The pension fund for the borough of Newham, in east London, has invested around £520m (€605m) in a newly launched global equity fund that tracks an index meeting EU Paris-aligned Benchmark (PAB) standards.
Run by Legal & General Investment Management (LGIM), the fund has also gained support from unnamed Irish pension investors, and Legal & General’s alternative asset platform, Legal & General Capital, has invested £100m.
Classified as an Article 9 product under the EU sustainable finance disclosure regulation (SFDR), the fund has an investment objective of providing low carbon emission exposure “in view of achieving the long-term global warming objective of the Paris Agreement”.
It seeks to achieve this by tracking the performance of a PAB-aligned index, meaning it applies constraints and conditions such as a 50% reduction in greenhouse gas (GHG) emissions intensity and a 7% GHG intensity reduction on average per annum.
The fund also has tilts towards companies that score more highly against social and governance criteria.
“In line with our own pledge to increase our commitment to net zero emissions by 2050, we believe this fund can help investors allocate their capital in a way which will contribute towards their own implementation of net zero,” said Volker Kurr, head of Europe, institutional, at LGIM.
“It also helps them address the additional challenge of ensuring their investments meet other demanding ESG standards.”
David Barron, head of index equity and smart beta at LGIM, said the asset manager believed “changing the actions and behaviours of the underlying companies in the index is key to integrating ESG”.
“Our solution links engagement with voting, and in turn the allocation of capital is based on how well companies fare on key ESG metrics.”
Newham is a shareholder and client fund of London CIV, one of the UK’s eight local authority pension asset pools. At the end of May 2021, London CIV assets under management including commitments were £13bn. It is working to grow its current fund offering.
New GAM climate bond strategy targets ‘pivotal’ banking sector
GAM Investments has launched a strategy allocating to green and sustainability bonds issued by European financial institutions.
It said the launch “recognises the pivotal role banks, in particular, will play in the environmental transition as the primary source of financing for European corporates and small and medium enterprises (SMEs)”.
The strategy adopts an active, bottom-up, high-conviction approach, investing in bonds which allocate proceeds to eligible green projects across market caps with measurable impact, such as renewable energy and green buildings. It has an average rating of BBB+ and has been classfied as Article 9 under SFDR, with investors to receive an annual impact report.
It will be managed by Atlanticomnium S.A., an independent Geneva-based fund management company, which has specialised in credit investing since it was founded in 1976 and has managed assets for GAM since 1985. The team applies a proprietary green bond assessment framework that is split into three layers of analysis – issuer, bond and green asset level.
“Engagement is also a key part of the team’s framework, both to enhance their analysis and to encourage improving standards within each pillar,” GAM said in a statement.
GAM today also announced that it had joined the Climate Bonds Initiative, an NGO working to mobilise the global bond market for the benefit of a low carbon transition.