Sustainable Investing

Paris-aligned benchmarks

Paris-aligned benchmarks are indices whose total emission levels are aligned with the Paris Agreement, which sees to limit the rise in global temperatures to well below 2°C above pre-industrial levels, and to pursue efforts to keep the rise to 1.5°C.

According to the EU this implies the creation of a benchmark “where the underlying assets are selected in such a manner that the resulting benchmark portfolio's [greenhouse gas] emissions are aligned with the long-term global warming target of the Paris Agreement and is also constructed in accordance with the minimum standards laid down in the delegated acts”.

Until 2020, no such benchmark existed for measuring the performance of investment strategies against the goals of the Paris Agreement. The EU Benchmarks Regulation responds to this need by defining the Paris-aligned Benchmark. Robeco innovated in this area by working with Solactive to create Paris-aligned Benchmarks for fixed income investing – for corporate credits and aggregate bonds. These are the indices against which the performance of the Robeco Climate Global Fixed Income strategies is measured.


The indices are structured along the following principles:

For corporate bonds:

  • A process of year-on-year decarbonization is reflected, equaling at least 7% on average per annum, based on the Scope 1, 2 and 3 emissions.

  • All industries except fossil fuels are included, and sector weights are kept close to the broader market index.

  • Emissions are normalized by the total capital of issuers, measured in terms of book values.


For sovereign bonds:

  • A process of year-on-year decarbonization is reflected, equaling at least 7% on average per annum.

  • Decarbonization of the index will be achieved through decarbonization at country level, as well as by adjusting the weights of individual sovereigns to establish a -7% annual trajectory at index level.

  • Country emissions will be normalized by the population size, measured in terms of CO2 emissions per capita.


Despite these carbon-related constraints, Robeco finds that the index characteristics mimic those of the general market over time. The behavior and yield characteristics of the Paris-aligned indices are very similar to those of their equivalent generic indices, with the important difference being that the Paris-aligned indices have a much lower carbon footprint.


Let's keep the conversation going

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

Don’t miss out
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.