Global Sustainability Trust hopes to offer ethical investors annual returns of around 6% through investments in microfinance and conservation.
A new investment trust hopes to close the so-called ‘sustainability financing gap’ by providing private investors with access to areas like microfinance and conservation finance for the first time.
The Global Sustainability Trust (GST) has been three years in the making and is the brainchild of Andrew Dykes, who has spent nearly 20 years managing and designing sustainable equity funds.
He has set up the Global Sustainability Community Interest Company (GSCIC) to launch what he believes will be the world’s first ‘global impact’ investment trust.
GST will invest in listed sustainable equities, microfinance, conservation finance, green bonds, renewable energy, social infrastructure, as well as impact venture capital and private equity. It will target an average annual total return of 6% over rolling five-year periods.
GSCIC hopes the launch will raise more than £100 million and is working towards floating the trust in November. After carrying out over 100 meetings with wealth managers, family offices, charitable foundations, university endowments and pension funds, it says it has so far received ‘indications of interest’ totalling £40-£50 million – and this is before they kick off the formal marketing drive.
However, it has yet to appoint a fund manager, although a tender process is underway to appoint one to run the multi-asset portfolio.
Dykes told Investment Trust Insider that GSCIC was in the final stages of selecting a fund manager. Other third parties will be hired to manage specialist investments, he said.
‘I think what is exciting is this is a demand-led initiative. We have been impressed with the engagements of the investment managers who got into the final round. There is a real desire to make this work,’ he explained.
Whichever asset manager is appointed will be required to pay back project costs plus interest to funders.
GST will invest across a range of areas that are able to deliver the United Nations’ sustainable development goals. There are 17 in total, including an end to world poverty, climate action and gender equality.
The trust will enable private investors to access new areas in a bid to bridge the ‘sustainability financing gap’, which is estimated to total more than $3 trillion per annum.
GST is being described as the world’s first ‘board-led sustainable finance investment trust’ because it is led by an independent board rather than an asset management company.
Early supporters include private bank Hottinger, Edinburgh-based financial adviser Ethical Futures, the Gloag foundation set up by Stagecoach co-founder and philanthropist Ann Gloag, and Dunelm Energy.
Dykes previously worked as a consultant for the United Nations Development Programme and co-founded Active Earth Investment in Switzerland back in 2009. Prior to this, he worked as a fund manager at Berenberg, SVM and Martin Currie in Edinburgh.