Robeco, The Investments Engineers

Sustainable Investing

Environmental Impact Monitoring Tool

The Environmental Impact Monitoring tool is a proprietary research model developed by Robeco to measure a company’s level of greenhouse gas emissions, along with its energy consumption, water use and waste generation.

Sustainable Investing

Environmental Impact Monitoring Tool

It is used to select stocks for strategies that seek a lower carbon footprint (among other environmental advantages) than their benchmark, including
those that belong to Robeco’s Sustainability Focused range of
ESG-enhanced portfolios. It relies on detailed information received from
the companies themselves in the Corporate Sustainability Assessment
(now owned by S&P Global) along with other sources.

  • Greenhouse gas emissions are measured in two ways: Scope 1 and 2.
    Scope 1 emissions are directly generated by the company, such as an
    airline producing exhaust fumes. Scope 2 emissions are created by the
    generation of the electricity or heat needed by the company to sell its
    main products.

  • Energy consumption is measured in megawatts per hour of electricity
    consumed by the company in its normal business operations, including
    any generated by itself using internal power plants.

  • Water use measures a company’s total water withdrawal from the mains water
    supply, reservoirs, rivers or other sources, in square meters. Any water
    that is discharged by the production process can count against this.

  • Waste generation measures the total amount of metric tons of dry
    waste generated by the company, consisting of by-products of the
    extraction or production process that can no longer be used for
    production or consumption and which the company intends to discard.

Once the data has been collected, Robeco measures the environmental footprint of a portfolio along two lines:

Footprint intensity expresses a portfolio’s
aggregate resource efficiency. Each company’s footprint intensity is
calculated by normalizing the company’s resources consumed by its annual
revenues. The portfolio’s aggregate intensity figure is calculated by
multiplying each portfolio component’s intensity figure by its
respective portfolio weight. 

Footprint ownership expresses the total amount of
resource consumption financed by the portfolio’s investments. Each
company’s footprint is calculated by normalizing the company’s resources
consumed by its enterprise value. Multiplying this figure by the dollar
amount invested in each company yields an aggregate ownership figure. 

Robeco strategies using the tool like to express the net contribution
to the environment made by investing in these more sustainable
companies in easy-to-understand ways. For example, the amount of CO2
saved can be expressed in how many cars this equates to taking off the
road. The amount of electricity or water saved can be shown in terms of
what the average household would normally use. Waste generation is also
expressed as what a household would normally create.

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