hongkongen
Let’s use finance to make the world a better place

Let’s use finance to make the world a better place

15-07-2019 | Interview
Amy Domini has been involved with sustainable investing for more than three decades. She assisted with the launch of Robeco’s first SI fund in 1999. Now she chairs Domini Impact Investments in the US. We talked with her about how far SI has come, the challenges that remain, and how her firm invests.
  • John Coppock
    John
    Coppock
    Investment writer

Speed read

  • Hard to argue that SI is not now mainstream
  • Five impediments remain to its full adoption
  • Investors need to look at full retirement picture

It’s been 20 years since you were involved with the launch of Robeco’s first SI fund. How much do you think has changed in sustainable investing over that time?

“It’s hard to argue that SI is not now mainstream when some of the world’s largest financial institutions are not only offering a product in this space, but are claiming this space as their future. On the other hand, the sustainability field has not come together to the point at which I would consider mainstreaming to be complete. For that, the data set that financial institutions rely upon needs to be universally available. We have figures for earnings, market cap, cash flows, and so on, but currently we have to fill in the blanks on sustainability. Furthermore, data around the world varies. Until these obstacles are overcome, I don’t think we can reach complete mainstreaming.”

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

What do you think are the main challenges regarding the full adoption of SI? What would be your top five impediments?

“There are two primary barriers: the continuing idea that using sustainable investing costs performance, and what I would call now confusion, particularly about what standards to apply when we use screens. Then there is that there is a school of thought that says, ‘There is a better way to do this’, such as charities, but I think this is an extremely naïve approach.” “Fourth, there is the person who still says: ‘I care about these things, but I cannot let it interfere with my primary directive, which is to allow these people to retire in dignity’. They’re making assumptions that are wrong: to retire with dignity requires more than money. And fifth, one emerging trend that bothers me is single-issue funds. If you are only concerned about solar power, animal rights or being a vegetarian, that’s a different goal from people and the planet.”

I do not believe that the right use of capitalism is to disseminate a harmful product as widely and as cheaply as possible

There has been some soul-searching over this supposed ‘fiduciary duty’ to make a profit. What’s your take on where the industry is going?

“This has always been a difficult issue. There is a school of thought that you need to get the ‘best’ weapons companies and the ‘best’ tobacco companies for your portfolios, but my own feeling is that this goes back to the right use of capitalism. I do not believe that the right use of capitalism is to disseminate a harmful product as widely and as cheaply as possible.”

How is the growing awareness of global warming shaping the SI agenda?

“We’ve seen the devastating results of climate change raise costs of flood insurance and property and casualty insurance. We had a big utility here in the US, Pacific Gas & Electric, that lost USD 2 billion in three days due to the California forest fires. But concern over climate change is still not as big a motivator here in the US as it should be. We’ve had a real assault on science here for a couple of decades, and the result has been that there’s a whole category of people who for 15 years thought they could not be re-elected for office if they acknowledged this climate change problem.”

What about the energy transition from coal, oil and gas to renewables? The world still needs fossil fuels, so how do you view this arena?

“Domini Impact Investments has moved to the explicit removal of energy sector companies from our universe. Many years ago, we had a couple of fairly large oil and gas companies; then we moved to the position that natural gas was transitional, and we wouldn’t have oil; then all natural gas companies started fracking, and we moved down further. We’ve excluded coal since the start. Most economies still rely on coal, but they also still allow smoking and guns.”

Did the Domini 400 Social Index make its mark on investing culture, particularly in the US?

“For the period of time after the end of apartheid in South Africa, it was the performance of the Domini 400 Social Index that drove the interest in this field. People could not believe that it kept outperforming! But then the KLD partners separated, and the index became part of MSCI. The MSCI KLD 400 Social Index as it exists today is now very different from what I would design – for instance, it holds oil and gas. They would say that the typical responsible investor is invested in oil and gas today (*including Robeco).”

You’ve won a considerable amount of plaudits during your long career… do you still get excited about SI today as when you started?

“I’m still giddy about it; I think my battle has goals that I now see as urgent; these are threefold. First is the need for disclosure or transparency about corporate impact, and how they affect communities and the planet. The next thing I would ask for is putting some sand in the speed of financial transactions, as this is converting the investor into a gambler. And finally, fiduciary responsibility, especially in the US, needs to be more clearly tied to the whole person. You really don’t retire in dignity based on your income if you live in a dangerous neighborhood and you’re afraid to go out after dark. If your grandson has asthma, you don’t care that you have an extra 100 dollars in your pocket due to the flourishing coal industry; you’re more interested in your grandchild’s health. With these three things dealt with, I would feel I can rest.”

Important information

The contents of this document have not been reviewed by the Securities and Futures Commission ("SFC") in Hong Kong. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has been distributed by Robeco Hong Kong Limited (‘Robeco’). Robeco is regulated by the SFC in Hong Kong.
This document has been prepared on a confidential basis solely for the recipient and is for information purposes only. Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accepting this documentation, the recipient agrees to the foregoing
This document is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. Investment decisions should only be based on the relevant prospectus and on thorough financial, fiscal and legal advice. Please refer to the relevant offering documents for details including the risk factors before making any investment decisions.
The contents of this document are based upon sources of information believed to be reliable. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.
Investment Involves risks. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance.

Subjects related to this article are:
Logo

Disclaimers

1. General
Please read this information carefully.

This website is prepared and issued by Robeco Hong Kong Limited ("Robeco"), which is a corporation licensed by the Securities and Futures Commission in Hong Kong to engage in Type 1 (dealing in securities); Type 4 (advising in securities) and Type 9 (asset management) regulated activities. The Company does not hold client assets and is subject to the licensing condition that it shall seek the SFC’s prior approval before extending services at retail level. This website has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

2. Important risk disclosures
2. Important risk disclosures Robeco Capital Growth Funds (“the Funds”) are distinguished by their respective specific investment policies or any other specific features. Please read carefully for the risks of the Funds:

  • Some Funds are subject to investment, market, equities, liquidity, counterparty, securities lending and foreign currency risk and risk associated with investments in small and/or mid-capped companies.
  • Some Funds are subject to the risks of investing in emerging markets which include political, economic, legal, regulatory, market, settlement, execution, counterparty and currency risks.
  • Some Funds may invest in China A shares directly through the Qualified Foreign Institutional Investor (“QFII”) scheme and / or RMB Qualified Foreign Institutional Investor (“RQFII”) scheme and / or Stock Connect programmes which may entail additional clearing and settlement, regulatory, operational, counterparty and liquidity risk.
  • For distributing share classes, some Funds may pay out dividend distributions out of capital. Where distributions are paid out of capital, this amounts to a return or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares.
  • Some Funds’ investments maybe concentrated in one region / one country / one sector / around one theme and therefore the value of the Fund may be more volatile and may be subject to concentration risk.
  • The risk exists that the quantitative techniques used by some Funds may not work and the Funds’ value may be adversely affected.
  • In addition to investment, market, liquidity, counterparty, securities lending, (reverse) repurchase agreements and foreign currency risk, some Funds are subject to risk associated with fixed income investments like credit risk, interest rate risk, convertible bonds risk, ABS risk and the risk of investments in non-investment grade or unrated securities and the risk of investments made in non-investment grade sovereign securities.
  • Some Funds can use derivatives extensively. Robeco Global Consumer Trends Equities can use derivatives for hedging and efficient portfolio management. Derivatives exposure may involve higher counterparty, liquidity and valuation risks. In adverse situations, the Funds may suffer significant losses (even a total loss of the Funds’ assets) from its derivative usage.
  • Robeco European High Yield Bonds is subject to Eurozone risk.
  • Investors may suffer substantial losses of their investments in the Funds. Investor should not invest in the Funds solely based on the information provided in this document and should read the offering documents (including potential risks involved) for details.

3. Local legal and sales restrictions
The Website is to be accessed by “professional investors” only (as defined in the Securities and Futures Ordinance (Cap.571) and/or the Securities and Futures (Professional Investors) Rules (Cap.571D) under the laws of Hong Kong). The Website is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of the Website is prohibited. Persons in respect of whom such prohibitions apply or persons other than those specified above must not access this Website. Persons accessing the Website need to be aware that they are responsible themselves for the compliance with all local rules and regulations. By accessing this Website and any of its pages, you acknowledge your agreement with understanding of the following terms of use and legal information. If you do not agree to the terms and conditions below, do not access this Website or any pages thereof.

The information contained in the Website is being provided for information purposes.

Neither information nor any opinion expressed on the Website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. The information contained in the Website does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, most recent annual and semi-annual reports, which can be all be obtained free of charge at www.robeco.com/hk/en and at the Robeco Hong Kong office.

4. Use of the Website
The information is based on certain assumptions, information and conditions applicable at a certain time and may be subject to change at any time without notice. Robeco aims to provide accurate, complete and up-to-date information, obtained from sources of information believed to be reliable. Persons accessing the Website are responsible for their choice and use of the information.

5. Investment performance
No assurance can be given that the investment objective of any investment products will be achieved. No representation or promise as to the performance of any investment products or the return on an investment is made. The value of your investments may fluctuate. The value of the assets of Robeco investment products may also fluctuate as a result of the investment policy and/or the developments on the financial markets. Results obtained in the past are no guarantee for the future. Past performance, projection, or forecast included in this Website should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Fund performance figures are based on the month-end trading prices and are calculated on a total return basis with dividends reinvested. Return figures versus the benchmark show the investment management result before management and/or performance fees; the fund returns are with dividends reinvested and based on net asset values with prices and exchange rates of the valuation moment of the benchmark.
Investments involve risks. Past performance is not a guide to future performance. Potential investors should read the terms and conditions contained in the relevant offering documents and in particular the investment policies and the risk factors before any investment decision is made. Investors should ensure they fully understand the risks associated with the fund and should also consider their own investment objective and risk tolerance level. Investors are reminded that the value and income (if any) from shares of the fund may be volatile and could change substantially within a short period of time, and investors may not get back the amount they have invested in the fund. If in doubt, please seek independent financial and professional advice.

6. Third party websites
This website includes material from third parties or links to websites maintained by third parties some of which is supplied by companies that are not affiliated to Robeco. Following links to any other off-site pages or websites of third parties shall be at the own risk of the person following such link. Robeco has not reviewed any of the websites linked to or referred to by the Website and does not endorse or accept any responsibility for their content nor the products, services or other items offered through them. Robeco shall have no liability for any losses or damages arising from the use of or reliance on the information contained on websites of third parties, including, without limitation, any loss of profit or any other direct or indirect damage. Third party off-site pages or websites are provided for informational purposes only.

7. Limitation of liability
Robeco as well as (possible) other suppliers of information to the Website accept no responsibility for the contents of the Website or the information or recommendations contained herein, which moreover may be changed without notice.
Robeco assumes no responsibility for ensuring, and makes no warranty, that the functioning of the Website will be uninterrupted or error-free. Robeco assumes no responsibility for the consequences of e-mail messages regarding a Robeco (transaction) service, which either cannot be received or sent, are damaged, received or sent incorrectly, or not received or sent on time.
Neither will Robeco be liable for any loss or damage that may result from access to and use of the Website.

8. Intellectual property
All copyrights, patents, intellectual and other property, and licenses regarding the information on the Website are held and obtained by Robeco. These rights will not be passed to persons accessing this information.

9. Privacy
Robeco guarantees that the data of persons accessing the Website will be treated confidentially in accordance with prevailing data protection regulations. Such data will not be made available to third parties without the approval of the persons accessing the Website, unless Robeco is legally obliged to do so. Please find more details in our Privacy and Cookie Policy.

10. Applicable law
The Website shall be governed by and construed in accordance with the laws of Hong Kong. All disputes arising out of or in connection with the Website shall be submitted to the exclusive jurisdiction of the courts of Hong Kong. 

Please click the “I agree” button if you have read and understood this page and agree to the Disclaimers above and the collection and use of your personal data by Robeco, for the purposes for which such data is collected and used as set out in the Privacy and Cookie Policy, including for the purpose of direct marketing of Robeco products or services. Otherwise, please click “I Disagree” to leave the website.

I Disagree