Responsible Funds, March 9: Finnish church awards €90m ESG mandate, Robeco exits tobacco

Round-up of the latest ESG developments

The €1.4bn Church Pension Fund, which represents the Evangelical Lutheran Church of Finland, has awarded a €90m ESG equities mandate to Finland’s OP Asset Management, according to a tender document. The scheme put out a tender in November, seeking to secure a new external manager to run an existing ESG portfolio for Finnish listed equities. Magdalena Lönnroth, Portfolio Manager and Head of Responsible Investment at the pension fund, told RI at the time that the ESG dimension of the mandate includes “ESG analysis, engagement, AGM participation and voting, and ESG reporting”. It received five tenders for the mandate.
Robeco has extended its tobacco exclusions to all it mutual funds, saying fundamental change was not possible through engagement with the industry. The exclusions, which were previously on applicable to Robeco’s sustainability funds, will come into play later this year. It will not apply to privately-run funds. A spokesperson said Robeco’s current exposure to tobacco was worth €128m (£114m) or 0.24% of its total €161bn (£144bn) of assets.
BMO Global Asset Management has launched another fixed-income responsible investment fund, bringing its ‘Responsible’ range to seven vehicles. The BMO Responsible Euro Corporate Bond Fund will invest in Euro-denominated, fixed-interest securities from issuers with positive environmental impacts, an emphasis on sustainable development and transparent governance. At launch the fund has €45.2m under management and is registered in Austria, Belgium, Finland, Switzerland, Germany, Spain, France and Italy.
JPMorgan Chase & Co has reportedly developed a quantitative tool to help investors pick socially responsible stocks based on up-to-date information. The tool uses a proprietary ‘ESGQ’ metric that combines a company’s long-term corporate responsibility score with more dynamic data including media coverage of potential controversies. The model attempts to address a “key frustration” in ESG investing, JP Morgan said, claiming that relevant data is often slow-moving and infrequent.
Franklin Templeton has overhauled its Templeton Global (Euro) Fund into the Templeton Global Climate Change Fund. It will invest in companies best-positioned for the transition to a lower-carbon economy due to a perceived “long-term competitive advantage over industry peers”, the firm said. The fund is actively-managed and seeks to be aligned with global climate change goals. This is the latest in a series of ‘rebrands’ from mainstream asset managers wanting to turn existing vehicles into ESG-focused funds. Most recently, Deutsche Asset Management has repositioned two of its offerings into sustainability funds.
Hermes Investment Management’s European Alpha Fund upped or retained its stake in a number of stocks that plummeted last year, arguing that it needed to look “beyond short-term turbulences”. The sustainability-focused house named four companies – jewellery firm Pandora, medical equipment maker ConvaTec, Nokia and Siemens Gamesa – that it decided to keep in its portfolio despite stock-price weaknesses in 2017. It raised its investment in Pandora despite slides of more than a quarter in its shareprice in 2017. Since the turn of the year, these stocks have regained positive momentum, Hermes pointed out.German sustainability fund ACATIS Fair Value Aktien Global returned -2.91% in February and 0.35% since the start of the year, according to its latest report. The equities fund holds positions in Alphabet, Nike and Visa, with approximately 20% exposure to the consumer sector. In 2017, Acatis Investment partnered with BayernInvest to launch the first fund entirely controlled by artificial intelligence.
Resonance, a UK social impact investor, has used its Health & Wellbeing Challenge Fund (South West) to take a position in Keep Cornwall Fed, a catering company which distributes profits to provide meals for people in food poverty. The organisation has received a £130,000 in the deal, which is categorised as “permanent capital”, with no initial repayments and no set repayment date.
The Lab, an initiative from the Climate Policy Initiative, says more than $1bn of investment has now been mobilised by its 25 investment vehicles. The project is backed by US, UK and German governments in a bid to channel private capital into developing countries. It currently has three programmes: the Global Lab, India Lab, and Brazil Lab. There are over 60 member institutions, including banks and investment specialists.
Tressis Gestión, a Spanish asset management company, has reportedly launched a socially responsible fund called the Tressis Sustainable Portfolio ISR, which aims to raise €50m in its first year. The fund will invest in companies promoting the protection of human life and dignity, the environment and the reduction of weaponry. The fund will be benchmarked by the Barclays Global-Aggregate Total Return Index Value Hedged EUR (by 70%) and the MSCI World (by 30%), with a target volatility of less than 10% per year. Tresis group had previously launched an ESG fund portfolio management service in 2014, which currently has close to €100m (£89m) AUM.
The deceleration of long-term improvements to life expectancy is providing an unexpected opportunity to profit, according to Liontrust’s Jamie Clark. The Continuous Mortality Investigation 2017 study, used by UK insurers and pension schemes gauge future changes in mortality, has suggested that the rate at which life expectancy is improving is slowing down, which would allow insurers to release reserves previously used as a hedge against exposure to longevity. Clark has singled out Legal & General’s recently announced profit boost as a result of factoring in this trend.