects (83MW) and five ground mounted solar PV projects (53.3MW). Belltown currently provides operational management and will continue to act as asset manager for all the assets post acquisition. This is Foresight’s first significant acquisition of the year and they are currently monitoring a pipeline of other wind opportunities for deployment within the next 6-12 months.
The Swiss Association for Quality and Management Systems (SQS), the not-for-profit organisation, has launched the first assurance standard on the quality of responsible investment (RI) processes at fund managers. The new standard, called Sustainable Investing Management System (SIMS), has been developed based on the ISO 9001 standard, the assurance standard for management systems. SQS partnered with Contrast Capital, a Swiss advisory company, to produce the standard, which focuses on the integration of ESG issues into investment processes. It aims to increase reliability and confidence for buyers, especially asset owners looking for asset managers with RI capabilities. Measurement yardsticks against the standard includes focus on customers, commitment from top management, effective planning and resource allocation and a consistent investor process on RI practices. The ISO 9001 standard is based on the idea of continuous improvement. According to industry data collected through the UNPRI 2017 Transparency Reports, less than 5% of PRI signatories currently conduct internal or third-party assurance of their RI processes.