The report also includes updates on trying to stem controversial corporate behavior, and on the collaborative engagement conducted with Australia over its climate transition policies. The team finally reviews the recent proxy voting season and asks the question: “Do we need a Say on Sustainability?”

It caps a busy summer for Robeco’s engagement specialists in tackling issues that pose a serious threat to human health and climate change, led by the opening of dialogues with chemicals companies to phase out the use of per- and polyfluoroalkyl substances (PFAS).

The new ‘Hazardous chemicals’ engagement theme raises the social, environmental and litigation risks around the production and distribution of chemicals such as PFAS, also known as ‘forever chemicals’ as they don’t degrade naturally. PFAS are used to make kitchenware, grease-proof packaging or medical clothing, and products that can repel water and bacteria – but there is a dangerous flipside.

“A growing amount of scientific research has associated these chemicals with causing cancer, infertility and a damaged immune system,” says Sylvia van Waveren, who is leading engagement on this theme.

“A global health challenge, we will be asking companies at the root of it to develop a timeline and action plan for phasing out PFAS, and to create safer alternatives for all hazardous chemicals’ production and their use.”

Companies involved in severe breaches of guidelines by the United Nations Global Compact (UNGC) and Organization for Economic Cooperation and Development (OECD) are subject to an enhanced engagement process. This aims to eliminate the problem and ensure that systems are put in place to prevent similar breaches from reoccurring. This process has potential investment implications that can include exclusion.

“We recently rolled out a number of improvements to our approach to our ‘Controversial behavior’ engagement theme and we are pleased to see this has borne fruit,” says senior engagement specialist Yumi Fujita in her progress report. “We have started to see positive results on both the environmental and social fronts, even in some of the most challenging contexts.”

“Going forward, this progress will be reflected in our new in-house controversy scores, which allow for a faster and more agile upgrading and downgrading across investment frameworks, and thus a better representation of risks across our products.”

Tackling global warming remains a priority around the world, and one of the countries that has seen the worst effects of it has been Australia, which has suffered severe bushfires and droughts in recent years. The country is also a major producer and user of coal, thereby contributing to its own environmental degradation.

“We therefore initiated a sovereign engagement program with Australia in 2021 to support its climate transition policy away from coal,” says Head of Active Ownership Peter van der Werf, who visited the country for a second time to take part in the talks. He reports on the generally positive outcomes of many meetings held in August 2024 with representatives from federal, state and regulatory agencies, including with the Australian Treasurer.

“Sovereign engagement is important, as national policy commitment on climate is used by Australian companies in their targets, while creating a level playing field among different countries contributes to addressing systemic risk for investors.”

Robeco is acting as a member of the advisory committee and co-lead of a working group under the PRI’s ‘Collaborative sovereign engagement on climate change with Australia’ initiative. During the latest trip, the collaborative team pressed the necessity that Australia sets a carbon reduction target of at least a 70% in its upcoming publication of its 2035 Nationally Determined Contributions (NDCs).

Finally, investors’ role in corporate annual general meetings have seen major progress in achieving a ‘Say on Pay’ when reviewing directors’ remuneration, and a ‘Say on Climate’ when addressing their climate change policies. But should there also be a ‘Say on Sustainability’ for the wider issues? The question is asked by voting specialist Diana Trif while reviewing Robeco’s proxy voting activities.

“‘We ask the question of why don’t investors have a ‘Say on Sustainability’, especially given the increasingly high materiality of the topics across companies risk management, investments and reporting,” she says.

“Having a ‘Say on Sustainability’ would allow investors to convey their views to the board and management through a clear ‘for or against’ vote, making the overall annual general meeting more constructive.”