Separate ESG fund plans announced by PIMCO, Northern Trust and Lombard Odier

Major finance institutions launch responsible funds on same day

Three major finance institutions – PIMCO, Northern Trust and Lombard Odier – have all launched separate environmental, social and governance (ESG)-themed funds today, showing more than ever that responsible investment is reaching deep into the ‘mainstream’.

PIMCO said it launched a dedicated ESG investment platform globally “offering a range of fixed income solutions to investors seeking attractive returns while making a positive social impact”. As part of this effort, the PIMCO GIS Global Bond ESG Fund has been launched in the Europe, Middle East and Africa region.

The fund from bond specialist PIMCO, which is owned by Germany’s Allianz, aims to maximize total return whilst favoring issuers with best-in-class ESG practices and those that are working to improve them. The fund is managed by a team led by Andrew Balls, the former FT journalist who is its chief investment officer of Global Fixed Income and Alex Struc, the portfolio manager who is co-heading the ESG initiative at PIMCO.

In addition, PIMCO added it has enhanced two of its socially responsible funds in the US to incorporate a wider range of ESG considerations into the investment process. These funds are managed by a team led by Struc and Scott Mather, CIO for US Core Strategies.

“The founding belief of these new strategies is that investors in ESG portfolios should not have to sacrifice their financial objectives in order to achieve an ESG impact,” Mather says in a detailed document explaining PIMCO’s ESG stance.

Separately, Northern Trust Asset Management has launched a Dutch-domiciled pooled fund passively managed against a sustainable real estate index developed with GRESB, the global sustainability benchmark for real assets.In what is being termed an ‘industry-first’ the index is “exclusively available” to investors using Northern Trust Asset Management vehicles and has been developed in response to demand for a passive approach to real estate investing incorporating ESG factors.

Sander Paul van Tongeren, the former Head of Sustainability Real Estate and Infrastructure at APG who now is managing director of GRESB, said the new fund would let investors “to passively gain exposure to companies that are highly transparent about their ESG performance and reducing environmental and social impact while also incorporating broad geographic and sector diversification.”

Last but not least, Lombard Odier Investment Managers has teamed up with Stuart Kinnersley’s Affirmative Investment Management fixed income boutique to launch a new fund that they say will help combat climate change “in a verifiable way”.

Lombard Odier IM is the asset management arm of the venerable Swiss wealth management house while Kinnersley is the former Nikko Europe investment chief who created the world’s first green bond fund with the World Bank in 2010. The AIM team, which Kinnersley co-founded with former Goldman Sachs Asset Management International Head Stephen Fitzgerald, includes Judith Moore, its Head of Sustainability Research and Policy, who developed the eligible criteria for green bonds while at the World Bank.

Carolina Minio-Paluello, Global Head of Sales and Solutions at Lombard Odier IM, said her firm was “pleased to be partnering with the specialists at AIM and together with our own robust impact investing expertise, we are seeking to develop a compelling and competitive proposition for investors”.