Responsible Funds, June 8: Six Danish pension funds back new SDG fund

The latest responsible funds news

Six Danish pension funds – including PKA, PensionDanmark, and ATP – have each contributed Kr400m (€53m) to an Kr4.1bn (€550m) investment fund seeking to support the realisation of the UN’s Sustainable Development Goals (SDGs) in its first closing. The Danish SDG Investment Fund is backed by Denmark’s Investment Fund for Developing Countries, which invests and facilitates investments in developing countries. The other pension funds involved are PFA, JØP / DIP, and PenSam. Link

Australia’s HESTA, the A$44bn (€28.3bn) super fund for the health and community services sector, has allocated a further A$40m to fund investments that generate both a measurable social impact and a market-based financial return. It’s the second commitment made through HESTA’s Social Impact Investment Trust (SIIT), which is managed by Social Ventures Australia (SVA). The SIIT was launched in 2015 with an initial commitment of $30 million, making it at the time one of Australia’s largest dedicated impact investment funds.

Amundi’s US-arm has announced the expansion of ESG considerations in two of its US mutual funds to “meet growing investor demand for ESG investment strategies”. Boston-based Amundi Pioneer will expand its screening and exclusions of companies that “fail to meet certain ESG standards across all industries” in both its Pioneer Fund and Pioneer Classic Balanced Fund from the start of next month. Ken Taubes, Chief Investment Officer said: “ESG factors are becoming increasingly important in understanding investment risk, and our ability to identify companies that have the potential to outperform over the long term”.

Swiss pension fund-backed advisory firm Ethos – in collaboration with global institutional investors representing €100bn in assets – has launched a “multi-year engagement program” urging eight unnamed European energy firms to develop decarbonisation strategies and disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The initiative has been created in collaboration with members of Ethos’ Engagement Pool International, an international corporate engagement programme launched in 2016. Announcement

Triple Point, a specialist asset manager, is initially raising £10m for its newly-launched Impact EIS which backs successful companies producing positive social impact. The EIS has a minimum investment of £25,000 and targets to exit investors in four to seven years after allotment. Investors will be offered a portfolio of 8 and 12 companies across four sectors: the environment, health, inequality and children/young people. According to the firm, ethical investing is not solely for a selective “cohort of more progressive individuals” as it provides for “fundamental critical insight into a company’s viability and potential long-term business performance”.

The Scottish government is looking to appoint fund managers to deliver microfinance, debt, and equity fund management services for the SME Holding Fund, a fund-of-funds which is part financed by the European Regional Development Fund and the 2014-2020 European Structural and Investment Fund Programmes in Scotland). The fund is part of the Scottish Growth Scheme, a government-backed £500m package of financial support intended to help businesses grow. The contract is divided into lots, with tenders able to be submitted for all lots. The contract start date is likely to be August 1, 2018, expiring July 31, 2025.European investment funds can now be rated on their alignment with the Paris climate goals, thanks to new methodology launched by Climetrics, the world’s first climate rating for funds. The methodology scores funds for investing in companies with public commitments to science-based emissions reduction targets. The rating is based on a fund’s portfolio holdings, investment policy and asset manager governance, and is intended to offer investors transparency on the climate impact and climate risk exposure of funds. Top-rated equity funds can be viewed for free here. Link

The biggest challenges facing the growth of the impact investment industry are: ‘the lack of appropriate capital across the risk/return spectrum’ and the ‘ lack of common understanding of the definitions and segments of the market,’ say respondents to the latest Global Impact Investing Network (GIIN) survey. The Annual Impact Investor Survey quizzes 229 impact investors who collectively manage over $224bn in impact investing assets. It finds top sectors to which respondents have allocated capital are financial services, energy, and microfinance. Also a majority said their investments have met or exceeded their expectations for impact (97%) and financial (91%) performance. And some 76% set impact targets for some or all of their investments, with the same amount tracking or planning to track their investment performance to the UN Sustainable Development Goals (SDGs) .

A lack of transparency is the biggest constraint for fund selectors looking to explore the SRI space, according to a report by Citywire. It said that attendees at an event it organised in Paris highlighted the difficulty in monitoring individual managers via a survey.

Natixis will soon be launching the Magenta Climat et Transition Énergétique, a scheme offering investors a potential gain of up to 30% at the end of a 5-year term determined by investee climate performance. The scheme, to be launched end-July, is indexed to the Euronext Climate Objective 50 Equal Index Weight Decrement 5% which is composed of 50 European stocks ranked according to their climate practices. If the value of the index is positive or zero at full term, the investor will receive their initial capital and a gain, capped at 30%, equivalent to the that of the index. In the case of a slide in the index, the investor will take an equivalent capital hit, capped at 10%.

Timber specialist Stafford Capital Partners has announced a possible US0.49 per share offer for the Guernsey-based Phaunos fund it used to manage. The bid, via its Stafford International Timberland VIII Fund, is for an entity that is being wound up after shareholders voted against its continuation last June. IT values Phaunos at £182m (euro). Phaunos’ largest shareholder is Deutsche Bank, which has a stake or more than 9%, according to reports.

John McDonnell, Diane Abbott and Caroline Lucas are among 11 MPs who have called for Cambridge University to remove its £377m fossil fuel investments. This comes alongside a letter calling for full divestment signed by over 200 Cambridge academics, as well as the release of a report showing that declining demand for fossil fuels could leave them as stranded assets by 2035. One of the report’s author’s Dr Jean-François Mercure, of Cambridge University’s Centre for Environment, Energy and Natural Resource Governance, said: “Divestment from fossil fuels is both a prudential and necessary thing to do. Investment and pensions funds need to evaluate how much of their money is in fossil fuel assets and reassess the risk they are taking.