While definitions and commonly accepted industry standards for categorizing investment products and providing related disclosures to investors are still evolving, a review of SPAC prospectus disclosures, illustrated for a selection of offerings set out in Table 1, combined with proposed classification framework2, served as the basis for cataloguing the existing universe of sustainable SPACs.
A very hot, some argue overvalued, market for Special Purpose Acquisition Companies (SPACs) may be attracting some sustainability-oriented investors. According to research conducted by Sustainable Research and Analysis LLC that was compiled from SPAC prospectus documents, the SPAC universe consists of 533 listed entities with a combined deal value of $171.0 billion. Of these, 163 SPACs, or 31% outstanding SPACs as of mid-March 2021 based on deal value pursue business strategies that are aligned either partially or entirely with sustainable investing strategies1 that fall into the following categories: social and environmental themes, the achievement of impact as well as the integration of ESG in the investment process.
Table 1: Illustration of SPACs Sustainable Investing Strategies
|Name, Offering Proceeds, Date||Sustainable Classification||Abbreviated Prospectus Description|
|Montes Archimedes $400 MM 10-6-2020||Health||…..we intend to focus our investment efforts broadly across the entire health care industry…..|
|Ares $870 MM 2-1-2021||ESG Integration||Ares also recognizes the importance of considering ESG factors in its investment process…..|
|Decarbonization + $350 MM 3-12-2021||New Energy||We intend to focus…..in one of the multiple sectors that may advance the objectives of global decarbonization…..|
|Adit Editech $240 MM 1-11-2021||Education||….. we intend to focus our search for target businesses in the education…..|
|Peridot $300 MM 9-23-2020||Social Infrastructure||….. we intend to target opportunities and companies that focus on environmentally sound infrastructure…..|
|PWP Forward 200 MM 3-9-2021||Inclusive Economy||…..We intend to demonstrate the distinct value-add of female leadership…..|
|Sustainable Dev. $275 MM 2-4-2021||Impact (UN SDG-Focused)||…..Our focus will include, but not be limited to, companies in the water, food & agriculture, renewable energy…..|
Commonly referred to as blank check companies, SPACs have two years to search for a private company with which to merge or negotiate an outright acquisition and in that way bring the company public. As a result, all other considerations aside, the fulfillment of a given SPAC’s business objectives may not ultimately align with the expectations of sustainable investors.
- While definitions continue to evolve, sustainable investing refers to a range of five overarching investing approaches or strategies that encompass: values-based investing, negative screening (exclusions), thematic investing, impact investing and ESG integration. Shareholder/bondholder engagement and proxy voting may also be employed along with one of more of these strategies that are not mutually exclusive.
- Promoting the Continued Growth and Development of Sustainable Investing in US Mutual Funds and ETFs: A Three-pronged Proposal to Address Misunderstanding and Confusion that Have Arisen in the Sector. Michael Cosack and Henry Shilling, May 2020.
Sustainable Research & Analysis LLC provides a timely monthly snapshot of trends and developments affecting the sustainable investing market segment as seen through the lens of mutual funds, ETFs and other registered investment products. The Monitor tracks total net assets, fund flows, fund re-brandings, new fund firms, new fund launches and fund closures. CLICK HERE to request additional information.