Solving the world’s greatest sustainability challenges, from halting climate change and biodiversity loss to promoting well-being and inclusion, requires collaboration. These issues are so complex that nobody – not governments, NGOs or big business – can solve them by themselves. That is why we do not act in isolation. So, why do we find partnerships so important, who do we collaborate with, and what do we work on?
There are two key reasons why collaboration is important for us. First of all, when working together, you can send a strong message to companies. Having a conversation as a single investor can be impactful, but when you speak on behalf of 10, 20 or more investors with related assets, it becomes even more powerful.
Next to this, there are so many sustainability areas that deserve attention. We invest in thousands of companies and we cannot engage with all of them, even with our team of 17 active ownership specialists. So, we have to prioritize. By partnering with others, we can work on more topics. And from a global perspective, it makes a lot of sense to collaborate: partnerships help us to cover more ground. So, all in all, collaboration enables us to have more clout.
Who do we collaborate with? We believe that effective action on sustainability issues requires partnerships with a diverse group of stakeholders. For that reason, we have different kinds of collaborations with other professional investors, while collaboration with NGOs and academics are of growing importance for us.
Our collaboration with Climate Action 100+ is a good example of how this works in practice. In this partnership, we engage with the world’s largest carbon emitters in order to reduce their adverse impacts on climate change. One sole investor may not make a difference, but a group of 617 investors with a combined USD 65 trillion in assets cannot be ignored.
There are many more such partnerships making a real difference. For example, we collaborate on living wages through the Platform Living Wage Financials, and on governance via the Asian Corporate Governance Association, and also through local governance initiatives such as AMEC in Brazil and Eumedion. Some of our collaborations have proven to be extremely powerful: strength in numbers can accelerate a transition to a more sustainable future.
We work carefully to maximize the efficiency of the partnerships we are involved in – but there are drawbacks. Joining forces can sometimes also be a burden. Not every investor is as involved as we would like. There are sometimes classic free rider problems, when not everyone is contributing their fair share. Another key aspect to collaborating successfully is clarity on the direction of travel. If investors do not agree on the course of action towards a company, such a collaboration is likely to become bogged down with vague positioning that will lead nowhere.
With every collaboration that we join, we therefore assess the likely contribution we can make, and what we want to achieve. In the 15 years that I have been involved in active ownership, I have seen all different shades of collaboration. Some of these were an outright success, but there were also clear failures.
Overall, the asset management industry is rapidly professionalizing, including the adoption of stronger process support for collaborative initiatives. That helps. At the same time, there is a massive growth in the number of investors that have entered the engagement arena, though not everyone has built a high-quality engagement capability overnight. This in itself can be challenging.
And we not only work with our peers; we also collaborate with NGOs to tap into their deep knowledge and experience of tackling sustainability issues. For example, we recently announced our partnership with the World Wide Fund for Nature Netherlands (WWF-NL). Their in-depth knowledge and research-driven approach are phenomenal, so this is helping us to develop a biodiversity investment framework. This collaboration will help us among other things to assess the impact that the companies in which we invest have on global biodiversity loss. This partnership is important as biodiversity is one of the three strategic topics in our current sustainable investing strategy.
Finally, collaborating with academics is key if you want to have a strong scientific base for your sustainable investing approach and expand your sustainability knowledge. For instance, we recently created a Sustainable Development Goals (SDG) Advisory Board in which three renowned academics – Prof. Kees Koedijk at Utrecht University; Cary Krosinsky at the Universities of Yale and Brown; and Prof. Rob van Tulder at Erasmus University – advise us on our SDG Framework and related strategies.
Our collaboration and active contribution to the investor leader group of the Cambridge Institute for Sustainable Leadership (CISL) is another excellent example of how beneficial this can be. CISL’s research has deepened our knowledge on nature-related financial risks and helped in areas that previously had only been researched to a limited extent. For example, we gained further insights on temperature scores, and what are the key approaches to biodiversity. The investment industry needs science to progress and fine tune their approach. Working with academics helps us attain that ambition.
So to summarize: there are clear dilemmas in collaborating. Jointly you can achieve more, and your clout is bigger. But not everyone is progressing at the same speed, and there can be free rider problems.
Still, working with NGOs and academics has brought new dimensions beyond traditional investor collaborations. Such partnerships not only give us an abundance of new energy, but also help us to broaden our sustainability knowledge. Despite the challenges that inherently come with collaborations, I am convinced that the future of sustainable investing will be collaborative. Come and join the club!
This is the third in our new series of SI Dilemmas exploring some of the difficulties in implementing sustainable investing, even when there is a clear motivation and enthusiasm for it. While sustainable investing is not a perfect science, it remains at the heart of Robeco’s investment and active ownership approaches.
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.