He says issues such as the need for electrification and decarbonization, which in turn rely on more efficient car batteries and greater scale in renewable energy, will provide immense investment opportunities.
“Innovation is the key thing that will take sustainable investing to the next level, and determine who are the winners and who are the losers,” says Schoenmaker, Professor of Banking and Finance at the Rotterdam School of Management, Erasmus University.
“This can be seen in the electric car industry. You don’t only need to change the factory to make electric cars; you need to retrain the workforce from traditional engineers into software engineers. And you may not be able to retrain some of them, which means you need to hire new staff.”
“Germany, for example does not have enough electrical engineering students. So it is behind companies in the US and Japan that saw this coming many years ago and have invested in the right people and technology.”
Then there is the issue of being able to mass produce the cars. “The will to make them is certainly there, but currently there isn’t enough cadmium and lithium in the world to make the batteries that could replace all petrol-driven cars,” Schoenmaker says. “And many cars don’t have the range needed for long-distance trips.”
“However, advances in battery technology are moving very fast. Spintronics can improve capacity through spinning electrons that creates magnetism. You just change the way these batteries are structured to get far more capacity without generating too much heat.”
“This kind of innovation will make batteries more efficient – there are people are out there at technical universities and in car factories working to solve it. Again, this goes back to innovation.”
He says it’s a similar story with solving the coronavirus pandemic. “The solution to Covid-19 is the vaccine. Governments are not producing vaccines; it is innovative companies who are doing that.”
“Governments can help out with smart R&D subsidies, but innovation only happens in the world of entrepreneurs and companies that want to gain market share.”
“When they first started building the Channel Tunnel, they didn't know at the time what the type of train was going through it – but they built it anyway. That takes vision.”
Renewable energy is an industry that has the vision but lacks the scale, he says. “The renewable network currently doesn’t have the capacity to handle times when the wind isn’t blowing, or the sun isn’t shining. It doesn’t have enough slack yet to handle a shock.”
“If we are to move society to renewable thinking, we must become more resilient to the shocks. A bank has enough capital to absorb a shock, and manufacturing has enough inventory to absorb a shock, but renewable energy doesn’t. It’s just a matter of scale.”
Schoenmaker says there is also an important shift away from making money for a select few shareholders to long-term value creation that benefits everyone – the move from creating only wealth, to targeting wealth and well-being.
“In the capitalist system, we are used to listed companies being required to create value for their shareholders,” he says. “The purpose of shareholder value is to create financial capital using financial capital. They just want to make a profit.”
“Long-term value creation argues that we need to create social, human and natural capital as well. Society is moving towards using sustainable development to reap future profits by integrating this idea that by investing in society, you create economic value in the future.”
“Much of it relies on human capital, particularly in emerging markets, where there is so much untapped potential. We’re often dealing with entire communities, and society does not accept negative natural capital investments anymore.”
Much of this can be achieved through impact investing, which is doing as its name suggests and making an impact in moving sustainable investing into a more dynamic direction, Schoenmaker says.
“What I see is a shift from ESG investing, which is basically done from a risk perspective trying to avoid harm, towards impact investing driven by things like the Sustainable Development Goals,” he says.
“That shift is extremely important, because we are not going to get sustainable development by risk avoidance. We need to grasp the opportunities of making a positive impact.”
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.
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:
3. Local legal and sales restrictions
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.
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.