The key challenge is to move from ESG integration to impact investing.
With its Action Plan on Sustainable Finance, the EU is setting the standard for the rest of the world on how to move towards sustainability and inclusivity, says Victor Verberk, Robeco’s CIO for Fixed Income and Sustainability.
In his keynote address to the 2021 RI Europe conference, Verberk describes the EU as having created a level playing field for investing, and that Asia and the US will likely follow the example.
The regulation is complex, though, and requires access to good quality, forward-looking data. It also calls for a reinvention of the way portfolio managers approach their work: it’s no longer acceptable to focus only on alpha generation, and investors are having to incorporate a broad range of new skills in order to manage a carbon budget, achieve impact, and report on progress.
This transition towards truly sustainable investing is still a work in progress for the investment industry. “But it’s the right thing to do,” Verberk says. “Embrace it; it is the future. Making the transition from ESG integration towards impact – that is the key challenge for the industry.”
To meet this challenge, investors will have to stay innovative. He explains that, because sustainability topics such as climate change, loss of biodiversity, and human rights are complex, understanding the science and doing the research is critical for coming up with innovative investment strategies that advance sustainability goals.
Robeco has provided a range of investment solutions in this regard. Among these are equity and credit strategies that focus on contributing to the SDGs, active ownership-driven equity products, and our climate strategies. The latter include the first global bond strategy fully aligned with the Paris Agreement.