UK ICMIF member OneFamily has announced the launch of a new Sustainable Climate fund strategy that will back its new stocks and shares ISA and its existing Lifetime ISA from 1 September 2020.
OneFamily believes that these accounts will be of particular interest to the ethically minded generation of teens whose child trust funds are to mature from the beginning of September.
Account holders will have a choice, says OneFamily; they can decide to invest 100% of their money in the Sustainable Climate fund, or alternatively, if they wish not to invest all their money into equities, they can place 35% of their investment in the new climate fund and the remainder, at least 65%, in fixed interest investments.
OneFamily has been working closely with its investment manager, State Street Global Advisors, to ensure that its Sustainable Climate fund focuses solely on investing in global companies that are determined to tackle climate change.
Jon Lee, Head of Investments Proposition at OneFamily said, “As a mutual, we don’t have shareholders to pay dividends to, so what our members say has a direct influence on our business decision making.
“We estimate that, from September, around 80,000 child trust funds will be maturing every month. Each fund is worth an average of GBP 2,000 and these teenagers are very much climate crisis aware so will be looking for a compelling proposition which supports their aims.
“The Greta Effect has had a massive impact on the way that teenagers are thinking about all aspects of their lives, and that includes where they put their savings. They’re telling us that they want to invest in companies that reflect their beliefs.
“Almost eight out of ten (79%)* teenagers tell us they are planning to save some or all of their child trust fund money. So, we wanted to get this right for them; to ensure that the funds behind our ISA and Lifetime ISA align with the United Nations Paris Accord on limiting climate change."
Cuan Coulter, Head of Europe Middle East and Africa for State Street Global Advisors added, “We’re delighted to work closely with OneFamily to develop this initiative that’s well in tune with today’s investors. The strategy helps deliver on our mission to invest responsibly and is consistent with our focus on ESG investing across our business.
“The Sustainable Climate strategy is leading the way in low-carbon investments. It’s designed to both reduce carbon intensity and to pivot investment to those companies that are adapting to and shaping the transition to the coming low-carbon economy.”
The fund draws on the MSCI World Index but aims to achieve a reduction in carbon intensity of 70%, a reduction in brown revenues of 90% and an increase in green revenues of 300%.
Each company in the Sustainable Climate fund must be aligned to five specific factors; carbon intensity, brown revenues, fossil fuels, green revenue and adaption. They must keep striving to be sustainable, since they will be reassessed four times a year, those that drop their green standards will be removed from the fund.
ICMIF has organised a forthcoming series of ICMIF Sustainable Investment Leaders webinars for members interested in learning more about sustainable investing. This series of four webinars (21-23 September 2020) will offer an opportunity to hear best-practice from the mutual/cooperative sector and other industry leaders to help our members increase their sustainability engagement and drive leadership in all aspects of responsible investing and sustainable finance. The webinars are specifically aimed at investment, finance and sustainability professionals from ICMIF member organisations, but they are open to all employees at ICMIF members who have an interest in these topics.
* Specifically, teenagers surveyed were asked “Imagine you were given £5,000 to use as you saw fit, which of the following would you be most likely to spend it on? Please select your top 5 options.” Given a shortlist of 13 options, 79% included saving in their top 5.