Sustainable Investing

Exclusion

An exclusion is the act of barring a company’s securities from being purchased for a portfolio due to business activities that are deemed unethical, harmful to society, or in breach of laws or regulations.


ESG criteria is used to determine whether a company complies with the desired level of standards. If not, it can be removed from consideration in the investment process, denying the company access to capital.

Exclusions typically involve the makers of controversial weapons such as cluster bombs or nuclear warheads and those making indisputably harmful products such as tobacco and firearms, along with companies engaged in human rights abuses such as child labor. Companies engaged in serious corporate governance breaches such as bribery or corruption and that show no willingness to resolve these issues, are also typically excluded.

The matter of what to exclude largely remains an act of conscience for investors. This is why most use the principles contained within the UN Global Compact as a benchmark for what is considered to be unacceptable business practices. For some products, exclusion is required by law: Dutch legislation, for example, forbids the ownership of companies making cluster bombs or other contentious munitions.


Creating returns that benefit the world we live in

Climate change

As the world combats climate change, companies heavily involved in thermal coal production, deforestation and unacceptable levels of pollution have joined the ranks of the routinely excluded. In July 2020, Robeco expanded the range for exclusions for companies involved in thermal coal, oil sands and Arctic drilling. This was, however, subject to the proportion of their business engaged in these activities.

Robeco set the threshold of 25% of revenues derived from thermal coal and oil sands, and 10% from Arctic drilling, for its Sustainability Inside range of funds. Stricter levels of 10% of revenues for thermal coal and oil sands, and 5% for Arctic drilling, were imposed for the Sustainability Focused and Impact Investing ranges of funds.

Exclusion is only used as a last resort when engagement is either not possible, or has failed to achieve the required objective due to a lack of cooperation from the company. Generally, it is possible to engage on corporate behavior, but not on a product. This means excluding an industry such as tobacco, since it cannot change the harmful nature of its product; but engaging with an energy company to try to persuade it to move more of its business away from fossil fuels.

Countries can also be excluded if they are subject to sanctions by the United Nations, European Union, or other international authorities. This bars Robeco from buying sovereign bonds from governments on the exclusion list, or from purchasing equities or credits or companies that are domiciled in these countries. This currently includes Iran, North Korea and Zimbabwe.

For more information, see Robeco’s exclusion policy and exclusion list.

Let's keep the conversation going

Keep track of fast-moving events in sustainable and quantitative investing, trends and credits with our newsletters.

Stay updated
Robeco

Robeco aims to enable its clients to achieve their financial and sustainability goals by providing superior investment returns and solutions.

Important information
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor.


Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States. This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.