Responsible Funds, Nov. 9: Wellington, Morningstar, BNP Paribas, BlackRock, Generali, Arabesque

Wellington Management, the $1trn investment management firm, has launched a new UCITS-compliant equity climate fund. The Wellington Climate Strategy Fund, managed by analyst Alan Hsu, will invest in companies deemed to be “directly” addressing “environmental sustainability or climate risks through their products, services, or capital”. Research from the firm’s partnership with climate research institute Woods Hole Research Center (WHRC), announced last month, will feed into the fund’s investment strategy.

BNP Paribas Securities Services’ voluntary carbon offsetting platform, ClimateSeed, is now live with 19 project developers promoting and selling carbon credits representing 8m tonnes of carbon dioxide equivalents on the platform. ClimateSeed was launched at the Global Social Business Summit 2018; it was developed with the support of Grameen Creative Lab co-founded by Nobel Peace Prize laureate Professor Yunus. In line with Social Business principles, ClimateSeed will reinvest all its profits in its development to maximise its positive impact on society and the environment.

Sustainable infrastructure manager NTR has reportedly made its first UK solar purchase, spending nearly £55m with a £2.3 deferred consideration on a 38.4MW portfolio. NTR made the purchase through its second sustainable infrastructure fund, NTR Renewable Energy Income Fund II. The assets are supported by either feed-in tariffs or Renewables Obligation Certificates at 1.3 ROCs.

Generali Investments SICAV SRI Ageing Population (GIS SRI Ageing Population) – Generali’s sub-fund aimed at capturing the opportunities offered by ageing populations – turned three last month. Combining SRI, a thematic approach and bottom-up stock picking, GIS SRI Ageing Population has reported a performance of +22.27% since inception, higher than its comparison index the MSCI Europe Net Total Return index. The sub-fund is managed by Olivier Cassé and Giulia Culot from Generali’s thematic equity team.

And Generali, Europe’s third largest insurer, is to exit coal, under a new policy. The policy will see Generali no longer insuring the construction of new coal projects, and no longer accepting coal companies as clients. Coverage of existing coal projects however is not excluded. Generali is the seventh large insurer to end or limit insurance support for coal, following in the footsteps of AXA, Allianz, Zurich, Swiss Re, Munich Re and SCOR.Morningstar has updated the methodology underlying its Morningstar Sustainability Rating, which it says reflects its “improved ability to make assessments over a longer time horizon and across more broadly-based categories”. The changes include the incorporation of historical sustainability scores, expanding peer groups and increasing the peer group threshold, and adding sustainability metrics for funds of funds. Madison Sargis, Associate Director of Quantitative Research, has published “Interpreting the Morningstar Sustainability Rating Changes”, a report to help investors understand the changes.

BlackRock has launched a new fund aimed at achieving long-term growth with two-thirds the volatility of equities for UK pension schemes. Part of the firm’s outcome-orientated multi-asset fund range, the BlackRock Strategic Growth Fund targets a total return through long-term allocations to bonds, equities and non-traditional assets and diversifiers such as high yield, REITS, infrastructure equities, and gold. ESG considerations are integrated into the investment process and the portfolio management team will invest 5% of capital into ESG themes such as renewable energy.

ESG house Arabesque says its Arabesque Prime offering returned -10.78% in October and its Arabesque Systematic returned -11.00% — while the benchmark, the MSCI ACWI, returned -8.72%. The sectors that contributed the most to negative absolute performance were, for Prime, Energy Minerals and Electronic Technology, and for Systematic, Technology Services and Energy Minerals. Relative performance was negatively impacted by sector allocation decisions for Prime (underweights in Finance and Consumer Non-Durables) and negatively for Systematic (overweight in Technology Services). Both funds’ stock selection decisions had a negative relative impact (mainly Communications for Prime and Technology Services for Systematic).

The Green Climate Fund (GCF) – the financing mechanism of the United Nations Framework Convention on Climate Change (UNFCCC) – has approved three African Development Bank (AfDB) financing proposals for climate resilience projects, with a total amount of $110m. The financing given the green light included $67.8m – made up of a $57.8m grant and a $10m concessional loan – towards an ecosystem conservation project, and a $20m senior loan, and $1m grant – each to be matched by the AfDB – towards three pilot solar plants and battery storage.