Responsible Funds, March 18: CalPERS, NN Investment Partners, Lloyds, Yunus Social Business

The round-up of the latest responsible funds news

The California Public Employees’ Retirement System has become a signatory and supporter of Japan’s stewardship code, formally titled the Principles for Responsible Institutional Investors. The code aims to enhance long-term return for investors through constructive engagement and dialogue with the publicly traded Japanese companies in its portfolio. “In our global investment portfolio, Japan represents CalPERS’ second-largest equity market,” said Ted Eliopoulos, CalPERS Chief Investment Officer. “We applaud the Japanese government for taking this important step to improve engagement between investors and companies.” The Code is based on the UK’s Stewardship Code, which CalPERS has not signed, although it is supportive of it.

The Pensions Infrastructure Platform, the UK pension fund-backed infrastructure investment platform, has launched the PiP Multi-Strategy Infrastructure Fund with a target size of £1bn (€1.3bn). It will invest directly in the UK, focusing on core infrastructure, targeting transportation; (renewable) energy; utilities; communications; housing; and social infrastructure. Founding investors include the Pension Protection Fund, Strathclyde Pension Fund, West Midlands Pension Fund and RPMI Railpen. Link

Lloyds Bank Commercial Banking has launched a new £1bn commitment for commercial real estate green lending to support its clients’ sustainability investments, aimed at reducing CO2 emissions from their real estate assets. It the “first-of-its-kind fund” would be used to incentivise clients’ adoption of energy efficiency measures and provide margin improvements of up to 20 basis points on new borrowing requirements of £10m and above. The bank worked with Trucost, the environmental consultancy, to create a tool to benchmark sustainability performance.

UK Chancellor of the Exchequer George Osborne announced this week that the government will double its funding for social impact bonds to tackle homelessness from £5m to £10m as part of the country’s Budget. It comes as charity-focused e-zine Third Sector reports that research to be published next month shows that 86% of UK charities feel an extra £80m allocated to the social impact bond space by the UK government last year will have limited or no effect.

The new Morningstar Sustainability Rating for funds is now available to approximately 10m individual investors on Morningstar’s North American and European websites as well as in Morningstar Advisor Workstation platform for advisors. The Sustainability Rating helps investors evaluate approximately 21,000 funds based on environmental, social, and governance, or ESG, factors.

Brazil-based private equity firm Aqua Capital has reportedly raised $188m for its second buyout fund. The New York Times said backers included the University of Texas Investment Management Company and German overseas development company DEG. The company focuses on investments in companies engaged in the Brazilian and South American agribusiness value chain, including food and logistics.NN Investment Partners, the former ING Investment Management, has laid claim to launching the first ever fund dedicated to investing in euro-denominated green bonds dubbed the NN (L) Euro Green Bond fund. NN Investment Partners says its green bond selection process is unique in that it examines the “greenness” of the issuer, as well as that of the projects.

Yunus Social Business, a business incubator co-founded by Nobel Laureate Professor Muhammad Yunus, is partnering with the Rockefeller Foundation to leverage commercial capital through ‘social success notes’. Building on the model of social and development impact bonds, the social success note (SSN), seeks to be an innovative pay-for-success financing mechanism that addresses the investment gap for impact-oriented SMEs and social businesses. The aim is to launch a pilot in 2016 with one of YSB’s investment-ready social businesses. Link

Volkswagen, Bayer, Commerzbank and TUI are among the nine new members of the ‘German Gender Index’ launched a year ago by the Hanover stock exchange. The bourse said the four German blue-chip companies were included due to the significant share of women on their management and supervisory boards. Prominent among the nine firms ejected from the index were chemicals firm Wacker Chemie, re-insurer Hannover Rück and Xing AG, the German equivalent of LinkedIn. There is currently one investment fund from Ampega that tracks the index.

The University of East Anglia’s Low Carbon Innovation Fund, managed by London-based merchant bank, Turquoise International, is now fully invested with £18.5m deployed across 23 companies. The Fund invests in environmentally focused small and medium-sized enterprises and is funded by the European Regional Development Fund (ERDF) East of England Competitiveness Programme.

Scottish Construction Now reports that the Scottish Government has unveiled a £50m investment in charitable bonds over the next two years to provide support for almost 1,000 new homes. The bonds, issued by social investor Allia, provide finance for housing associations to build around 750 new affordable homes, while interest on the loans provide grants for 200 social homes.

Aquila Capital, a German infrastructure investment firm, is offering its clients the opportunity to invest with it for two years – a timeframe it says is significantly shorter than that of typical infrastructure investments. Aquila said that either via direct investment or funds, institutional clients would get exposure to renewable energy, transport, utilities and waste disposal. More than 50% of the investments would be made in Europe, and investors would be paid a dividend in the first year of their commitment, the Hamburg-based firm, which has €7bn under management, said.