Responsible Funds, June 22: LGIM, La Banque Postale AM, KGAL, Hermes Investment Management, Deutsche Bank

The latest responsible funds news.

Legal & General Investment Management, one of the UK’s largest investment managers, has launched a new fund for defined contribution (DC) schemes seeking an ESG option. The Future World Multi-Asset Fund – an addition to the firm’s pioneering Future World Fund range – will incorporate ESG considerations using “tilts” to the underlying standard indices, primarily the L&G Future World ESG index funds. It also incorporates the company’s Climate Impact Pledge, focused on speeding up the progress companies are making in addressing climate change and transitioning to a low-carbon economy.

La Banque Postale AM, the funds arm of the bank that is owned by the French postal service, has launched two SRI funds – bringing its total SRI fund range to six and a step closer to its target of being 100% SRI-focused by 2020. Its current responsible fund range has an individual focus on analysing impact on demographics, urbanisation, climate, environment, agriculture, food and public health. (Link, French)

TriLinc Global Impact Fund, a fund investing in developing country SMEs, has approved an additional $15.3m in financing to companies operating in Sub-Saharan Africa, Latin America, and Southeast Asia. This brings its investments in those regions, including Emerging Europe, to $438.2m.

Hermes Investment Management, the £33.6bn (€21.6bn) asset manager now majority owned by New York-listed Federated Investors, is launching a tool to enable its own fund managers assess carbon performance, carbon risk, and corresponding engagements with investee companies. A range of other internal tools – on governance water and social factors – would be launched over the next 18 months or so, executives said.

Carbon Delta, the analytics firm specialising in climate data, has closed its first CHF 1.7m (€1.5m) investment round with Zürcher Kantonalbank (ZKB) and a group of angel investors from the Swiss ICT Investor Club (SICTIC). Carbon Delta was the fintech company behind the Climate Value-at-Risk system, which has gained traction among investment firms. The new funding will be used to accelerate growth and advance sustainable asset management and climate reporting throughout Europe.

ShareAction has found that six out of nine of the UK’s largest automatic enrolment pension providers do not screen for companies profiting from chemical and biological weaponry. A recently released report lists the asset managers: Aviva, The People’s Pension, Royal London, Scottish Widows, Aegon, and Standard Life. Additionally, Aegon does not have exclusions in place for any controversial weapons including anti-personnel mines and cluster munitions. The report also finds that auto-enrolment providers are “lax on tax”, with only NEST and Royal London having specific policies in place to engage with investee companies on responsible tax conduct.

Leleux Invest, the Belgium domiciled financial group, has reportedly unveiled a new ESG fund strategy in response to client demand. The Leleux Invest Responsible World FOF, which sits within the firm’s Sicav fund range, will operate as a multi-asset fund of funds, taking a flexible, dynamic approach to achieving long-term capital appreciation. The fund is designed to benefit investors with a five-year time horizon

Overseas China Banking Corp (OCBC Bank) and agri producer Wilmar International, have inked an agreement which links interest rates of an existing $200m revolving credit facility to sustainability performance, in what both parties say is the largest arrangement of its kind in the country. Under the agreement, interest rates will be reduced if Wilmar achieves sustainability targets based on ESG metrics, based on assessment by Sustainalytics. Analysis suggests that achieving the targets may result in an interest rate differential between 10 to 60 basis points. This moves comes as Singapore works to establish itself as a green financing hub and oil palm producers, such as Wilmar, face increasing reputational risk due to allegations of environmental and human rights abuses.KGAL, a German asset manager, has announced that the London Borough of Newham Pension Fund has become the first UK local government pension scheme (LGPS) to back its renewable energy fund KGAL ESPF 4. Newham is one of five European investors which committed €127m in the second closing of its fund, which has an equity target of €500m and is capped at €600m. The final closing is expected to take place at the end of the year.

BlackRock and Wells Fargo are developing ESG funds for the US retirement saving plans known as 401(k), according to a Bloomberg report. It said spokespersons from both firms declined to comment.

Private equity specialist LeapFrog Investments has invested in one Nigeria’s largest pension-fund managers, as demand for retirement products in the West-African country among low-income consumers soars, Bloomberg reports. The details of its deal with ARM Pensions, which has $1.8bn in funds under management, were not disclosed. Nigeria’s pension-fund assets have more than quadrupled over the past nine years to 8 trillion naira ($22bn), according to data compiled by the National Bureau of Statistics.

UK fund firm RWC Partners has announced it has hired ESG research provider Sustainalytics to help further integrate ESG research and data in its investment decision-making processes across its range of strategies. This allows each team a degree of autonomy to “decide how ESG considerations are best incorporated in their respective fields”.

BlueOrchard, the Swiss microfinance specialist, will be launching the Emerging Markets Impact Bond Fund, a UCITS fund, which aims to fill the investment gap in social development financing by investing in selected frontier and emerging markets bonds. The fund is aimed at capitalising on investor demand for liquid microfinance investment strategies. BlueOrchard received a UCITS license from Luxembourg financial regulator CSSF earlier this month.

The European Investment Fund, the European Union’s vehicle for financing small and medium sized enterprises, has signed a deal with central European bank Erste Group to provide €50m in financing to social enterprises in Austria, Croatia, the Czech Republic, Hungary, Romania, Slovakia, and Serbia over the next 5 years. Social entrepreneurs and non-profit organisations will benefit from reduced interest loans and lower collateral requirements as part of the programme.

Degroof Petercam, a Belgian bank, is set to launch a closed-end European impact fund in 2018 after it took an equity stake in Swiss boutique investor, Quadia, earlier this year. The latter specialises in impact investments through both equity and debt, and has holdings in over thirty companies valued at close to $170m. According to Philippe Masset, Degroof Petercam’s CEO, the partnership has positioned the group as a “leading actor in the area of responsible finance”.

Deutsche Bank has launched a new strategy to integrate ESG investment factors into its company research to meet the “significant growth in demand for responsible investment mandates worldwide”. It will now offer “detailed ESG information and guidance” in its research on all companies in the EuroStoxx50 index, which will be “assigned an ESG rating alongside the usual ‘buy’, ‘sell’, ‘hold’ and target price information”. The ESG ratings comprise two elements: risk and opportunity. Deutsche Bank will also provide an ‘Opportunity Ratio’ (0-100%), which compares companies’ “opportunity assessment” to its overall ESG profile.

The World Bank has issued a 10-year sustainable development bond for CAD60m (€40m), intended to raise funds for sustainable development activities around the world. Japan Post Insurance was the only investor in the transaction. The World Bank issues around $40bn (€34bn) of sustainable development bonds in global capital markets annually, aimed at ending extreme poverty and promoting the UN’s SDGs.