Robeco is a strong proponent of responsible investment in the belief that sustainability is a long-term force for change in markets, countries and companies, and can have an important impact on future performance. As a part of this proposition, the aim of Robeco's Active Ownership activities is be active owners of the companies in our portfolios, by engaging with companies with the aim of maximizing the long-term value of their investments. The outcomes of our engagement efforts are communicated to our analysts, portfolio managers and clients, enabling them to incorporate this information into their investment decisions.
Our overall approach to engagement is based on:
- Engagement with companies in our clients' portfolios
- SMART (Specific, Measurable, Attainable, Relevant, Time-bound) engagement objectives and progress tracked quarterly
- Promoting market best practices through active membership in collaborative platforms such as ICGN, PRI, Interfaith Centre for Corporate Responsibility (ICCR), the Carbon Disclosure Project, ACGA and Eumedion
- Providing detailed confidential engagement reports directly to the client, as well as reports that are suitable for distribution/reporting to the client's own stakeholders (i.e. pension fund beneficiaries)
Robeco separates its engagement activities into two distinct programs:
Value Engagement: A proactive approach focusing on material sustainability themes that have the most potential to mitigate downside risk. These themes are selected in close cooperation with Robeco's analysts and portfolio managers located around the globe, based on the financial materiality analysis conducted by RobecoSAM's sustainability investing research team. By discussing sustainability risks and opportunities with companies and providing them with insights into investors' expectations of corporate behavior, we encourage them to adopt better practices. We believe companies with sustainable business practices can create a competitive advantage and are more likely to be successful over the long run, ultimately contributing to the risk-return profile of their securities.
Enhanced Engagement: Focusing on companies that severely and structurally breach principles of the United Nations Global Compact and/or the OECD Guidelines for Multinational Enterprises. Enhanced engagement might ultimately lead to exclusion of a company from our investment universe if it does not improve its ESG behavior and does not lift the breach(es), after our engagement.
Building on our founding philosophy that every investment strategy should be research driven, we undertake extensive research for every engagement we undertake, always focusing on the most material ESG factors which drive long term company performance. We do this in that belief that engagement with companies in which we and our clients invest will have a positive impact on both long-term investment results and on society.
Whilst company engagement is primarily coordinated through Robeco's Active Ownership team (AO team), Robeco's Credit analysts are involved across the entire lifecycle of an engagement, from theme selection and engagement research, to the actual engagement process itself. In 2019, there were joint calls with various companies about ESG issues. These calls generally increase the analyst's understanding of the companies and the way they deal with ESG related issues. Examples are conversations with food producers on risks related to obesity, discussions with car manufacturers on product quality supply chain management, and utilities companies on climate risk management. For 2020 a number of engagement themes have been selected. These themes include mining, biodiversity, decarbonization, incentive structures, and corporate governance in emerging markets. Project groups have been formed consisting of AO specialists, credit analysts, equity analysts, and colleagues from the SI research team from RobecoSAM. By setting up calls with companies, and combining knowledge from the various disciplines, the credit analysts involved increase their understanding of the companies and the way they deal with ESG related issues.