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Responsible Funds, July 19: BlackRock, BNY Mellon, Legal & General, Actis, Christian Super, Franklin Templeton, Banca IMI

The latest responsible funds developments

Swansea’s £2.1bn (€2.3bn) local authority pension scheme is to shift a quarter of its assets to a low carbon fund run by BlackRock in a bid to reduce its carbon footprint by 50% by 2022. The move will see the pension fund of the Welsh city pull £500m from a conventional index fund, also run by BlackRock, and invest it in a passive low carbon strategy. The pension scheme has around 9% less invested in major carbon emitters than the market average, according to MSCI analysis of its equity portfolio.

BlackRock has made another expansion into the ESG fixed income space with the launch of a new high-yield strategy, according to media reports. The BlackRock Global High Yield ESG and Credit Screened Fund will be managed by Riyadh Ali, who currently oversees the BlackRock Defensive Yield fund, alongside Lauritz Ringdal.

BlackRock has launched two low carbon global equity ESG funds “in response to growing appetite among UK pension schemes”. The BlackRock ACS World Multifactor ESG Equity Tracker Fund aims to improve on the MSCI World’s ESG score by 20% and reduce carbon exposure by 50%, while increasing exposure to four “return-enhancing equity factors”. The BlackRock ACS World ESG Equity Tracker Fund, meanwhile, aims to improve on the MSCI World’s ESG score and reduce carbon exposure by at least 50%, while exhibiting risk similar risk and return characteristics. Both are Authorised Contractual Scheme (ACS) funds.

A $130m impact investment designed to protect the Appalachian Mountains in North America has been backed by the Doris Duke Charitable Foundations. Other investors in the private equity deal, designed by NatureVest, include family offices, foundations and high-net worth individuals. Its aims include reforesting formerly-mined lands, biodiversity protection and direct community engagement.

Legal & General Investment Management (LGIM) has added three thematic ETFs to its disruptive technology range, taking innovation in artificial intelligence, healthcare and clean water as their focus. Listed on the London stock exchange, the L&G Artificial Intelligence Ucits ETF, the L&G Healthcare Breakthrough Ucits ETF and the L&G Clean Water Ucits ETF will rely on indices with ROBO Global and Global Water Intelligence. According to LGIM, the ETFs are designed to minimise overlap within investors’ existing portfolios.

Facebook has been dropped from the S&P 500 ESG Index, along with Wells Fargo, Oracle, IBM and others, upon the index’s annual rebalancing. A day before its exclusion, Facebook had a weight of 2.5% in the index, according to S&P’s Indexology Blog. The social media giant was excluded after privacy concerns, including a lack of transparency around the collection and storage of user information, caused the company to fall behind its peers in terms of ESG performance.

Index firm STOXX has licensed a low carbon version of the EURO STOXX 50 Index to Banca IMI, the investment bank of the Intesa Sanpaolo Group. The EURO iSTOXX 50 Low Carbon NR Decrement 3.75% Index, which Banca IMI will use to underlie structured products, uses CDP and ISS ESG data to overweight stocks with lower carbon intensity and underweights those that are higher.BNY Mellon Investment Management has launched the BNY Mellon Sustainable Global Equity Income Fund. It will be managed by its Newton Investment Management arm, specifically Nick Clay, leader of equity income, and Rob Stewart, head of responsible and charity investment.

UK-based emerging markets investor Actis is to take over two funds previously run by the now defunct Abraaj Group. Actis said on Monday it had acquired the rights to manage global buyout fund Abraaj Private Equity Fund IV and Abraaj Africa Fund III, a fund for investment in sub-Saharan Africa.

The Danish Red Cross plans to launch a $10-15m catastrophe bond supporting people at risk of volcanic activity. The privately placed bond is currently backed by the Natural Disaster Fund, which has been granted first right to subscribe up to $5m.

ISS ESG, the responsible investment arm of Institutional Shareholder Services, has launched an index series tracking companies with the most “ambitious, absolute” ESG performances. The Solactive ISS ESG Prime Index Series uses ISS ratings to select “Prime” companies which achieve or exceed defined sector-specific ESG performance requirements, based on risk exposure and impact. The series launches with five indices covering different market segments: Global, Developed Markets, Emerging Markets, US, and Europe.

The European Investment Bank and Finnish pension insurers Ilmarinen and Varma were among investors in the fifth renewables fund from Helsinki-based wind and solar fund manager Taaleri Energia, which reached first close at €220m. The Taaleri SolarWind II Fund, which will invest in wind and solar assets, has a target size of €300m and a hard cap of €400m.

Australia: The A$1.5bn (€941m) Christian Super fund has launched two ethical options for its members. The Ethical Growth Plus has an 84% allocation to growth assets and 16% to defensive assets, while the Ethical Index Shares invests in Australian and global shares.

French boutique fund house Meeschaert Asset Management has reportedly launched two new funds focused on the sustainable transition. The MAM Transition Durable Obligations and the MAM Transition Durable Actions, which respectively invest in bonds and equities, select companies best-positioned for a 2°C scenario, carbon-intensive companies “in transformation towards” a low-carbon economy, and companies providing solutions.

Franklin Templeton’s Franklin Green Target Income 2024 Fund has received an ESG label from the Luxembourg Finance Labelling Agency (LuxFLAG). The label requires applicant funds to screen 100% of their portfolio according LuxFLAG-certified ESG strategies and standards.

Future Super, Australia’s first fossil free superannuation fund, is reportedly investing an initial A$200,000 in peer-to-peer lender RateSetter for it to provide loans for clean energy projects, including rooftop solar and battery storage systems. It is thought to be the first time a retail super fund has invested in peer-to-peer clean tech lending.