latamen
Robeco launches climate change policy

Robeco launches climate change policy

03-10-2017 | Insight

Robeco has launched a climate change policy to explain its approach to combatting global warming.

  • Carola van Lamoen
    Carola
    van Lamoen
    Head of Active Ownership

Speed read

  • Policy builds on ESG integration and engagement 
  • Targets for cutting carbon footprints in portfolios 
  • Aims to cut thermal coal exposure in SI funds range

As a pioneer of sustainability investing, the new policy aims to make clear how seriously the challenges of climate change are taken by the company.

Having such a clear policy is becoming increasingly important as clients seek to address challenges relating to the Paris Climate Agreement, the recommendations of the Task Force on Climate-Related Financial Disclosures, and the requirements of their beneficiaries.

Stay informed on Quant investing with monthly mail updates
Stay informed on Quant investing with monthly mail updates
Subscribe

Five policy pillars

There are five pillars to the Robeco Climate Change policy:

  1. Integrating ESG into the investment process
  2. Using active ownership to effect change
  3. Decarbonizing portfolios
  4. Divesting carbon-intensive thermal coal
  5. Reducing our own carbon footprint

The policy will be rolled out across the company globally. Part of the climate change policy is that the carbon footprint of the sustainability funds will be reduced by at least 20% against the benchmark, and divesting from thermal coal activities, with a 20% threshold for power generators and 10% for mining operators.

Robeco has worked closely with RobecoSAM in developing this policy. This has included determining the levels of ambition and the exclusion thresholds. Both work together in integrating sustainability and climate change issues into investment decisions. RobecoSAM also provides the environmental impact data and the fossil fuel screening that will underpin the implementation of the policy.

“Robeco acknowledges the responsibility of the investment industry towards climate change risks through the investment decisions that we make and the contact we have with investee companies and other institutions,” says Carola van Lamoen, Head of the Active Ownership team and a co-author of the new policy.

“We aim to make our contribution to the Paris Agreement ambition to keep the global temperature rise well below 2 degrees Celsius above pre-industrial levels, and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. We also recognize the contribution that companies can make to the UN’s Sustainable Development Goals by addressing climate change risks.”

“RobecoSAM recognizes that climate change is among the most challenging and most complex sustainability issues, and that it is inextricably linked to many of the other topics we are concerned with, such as water scarcity, sustainable agribusiness, or public health in developing nations. We are therefore keen to contribute our part in ways that best reflect our research expertise and comprehensive knowledge base”, says Daniel Wild, PhD, Head of Sustainability Investing R&D at RobecoSAM.

Enhancing the investment process

The first pillar builds on Robeco’s existing holistic approach when integrating environmental, social and governance (ESG) issues into its investment processes. Robeco is convinced that systematically considering material ESG factors such as climate change risks into the investment processes ultimately leads to a better-informed investment decision.

Robeco addresses climate change risks through considering business models, corporate climate change strategies, and products and services. By including the analysis on climate change in the investment process, the company’s fundamental analysts have a better view on the risks (and opportunities) that companies are exposed to.

Using active ownership

In terms of active ownership, Robeco has a long track record of engaging with companies on their sustainability practices, in an effort to improve them. This includes engagements with greenhouse gas-intensive industries such as oil and gas, utilities, automotive, extractive, cement and real estate.

“We encourage the implementation of proactive and ambitious environmental strategies, the pursuit of operational excellence, the creation of asset portfolio resilience, the innovation of business models, and responsible participation in the public policy debate,” says Van Lamoen.

Decarbonizing portfolios

To decarbonize portfolios, RobecoSAM’s Environmental Impact Monitoring tool measures the impact of investors’ portfolios in terms of their carbon emissions, energy and water consumption and waste production.

In close collaboration with RobecoSAM, Robeco has developed the methodology to be able to steer portfolios on these metrics. All Robeco SI Focus funds will optimize their carbon footprint by having a carbon reduction target of at least 20% versus the benchmark.

Divesting thermal coal

Divesting is about withdrawing from companies that are unable or unwilling to correct certain inappropriate or unsustainable practices in relation to environmental and climate change issues.

The SI Focus funds are divested from mining companies with more than 10% of revenues derived from thermal coal, and from power producers with more than 20% of thermal coal-related revenues. Robeco recognizes that meeting the Paris Agreement ambition requires continual reduction in greenhouse gas emissions. Consistent with this, these thresholds for thermal coal exclusions are set to be lowered in the coming years.

Thermal coal is a product that is predominantly used in power generation and is a more carbon intensive source of energy than any of the alternatives such as oil and natural gas. We expect to see companies reducing their dependence on thermal coal in the future and aim to adjust our threshold lower in the coming years.

Reducing our own footprint

Finally, Robeco acknowledges that its own operations generate a carbon footprint and seeks to “practice what you preach’ by cutting its own energy consumption and water use.

The move of the company’s Rotterdam head office to a new state-of-the-art sustainable building in May 2016 is a good example of this. Robeco compensates its carbon emissions on an annual basis and is certified ‘CarbonNeutral’ in accordance with The CarbonNeutral Protocol.”

Important information

The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).

This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor. Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States.

This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.

I Disagree