hongkongen
Climate partnerships needed between company boards and investors

Climate partnerships needed between company boards and investors

20-01-2020 | Insight
A partnership between companies and investors is essential if climate change targets are to be met. And investors must themselves band together through collaborative initiatives if real progress in decarbonizing the energy sector is to be made.
  • Sylvia van Waveren
    Sylvia
    van Waveren
    Engagement Specialist
  • Carola van Lamoen
    Carola
    van Lamoen
    Head of Active Ownership

Speed read

  • More collaboration needed to meet the Paris Agreement targets
  • Company boards can partner with investors to reduce CO2 emissions
  • Investor initiatives such as Climate Action 100+ prove their worth

That’s the message from engagement specialist Sylvia van Waveren and Head of Active Ownership Carola van Lamoen ahead of the annual World Economic Forum, at which the issue of tackling emissions has top billing. The main topic to be discussed at Davos on 21 January is “How to address the urgent climate and environmental challenges that are harming our ecology and economy.”

Making the world carbon neutral by 2050 is seen as essential to meet the goals of the Paris Agreement, which seeks to limit global warming to 2 degrees Celsius or less above pre-industrial levels by the second half of this century. Much of the focus has been on reducing the carbon emissions by oil and gas companies in the transition from fossil fuels towards renewable, net zero carbon energy.

Robeco had a three-year engagement program with eleven listed oil and gas companies that ended in 2019. Engagement was conducted with six international and five national oil and gas companies which combined account for one quarter of global oil and one fifth of gas supply.

“Looking back on three years of engagement, our work with the oil and gas companies have in general led to successful outcomes,” says Van Waveren, who covers the global energy industry in Robeco’s Active Ownership team.

“Of the 11 companies within the peer group, we have been able to close seven successfully, based on their progress on the underlying objectives set at the beginning of the engagement. That’s a success rate of 64%.”

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

Stunning success with Shell

The engagement formed part of collaborative work with the Climate Action 100+ initiative, a grouping of more than 370 investors with more than USD 35 trillion in assets collectively under management. Launched in December 2017, the initiative has identified more than the 100 companies that emit the most carbon, including the biggest names in the oil and gas sector.

It achieved a stunning success in December 2018 when Shell agreed to set short-term targets for the carbon emissions, including those of the used products, and said it will link executive pay to meeting these objectives for the first time. The Shell engagement was co-led by Robeco and the Church of England Pensions Board.

“The Shell example shows how important it is to form partnerships, both with the companies that need to lower their carbon footprints, and with other investors,” says Carola van Lamoen, Head of the Robeco Active Ownership team.

“Initiatives like the Climate Action 100+ have laid the foundations for the unprecedented partnerships that are needed going forward in high-emitting sectors such as aviation, automobiles, shipping, energy and steel.”

Public/private partnerships

The Davos summit is itself a public/private partnership at which the world's largest corporations meet in the Swiss ski resort every January to discuss global issues. This year the main topics under discussion by business leaders are sustainability, the ‘fourth industrial revolution’ and the demographic and social trends reshaping entrepreneurship.

Van Waveren says investors can build on the collaborative successes of 2019, at which three major moves forward were seen. “The first and most important was the firm establishment of the umbrella-style partnership model to drive ambitious change, as seen with what Climate Action 100+ achieved working collectively,” she says.

“The second was the concept of aligning companies’ business models with the Paris Agreement, helped by organizations such as the Transition Pathway Initiative, which looks at carbon emissions. Thirdly, attention has been – very logically – shifting away from energy supply and towards energy demand, since many decarbonization solutions lie with the use of the energy products by consumers. One example is the high carbon industries such as transport.”

More ambition needed

In 2020, investors and companies can build on this success, Van Waveren says. “While 2019 marked a watershed in terms of emerging practice and in terms of changing investors’ attitudes and views, we do not yet have the level of ambition needed if we are to succeed,” she says.

“This is why 2020 has to be the time a new partnership is formed between the company board room and institutional investors. This should be a partnership that is based upon systemic change and practical outcome that can work across the full value chain and across all asset classes, to develop net-zero carbon paths for aviation, autos, shipping, steel and cement, to name but a few.”

Van Waveren says that at a governmental level, Nationally Determined Contributions – the emissions that countries are committed to mitigate under the Paris Agreement – will rise up the agenda. Many governments including Robeco’s home nation of the Netherlands are already setting targets. Some companies are also formulating their own Determined Contributions to similarly try to become Net Zero Carbon– the new buzz phrase in sustainable investing – by 2050.

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.

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. 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
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.

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 “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