In Brief

BMO acquires sustainability consultant

Radicle specializes in carbon credits and helping clients reduce emissions

BMO is purchasing a sustainability specialist firm, the Canadian bank announced this week.

Calgary-based Radicle Group, which BMO would acquire by the end of the year, focuses on carbon credit development, measuring emissions and environmental commodities, the companies noted in an announcement. Radicle founded itself in 2008 and has 130 employees.

The firm, which helps clients measure and reduce their emissions, has more than 4,000 customers globally, the companies stated. It claims to have helped cut 7m tons of carbon emissions among its clients and that it has traded more than $500m of environmental commodities.

Last year, Radicle disclosed that it received an investment from Canadian venture capital fund TELUS Ventures.

Following the acquisition, BMO Capital Markets’ global markets group will integrate Radicle’s team.

“The acquisition of Radicle supports BMO’s climate ambition to be our clients’ lead partner in the transition to a net-zero world, and the progress we’re making for a thriving economy, a sustainable future and an inclusive society,” BMO Capital Markets CEO Dan Barclay stated in the acquisition announcement. “Radicle’s leading expertise and innovative solutions make BMO a leader in carbon credit development capabilities and the environmental commodity market. These capabilities enhance our commitment to help our clients understand and manage the risks and opportunities of energy transition.”

BlackRock hires Kaminker from Lombard Odier

Chris Kaminker taking up the post of deputy head of sustainable investing at US asset management giant

Christopher Kaminker has joined BlackRock as deputy head of sustainable investing joining from Lombard Odier.

Kaminker will be responsible for “research-driven product innovation” on a global basis. Working with the BlackRock Investment Institute and BlackRock platforms, he will also look to expand the investment solutions, capabilities and research for clients. Kaminker reports into group head of sustainable investing Paul Bodnar.

He joined Lombard Odier in 2019 and was latterly group head of sustainable investment research, strategy and stewardship. He has also previously worked at Nordic banking group Skandinaviska Enskilda Banken (SEB) and Goldman Sachs.

Meanwhile, Emily McGlynn and Benjamin Attia have also joined BlackRock’s climate and sustainability research team to focus on sustainable investing data, analytics and research.

Harbor Capital adds energy transition ETF

The ETF is subadvised by Quantix Commodities

A new ETF from Harbor Capital Advisors will invest in the “energy transition”, or the bridge between the dirtiest fuels used today and the potential net-zero environment of the future.

The Chicago-based fund provider launched its Harbor Energy Transition Strategy ETF (RENW) on July 14, noting the product will track the Quantix Energy Transition Index. The index includes commodities such as metals used to build energy infrastructure, fuels like natural gas and incentives such as carbon credits, according to Harbor.

“The world is undergoing a dramatic energy regime shift that has only been accelerated by recent events. This will be one of the most significant macro themes in the financial markets for the next several decades,” Harbor Capital president Kristof Gleich said in the company’s announcement.

“RENW is built to provide the opportunity to invest in this transition, through the commodities needed to facilitate change, as the world marches towards a net-zero carbon emissions goal.”

Quantix Commodities is the subadvisor to the ETF, with the portfolio manager being Quantix’s Matthew Schwab.

The ETF’s management fee is 80 basis points, which represents its total net operating expenses, according to the prospectus.

Sustainalytics buys real estate climate risk firm

Aquantix uses AI models to assess physical climate risks for properties

Morningstar Sustainalytics has bought Montreal-based climate-risk tech firm Aquantix.

The acquisition will significantly expand Morningstar Sustainalytics’ climate data capabilities in the real estate sector, where Aquantix specializes.

The acquired company’s climate-risk models use artificial intelligence to assess physical risks for about 500 million residential and commercial assets across 180 countries, according to the firms.

“Banks, lenders and real estate asset managers require a comprehensive understanding of the impact that climate change has on their portfolio of real estate investments,” said Morningstar Sustainalytics commercialization director of real estate solutions, Toby Messier, in the announcement.

“Aquantix fills this void by capturing millions of climate-related data points and providing meaningful property risk metrics that measure the estimated asset damage from emerging climate events across various time frames and scenarios.”

Aquantix has a strategic partnership with fellow Canadian firm Teranet, from which Morningstar will also benefit, the acquiring firm stated.

Teranet, which specializes in registry services and real estate data and analytics, uses Aquantix’s property climate risk information for the packages it provides to financial institutions and regulators.

HSBC hires RadiantESG to give fund ESG treatment

The mandate represents RadiantESG's second portfolio

HSBC is tweaking its small- and mid-cap growth mutual fund to give it an ESG spin, bringing on women-led firm RadiantESG as the new subadvisor.

The HSBC Opportunity Fund has been renamed as the HSBC RadiantESG US Smaller Companies Fund, with RadiantESG replacing the incumbent subadvisor Westfield Capital Management Company.

RadiantESG, which is backed by HSBC, launched its first strategy in December, a small- and mid-cap portfolio that became available through separately managed accounts and commingled funds earlier this year.

The new HSBC fund mandate represents the first mutual fund that the company subadvises.

The revamped fund’s principal investment strategy uses proprietary models to evaluate companies by fundamentals and ESG criteria, with the goal of having stronger long-term risk-adjusted returns.

The fund screens out stocks with excessive tail risk and fills out the portfolio with competitive fundamental and ESG scores, according to the prospectus.

The benchmark used by the fund, the Russell 2500 Growth Index, is not changing, the companies said in an announcement.

The fund, which was launched in 1996, represented more than $81m in assets as of the end of March. However, the fund now has about $28.9m, data from Morningstar show.

The change is attributed to a large investor recently selling their shares. The fund returned 34.3% in 2019, 33.4% in 2020, 16.2% in 2021 and has seen year-to-date returns of -29.2%, according to Morningstar data for I shares of the product.

Management fees for the fund are 60 basis points, with a total net fee of 145 bps for A shares, according to the prospectus.

RadiantESG currently has about $30m in assets under management, company cofounder Kathryn McDonald said in an email.

In addition to the two existing strategies, RadiantESG is in discussions with prospects about others that would fit with its global capabilities, “several of which are explicitly impact focused,” or aligned with UN Sustainable Development Goals, McDonald said.

Nuveen ‘net zero’ ETF includes oil and gas holdings

Seeks to decarbonize by engaging with high emitters

A new ETF from Nuveen is investing in companies that are, or are likely, to be part of the energy transition.

That includes “high carbon emitters,” including oil and gas companies, according to the company’s announcement and the product’s portfolio positions.

That category is one of three the fund seeks to hold, with others being “climate leaders” and companies that provide disruptive technology, Nuveen stated in its June 24 announcement.

The Nuveen Global Net Zero Transition ETF defines climate leaders as companies that Paris-aligned carbon reduction plans as well as those “with a credible intention to reducing carbon”.

Among the active ETF’s top holdings is Shell plc, which represents about 2% of the portfolio. Other top position are in Microsoft (4.3%), Amazon (3%), Walmart (2.3%), Eli Lilly & Co (2.1%) and Merck & Co (2%).

“Today, a confluence of scientific conviction, societal consensus, energy security policy and business practice is all centered on the reality that reducing harmful carbon emissions is absolutely critical to the future of the planet.

“These forces represent a powerful tailwind for our strategy as more investors prudently realize the urgently needed transition to net zero will inevitably create market winners and losers.

“Through our engagement process, we will seek to decarbonize the portfolio at a rate faster than that of the market to achieve net-zero carbon ahead of the Paris Agreement 2050 deadline,” Nuveen’s head of ETF product Jordan Farris said in the company’s announcement.

“Importantly, the fund serves as an effective voice for investors who are concerned about climate issues and want to drive change through their investments.”

The ETF will focus its engagement work on the companies with the highest carbon emissions, the company stated.

That includes holding meetings with portfolio companies, recommending changes, monitoring progress and voting on shareholder proposals on climate change, according to the announcement.

Search ESG Clarity