Sustainability investing has been part of Robeco for so long that to look at its first fund, you have to go back to Dutch guilders.
The first dedicated SI fund, in Dutch called the DuurzaamAandelen (sustainable stocks) Fund, was launched 20 years ago in February 1999. Its original investors used Dutch guilders, the national currency that preceded the euro.
It was the first sustainability fund to be launched by a mainstream asset manager in the Netherlands, a pioneering approach that set Robeco on a course that led it to become the world’s leading practitioner of sustainability investing.
And its origins go back in time to an era in which sustainability had different definitions. The Duurzaam fund not only predates the euro, which replaced the guilder in 2002, but also the concept of using environmental, social and governance (ESG) factors in sustainability analysis. Back in the 1990s, investors focused on the ‘three Ps’ of People, Planet, Profit’, also known as the ‘triple bottom line’. The buzz phrase then was ‘socially responsible investing’, before PPP morphed into ESG, and SRI became SI.
So, how did it begin? Robeco recognized the trend within large companies to increasingly focus on sustainability, and decided to launch a fund focusing on the most advanced sustainable companies. Robeco engaged advisors, including Triple Value Consulting, a Dutch consultancy whose co-founder was Stefan den Doelder, now an investment director with Robeco Private Equity. His firm was named after the triple bottom line, focusing on sustainable business and sustainable investing.
The point person at Robeco managing the project was Ronald Wuijster, who later became the head of the Institute for Research and Investment Services (IRIS), a joint-venture between Robeco and Rabobank.
“Ronald had a long career at Robeco and he always had a keen interest in sustainability and this was clearly the first thing that he had done in this field,” says Masja Zandbergen, then an analyst in the early stages of her career at Robeco, and now Head of ESG Integration. “He sat down and thought: what would this fund look like? How do we make this into an investible proposition?”
“What they came up with was the best-in-class selection method, using positive selection but also applying a number of negative criteria, including the usual exclusions – no tobacco, no weapons, etc. On top of that, they wanted to select the best companies not only from the ESG perspective, but also from a financial perspective – these needed to be the best companies all round.”
“The investment universe that was targeted was global, using the MSCI World index members, focusing on North America, Europe and Japan. So, the big question was, where to find the data?”
Therein lay the first real problem. Data providers focused on sustainability research in the late 1990s were few and far between. But it led to the beginning of some relationships that continue to this day, not least in connecting Robeco with the Swiss firm Sustainable Asset Management (SAM).
“The Duurzaam team did a whole analysis of who was providing sustainability data,” says Zandbergen. Then they selected SAM, which had started a few years earlier in 1995. SAM launched the Dow Jones Sustainability Index (DJSI) in 1998 and was starting to get a name in the market, but its database was quite limited. It was quite some work to really assess more than 2,000 companies in the Dow Jones World Index at the time, so they only had data on around 500 of them.”
“That is why Robeco also used Ethical Investment Research and Information Service (EIRIS), which had been around since the 1980s and whose scope was much wider. However, the problem here was that their analysis was much more from an ethical perspective, looking at things such as whether the companies were doing animal testing. It was more difficult to come to a score for a company as a whole.”
“The third provider was Kinder, Lydenberg and Domini (KLD), a consultancy that was a long-standing research provider to what was then called the socially responsible investing community in the US. They also provided information; they had quantity but less quality; it was of a different nature.”
By putting it all together, and giving weights to information from each source, 400 companies worldwide were selected for the investible universe from the first screen based on sustainability. For the second screen on financial performance, 70 companies were ultimately selected for the fund.
And then for the launch. Buying into the fund cost 50 guilders for one unit of it, and the initial target size for the fund was 50 million guilders (EUR 22.7 million when the euro began). But expectations were greatly exceeded when the fund raised 160 million guilders following a series of roadshows and adverts.
The fund existed for 15 years before it was merged into the RobecoSAM Quant Sustainable Global Equities fund, now renamed as the Robeco QI Global Developed Sustainable Enhanced Index Equities fund. While it no longer stands alone, the Duurzaam fund started a trend that continues to this day.
“Robeco was the first of the traditional asset managers to launch a sustainability fund,” says Zandbergen. “After it launched, our competitors all came up with one. We really were pioneers.”
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