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Climate change dominates Robeco’s public policy engagement

Climate change dominates Robeco’s public policy engagement

03-01-2019 | Active Ownership Report
The battle against global warming was a central theme in Robeco’s engagement with public bodies in 2018.
  • Carola van Lamoen
    Carola
    van Lamoen
    Head of Active Ownership

Speed read

  • Climate change and EU Action Plan were main focus areas
  • Call on G7 nations to speed up adoption of Paris Agreement
  • Request made to adopt sustainable stock exchange guidance

Cutting carbon footprints remains an important topic for Robeco, particularly following the launch of our own climate change policy in 2017. Robeco supports the targets for lowering harmful greenhouse gas emissions globally, as set out in the 2015 Paris Agreement.

One focus area was targeting the Group of Seven leading industrialized nations. In May, Robeco was a signatory to the 2018 Global Investor Statement, signed by 288 investors from around the world, “calling on the governments of the G7 nations to increase efforts to achieve the goals of the Paris Agreement, accelerate private sector investment in the low carbon transition and commit themselves to improving climate-related financial reporting.”

The statement was delivered in advance of the G7 Summit on 8-9 June 2018. Similar statements were issued in 2016 and 2017 and provided a strong signal of the investor community to the G7 nations

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EU Action Plan for Sustainable Finance

Next to our policy efforts on climate change, we gave our opinion on the EU Action Plan for Sustainable Finance via the European Fund and Asset Management Association (EFAMA).

In July 2018, Robeco supplied feedback to EFAMA regarding a letter it was sending to the European Commission about disclosures relating to sustainable investments and sustainability risks. This included amending Directive 2016/2341. While this may seem rather technical, the final plan has the potential to introduce sustainable finance on a level playing field across the EU, and is a major debating point for sustainable investors.

Robeco’s comments focused on the need to be positive, clear and not too conservative about promoting sustainable finance. Whilst we agree that investment using environmental, social and governance (ESG) factors should not become a box-ticking exercise, we also believe that the implementation of sustainable finance is unlikely to be a ‘one-size-fits-all’ approach.

We further encouraged EFAMA to be more ambitious in its recommendations. For example, the letter recommends that the asset management industry can contribute to a more sustainable economy by “engaging with companies in their portfolios to better understand the management of their ESG risks and opportunities.” Robeco is convinced that engagement should also aim to improve overall ESG conduct.

Backing a Carbon Disclosure Project Statement

Other investor initiatives seen in 2018 were also related to the EU Action Plan on Sustainable Finance. Robeco backed a statement in November by the Carbon Disclosure Project (CDP), a UK organization which encourages countries and cities to disclose the environmental impact of major corporations within their jurisdictions. Robeco has been an active member of the CDP for many years. Robeco and other investors support the creation of a level playing field for carbon disclosure across the EU by standardizing sector-specific metrics. Our statement also called for policy coherence between investor duties and corporate reporting, so that companies actually disclose the information that investors require.

Roundtable on Sustainable Palm Oil

Support for making palm oil production more sustainable led to Robeco participating in the Roundtable of Sustainable Palm Oil (RSPO) annual event in August. The industry faces issues related to deforestation, labor rights and has a substantial carbon footprint. We have engaged for many years with palm oil companies and will step up our efforts in 2019.

Robeco wrote to the RSPO, backing its moves to strengthen its standards for certifying the sustainable production of palm oil, a certification process that undergoes public review every five years. The final letter was sent to the RSPO Secretariat, its Principles and Criteria Task Force, and workshop consultation leads.

Although a handful of firms are already engaging directly with the RSPO via calls and meetings, major updates by letter will be shared with signatories as they occur. This is in addition to a high-level press release that was sent in August.

On 15 November, the RSPO ratified and adopted a certification standard aimed at universally strengthening social development, environmental protection and economic prosperity across the sustainable palm oil value chain. The RSPO has also developed an additional and separate standard specifically geared toward independent smallholders which is due for ratification in November 2019.

Exchange of Ideas

Finally, regulation has an important role to play in promoting sustainability, and therefore Robeco follows initiatives from the International Organization of Securities Commissions (IOSCO), an association of bodies that regulate the world’s securities and futures markets. Members are typically primary securities and/or futures regulators in a national jurisdiction, or the main financial regulator from each country.

Collaboratively with many other investors, we wrote to IOSCO in April to express our support for its review of ESG issues in two of its committees. We called on the group to endorse the Sustainable Stock Exchanges’ Model Guidance on Reporting ESG Information to Investors as a consistent principles-based approach to disclosing sustainability issues.

We also asked IOSCO to engage with the World Federation of Exchanges (WFE) in their ongoing sustainability work, including examining metrics as a starting point towards developing a minimum, baseline level of disclosure. Finally, we sought IOSCO’s endorsement of the Financial Stability Board (FSB) Taskforce on Climate-related Financial Disclosures (TCFD) recommendations as a means for a deeper examination of climate-related disclosures.

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