ENB Publishers Note: This is just one example of “Climate Investor Hypocrisy”. It seems that accountability is missing in almost all parts of ESG investing.
A UN-backed green investment fund is on the brink of failure three months after its launch during the Glasgow climate summit because institutions including big banks never delivered expected seed funding. The MSCI Global Climate Select exchange-traded fund was unveiled in early November. Trading under the ticker NTZO, it excludes fossil fuel companies and boosts holdings of companies with lower carbon emissions.
The fund has amassed less than $2mn and is likely to be wound down as soon as the end of March without further investment, said Ethan Powell, founder of Dallas-based Impact Shares, the fund manager. He said Impact Shares has been spending about $25,000 a month to manage the ETF. The case illustrates how corporate organizing to combat climate change can fall short when capital is needed.
The ETF was created by Impact Shares and Global Investors for Sustainable Development (GISD), a group of 30 global companies that launched in October 2019 to help fund the UN’s sustainable development goals. Bank of America, Citigroup, and Santander, all GISD members, pledged to provide seed money to NTZO but have refused until other investors step up, said Jim Healy and Sudip Thakor, former Credit Suisse bankers who are involved with the fund. “It is a classic case of everyone just going through the motions,” Thakor said. He said he invested $500,000 in the ETF, while Healy and his wife invested $1mn. Bank of America and Citigroup pledged up to $50mn and $12.5mn for the ETF, respectively, but with the proviso that their investments could not account for more than 25 percent of the fund, Healy and Thakor said. They said Santander, the Spanish bank, pledged $50mn but would not have more than 5 percent.
Because of the ETF’s small size, the banks could not provide their maximum dollar commitments without exceeding the pledged percentages. Bank of America said it “stood by ready to provide seed capital on the basis that the ETF would be able to gather sufficient volume from long-term institutional investors”. Citigroup said it is willing “to provide seed capital for the NTZO ETF contingent on preset criteria and regulatory requirements”, adding that “any claim to the contrary is false”.
For the entire article please go to FT.com
