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Nuveen Delivers A First in ESG

IMAGE PROVIDED BY UNSPLASH.

In the world of ESG, everyday brings with it the release of new issuances and the breaking of new records. The latest comes from Chicago-based asset manager Nuveen, a subsidiary of, and the investment manager for TIAA-CREF (Teachers Insurance and Annuity Association of America-College Retirement Equities Fund). A well-known responsible investor, Nuveen has more than $15 billion in assets under management (AUM) and $39 billion in responsible investing strategies. 

Their latest issuance, the Nuveen Core Plus Impact Fund (NYSE: NPCT), is “the industry’s first responsible investing closed-end fund,” according to the company’s press release. It is the first to be listed on the New York Stock Exchange, where it started trading on April 28 after an initial public offering of common shares that raked in $575 million. However, if the underwriters choose to exercise their option to purchase additional shares, the total amount will hit $661 million. 

Dave Lamb, Nuveen’s Head of Closed-End Funds, elaborated that Nuveen has “a long history of not only pioneering responsible investing but also delivering income solutions.” Lamb continued:  “we are proud to bring these together, while building on our heritage of innovation in closed-end fund strategies, to launch the Nuveen Core Plus Impact Fund.” 

In line with the asset manager’s Public Markets Impact Framework, which “emphasizes four themes, to support a multitude of positive environment and social outcomes,” the fund will put money towards fixed-income investments in: 

  1. Affordable housing, with goals to increase options located near convenient forms of transportation, to contribute to rent reduction so that individuals and families have more spare funds each month, and to make it easier for those in lower-income brackets to own homes of their own. 
  2. Community and economic development, with goals to push funds toward small businesses and macroeconomic development, to promote education and acquisition of skills, to spread access to health and medical care, to combat food shortages by boosting farm yields, and to provide support in the wake of disaster or conflict. 
  3. Renewable energy and climate change, with goals to escalate sources of renewable energy and forms of sustainable transportation, and overall to contribute to improved efficiency of energy and reduction of greenhouse gas emissions. 
  4. Natural resources, with goals to prevent deforestation, pollution, and waste, conserve habitats and promote sanitation, boost access to clean water, and support sustainable agriculture. 

This impact framework will help Nuveen to identify opportunities ― in the form of both issuers and specific projects ― that will make a meaningful difference. The resulting impacts must be direct, with raised capital used for projects that have “a clearly defined environmental or social benefit,” and measurable, with disclosure of key performance indicators at least annually. 

Additionally, ESG criteria will receive special consideration, and the Core Plus Impact Fund will also invest in issuers that “demonstrate environmental, social and governance (ESG) leadership. . . with leading ESG practices relative to industry peers.” In addition to the typical environmental, social, and governance categories, issuers’ adherence to international norms will weigh in their favor positively, while involvement in ESG controversies will weigh negatively. The fund’s assets under management dedications will thus be split between these two sources: the impact investing opportunities and the ESG investments. 

Beyond the obvious benefits for people and the planet, the Core Plus Impact Fund also works to deliver good returns, as an “actively managed, primarily high-quality portfolio,” with all investments evaluated using Nuveen’s relative value framework and the same financial criteria that the asset manager uses to evaluate other fixed-income investments. 

Moreover, the impact framework is specifically designed to generate financial returns in addition to impact, and investing in ESG bonds from industry leaders provides both performance value and risk mitigation. 

With a 12-year term and opportunities for extension or conversion to a perpetual term by a vote of the Board of Trustees, there is a lot of time for Nuveen’s new fund to make a significant impact in the world and for investors to earn noteworthy returns.

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