switzerlanden
Results of EU fund classification reflect sustainability of Robeco’s fund range

Results of EU fund classification reflect sustainability of Robeco’s fund range

10-03-2021 | Insight
Investment funds are getting a huge shake-up under new EU rules that will prove how sustainable they really are. And this bodes well for Robeco’s suite of strategies that have embraced sustainability for decades.
  • Elissa Lyra
    Elissa
    Lyra
    Senior Product Development Manager
  • Kenneth Robertson
    Kenneth
    Robertson
    Client Portfolio Manager - Sustainable Investing

Speed read

  • Almost all Robeco funds meet the EU’s sustainability credentials
  • Articles 8 and 9 mirror an existing internal classification system
  • Long history of integrating sustainability made the process easier

The moves form part of the EU’s Sustainable Finance Action Plan and a key new directive, the Sustainable Finance Disclosure Regulation (SFDR), both of which start to come into effect from March 2021.

The SFDR forces asset managers to disclose the differing levels of sustainability integration and focus of each investment strategy that they offer. This aims to create a more transparent playing field and stop greenwashing by increasing comparability between funds for end investors.

Two defining parts of the regulation affect virtually all funds at Robeco. Article 8 labels all strategies that that promote environmental and social characteristics, and have these factors integrated into the investment process. The higher Article 9 applies to those with specific sustainability targets or objectives. All needed to be labeled according to the relevant Article by 10 March.

Climate investing: from urgency to solutions
Climate investing: from urgency to solutions
Read more

Business as usual

In a way, this is business as usual for Robeco. “With 25 years of sustainable investing experience, Robeco has long categorized our range of investment using our own internal classification system,” says Kenneth Robertson, Client Portfolio Manager with the Robeco SI Center of Expertise.

“When preparing for the new requirements specified under SFDR, we have therefore been able to draw on these experiences to ensure our compliance with the new regulations from their 10 March implementation.”

“Our company-wide philosophy is that companies (and countries) that act in a sustainable way towards the environment, society and all its stakeholders are likely to be more able to deal with a variety of issues in the future of their business or endeavours. The vast majority of Robeco strategies therefore systematically integrate ESG into the investment process based on proprietary research.”

“Here, the starting point is a deep understanding of the materiality of sustainability factors, and their impact on a company’s business model and profitability, allowing us a better understanding of the risks and opportunities faced by companies over the long term.”

In-house classifications

Robeco’s in-house classification system was launched in 2019 to make it easier for clients to choose just how sustainable they wanted their investments to be. This led to the creation of three types of fund range, labeled as Sustainability Inside, Sustainability Focused, and Impact Investing.

“The majority of Robeco strategies fall into our Sustainability Inside category, which includes full ESG integration based on proprietary research, exclusions, and voting and engagement,” says Robertson. “Our Sustainability Focused strategies have an explicit sustainability policy, and targets for an ESG profile and an environmental footprint that are better than their benchmarks.”

“Our Impact investing strategies aim to contribute to specific sustainable themes, such as the Sustainable Development Goals and our new fixed income climate funds that are aligned with the Paris Agreement benchmark. These funds are labeled as RobecoSAM.”

Mirroring the regulations

This neatly mirrors the new SFDR classifications:

  • Article 8 Funds: “Where a financial product promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.” This will cover all Sustainability Inside and Sustainability Focused strategies.
  • Article 9 Funds: “Where a financial product has sustainable investment as its objective and an index has been designated as a reference benchmark.” This will cover all Impact Investing funds (labeled as RobecoSAM).

A small minority of Robeco funds will fall under the lesser Article 6 classification, in which ESG is not applied, such as those solely using derivatives, or cash savings accounts.

Dedicated working groups

“Even with a long history of sustainable investing, Robeco undertook an extensive classification of our strategies, using the criteria as set out by the new SFDR regulations,” says Elissa Lyra, Senior Product Development Manager at Robeco.

“Our classification process began with the creation of dedicated working groups for each investment capability offered by Robeco, including for fixed income, quant, fundamental equity and multi asset. At this stage, each fund was mapped against the classification requirements as set out by the SFDR.”

“As a second step, using a newly developed in house tooling, we assessed the performance of our fund range against the adverse impact metrics as specified under the regulation. Following these initial steps, Robeco’s Legal, Compliance and Risk teams performed additional assessments to ensure compliance with the spirit and the letter of the new regulations.”

“Finally, this led to a classification proposal that was reviewed by several internal governance committees, and ultimately led to the final classification of our fund range that comes into play on 10 March. New fund disclosures will also be available on our website from that date.”

Promoting environmental and social characteristics

While the process was complex and involved teams across the whole company, it was made easier by the fact that ESG has routinely been integrated into the investment process since 2010 .

“Given that the vast majority of Robeco strategies systematically integrate ESG into the investment process, in addition to integrated active ownership and exclusions, most Robeco strategies fell quite naturally under Article 8,” says Lyra.

“Binding selection criteria were used for the underlying assets, as well as binding indicators to measure whether the criteria for promoting environmental or social characteristics were met. The assessment of good governance practices among investee companies is also an integrated part of these strategies.”

“Our SI Focused range goes a step further in reducing their environmental footprint versus the benchmark. However, we chose to still classify these strategies as Article 8 funds, given that these strategies are not deemed to be fully pursuing environmental or social objectives, but rather strive for a footprint reduction as a risk mitigation measure.”

“For Article 9, all of our RobecoSAM-labeled strategies follow our state-of-the-art impact approach. They are designed to make a measurable environmental or societal impact, and therefore have a sustainable investment objective at their core, as well as a commitment to do no significant harm to other sustainable objectives. The whole Impact Investing range can therefore be classified as Article 9.”

Sustainable Finance Action Plan
Sustainable Finance Action Plan
Overview
Logo

Disclaimer Robeco Switzerland Ltd.

The information contained on these pages is for marketing purposes and solely intended for Qualified Investors in accordance with the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”) domiciled in Switzerland, Professional Clients in accordance with Annex II of the Markets in Financial Instruments Directive II (“MiFID II”) domiciled in the European Union und European Economic Area with a license to distribute / promote financial instruments in such capacity or herewith requesting respective information on products and services in their capacity as Professional Clients. 

The Funds are domiciled in Luxembourg and The Netherlands. ACOLIN Fund Services AG, postal address: Affolternstrasse 56, 8050 Zürich, acts as the Swiss representative of the Fund(s). UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zurich, postal address: Europastrasse 2, P.O. Box, CH-8152 Opfikon, acts as the Swiss paying agent. The prospectus, the Key Investor Information Documents (KIIDs), the articles of association, the annual and semi-annual reports of the Fund(s) may be obtained, on simple request and free of charge, at the office of the Swiss representative ACOLIN Fund Services AG. The prospectuses are also available via the website www.robeco.ch. Some funds about which information is shown on these pages may fall outside the scope of the Swiss Collective Investment Schemes Act of 26 June 2006 (“CISA”) and therefore do not (need to) have a license from or registration with the Swiss Financial Market Supervisory Authority (FINMA). 

Some funds about which information is shown on this website may not be available in your domicile country. Please check the registration status in your respective domicile country. To view the RobecoSwitzerland Ltd. products that are registered/available in your country, please go to the respective Fund Selector, which can be found on this website and select your country of domicile. 

Neither information nor any opinion expressed on this website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco Switzerland Ltd. product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports. 

By clicking “I agree” you confirm that you/the company you represent falls under one of the above-mentioned categories of addressees and that you have read, understood and accept the terms of use for this website.

I Disagree