Funds For Good, in partnership with Banque de Luxembourg Investments, is broadening its range with two new impact-focused equity funds in the US and Europe.
Funds For Good, a Brussels-based fund distributor, dedicates 50 percent of its annual profits to creating a social impact. It assists young entrepreneurs with the necessary guarantees for bank financing. The decade-long collaboration between FFG and Banque de Luxembourg Investments (BLI) has intensified with the recent debut of two impact funds aligned with Article 9 of the SFDR.
“Unlike other products in this category, we do not focus on a specific theme, but on companies with a very high exposure to one or more of the Sustainable Development Goals,” says Luc Bauler, manager of the FFG American Impact Equities fund. He notes that eighty-two percent of the turnover from companies in the portfolio is directly tied to an SDG.
Recycling innovators
Bauler showcases Advance Drainage Systems, a leader in HDPE bottle recycling. “Last year, ADS recycled twenty-eight percent of HDPE bottles in the US, amounting to 270,000 tonnes of plastic, for their HDPE pipe production.” These products, comprising fifty-nine percent recycled material, help replace old pipes without the risks of corrosion or deterioration and are easier to install, addressing SDG 6 (water quality) and SDG 12 (waste reduction).
Another firm under the fund’s umbrella is MSA Safety, a manufacturer of protective gear for workers, correlating with SDG 8 (decent work). “The International Labour Organisation estimates that about 2.3 million people die annually from workplace accidents or diseases,” emphasises the focus on creating a safer working environment.
SDGs 7 and 9
Tom Michels, manager of the FFG European Impact Equities fund, points to the Swedish company Munters as a benefactor of regulatory pressures, working towards SDGs 7 and 9. “By controlling humidity, energy consumption is reduced significantly, which is vital in sectors like lithium-ion battery production,” he explains. SIG Group also gets a mention for its sustainable packaging solutions, supported by current regulations and contributing to SDGs 8 and 12.
“These funds are biased towards mid-caps where sales can be readily linked to an SDG, something not easily found in large multinationals,” Bauler asserts. Both funds are concentrated, with forty percent of assets in the top ten holdings and seventy percent in the top twenty, aiming to maximise impact through selective stock picking.
As with all BLI-managed products, these new funds by FFG favour quality companies with strong market positions and sound financials. This approach often excludes sectors like financials or telecoms, while showing a preference for industrials, healthcare, and technology sectors.
Besides the impact from investment choices, FFG and BLI amplify their influence by allocating a part of the management fee to finance zero-interest, unconditional loans via Funds For Good IMPACT. Collaborating with microfinance institutions, they have supported 1,127 projects and created approximately 1,300 full-time jobs. “This additional impact is both tangible and resonates well with our investors,” concludes Nicolas Crochet (photo), co-founder of Funds For Good.