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08-03-2018 · Insight

Robeco puts tobacco on exclusion list

Robeco excludes investments in the tobacco industry from its mutual funds. This is a logical next step in its Sustainability Investing approach.

    Authors

  • Carola van Lamoen - Head of Sustainable Investing

    Carola van Lamoen

    Head of Sustainable Investing

  • Sylvia  van Waveren - Engagement Specialist

    Sylvia van Waveren

    Engagement Specialist

Summary

  1. Society’s stance is increasingly negative towards tobacco

  2. Engagement will not lead to fundamental change

  3. Tobacco exposure in funds was already relatively low

Robeco has been a leader in Sustainability Investing (SI) for years. Not only are Environmental, Social and Governance (ESG) considerations fully integrated into its investment processes, active ownership also plays an important role, as dedicated specialists vote at Annual General Meetings of listed companies and actively engage with companies in the investment portfolios to improve their sustainability profile.

Robeco already excluded tobacco from its sustainable fund range. This exclusion is now extended to the mainstream Robeco funds, including sub-advised funds. The exclusion does not apply to client-specific funds and mandates, where the client’s exclusion list is leading.

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Reasons for the exclusion

The harmful effects of the tobacco industry are increasingly exposed. The World Health Organization estimates that by 2030 tobacco will become the world's biggest single cause of death and disease, killing 10 million people each year. In 2017, the UN Global Compact excluded tobacco companies from participating in the initiative. Clients are increasingly unwilling to accept investments in tobacco.

Robeco takes its responsibility as an investor seriously and actively engages with companies it invests in. As a result, exclusion is only applied when other means are exhausted. In the case of the tobacco industry, engagement will not lead to fundamental change, as tobacco companies are not expected to stop producing cigarettes. Therefore, for Robeco, investing in tobacco is no longer compatible with the company’s commitment to SI.

As some funds had already divested tobacco, investments in tobacco and related companies had already decreased to 0.22% of total assets in funds managed by Robeco.

Peter Ferket: “Robeco has been at the forefront of SI since the 1990s and sees sustainability as a long-term force for change in markets, countries and companies. Given the significant international concerns about the risks posed by tobacco and in view of recent developments, such as the UN Global Compact’s decision, we think the time is ripe for excluding tobacco altogether.”

Carola van Lamoen: “Excluding tobacco is a logical addition to our Sustainability Investing approach; it complements a diverse set of SI instruments such as ESG integration, active ownership, impact investing and our existing exclusions.”

Scope of the exclusion

The exclusion applies to all listed companies that are involved in the production of tobacco or significant components of cigarettes. The process of excluding tobacco stocks will be completed by the end of the third quarter of this year.

Robeco

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

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In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. 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. Robeco Institutional Asset Management B.V. (“Robeco”) expressly prohibits any redistribution of the Information without the prior written consent of Robeco. The Information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Certain information contained in the Information includes calculations or figures that have been prepared internally and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results. Robeco Institutional Asset Management UK Limited (“RIAM UK”) is authorised and regulated by the Financial Conduct Authority. RIAM UK, 30 Fenchurch Street, Part Level 8, London EC3M 3BD (FCA Reference No:1007814). The company is registered in England and Wales under Ref No. 15362605.

In all cases where historical performance is presented, please note that past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. 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. Robeco Institutional Asset Management B.V. (“Robeco”) expressly prohibits any redistribution of the Information without the prior written consent of Robeco. The Information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use is contrary to law, rule or regulation. Certain information contained in the Information includes calculations or figures that have been prepared internally and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results. Robeco Institutional Asset Management B.V. is authorised as a manager of UCITS and AIFs by the Netherlands Authority for the Financial Markets and subject to limited regulation in the UK by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.