Seven steps to ESG integration

Seven steps to ESG integration

02-05-2017 | Research

Integrating sustainability into the investment process is a strategic choice at Robeco – but it hasn’t happened overnight. So how is it done?

  • Masja Zandbergen
    Masja
    Zandbergen
    Head of ESG integration

Speed read

  • Robeco uses a seven step process for integrating sustainability
  • ESG is used across the equity, quant and credit fund ranges
  • Research and active ownership underpin the investment process

There is no right or wrong way to do it – all professional investors will approach it differently, and use different criteria, based on what their clients or beneficiaries want. Our new white paper entitled ‘Seven steps to ESG integration – the Robeco approach’ lays down for the first time how such an important part of Robeco’s investing philosophy and landscape was created over time.

In short, the steps are:

  1. Defining your investment belief, as this will define your sustainability investing strategy. 
  2. Embedding it in the organization, and then seeing the multiplier effect. 
  3. Creating an integrated framework, which for Robeco means… 
  4. Having access to leading research, from our sister company RobecoSAM; 
  5. Integrating ESG, where each investment process requires its own approach; and 
  6. Using active ownership to enhance performance and take responsibility 
  7. Finally, there is raising the bar, as global challenges continue to shape markets.

At the heart of Robeco’s strategy is the firm belief – now backed by a long track record – that:

  • Integrating ESG factors into investment analysis and decision-making processes leads to better-informed investment decisions; 
  • ESG factors can act as an ‘early warning radar’ for risks that are not yet reflected in asset values, which means their use improves risk/return ratios; 
  • Considering ESG therefore leads to more comprehensive assessments and valuations, resulting in the earlier discovery of investment opportunities; and
  • Exercising ownership rights through voting and engagement enables us to create additional long-term value, while also taking responsibility as an asset owner.

“Putting in place a good process in line with our beliefs clearly goes well beyond screening and engagement, and implies the use of ESG information in all stages of the investment process, including the investment case and the valuation models used in investment decisions,” says Masja Zandbergen, head of ESG integration at Robeco.

Integrated sustainability: making better informed investment decisions

Raising the bar

Finally, as global sustainability challenges continue to shape markets, the bar is being raised all the time. Sustainable Development Goals (SDGs) and Stewardship Codes are among initiatives that are widening the scope of sustainability investing, though Europe remains more advanced, the US and Asia are making progress as well. “The bar is being raised all the time in trying to achieve higher standards across the SI spectrum,” says Zandbergen. “Robeco continues to move forward, for example by signing the Dutch SDG investing agenda, which states our commitment to contribute to the SDGs. As they are drivers for change, the extent to which companies contribute to realizing the SDGs can be valuable information to incorporate in our investment processes.”

“It remains a journey on a route that is ever-changing, but looking through a wider lens allows us to make better informed investment decisions and to take our responsibility as an investor.”

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