Using satellite data for engagement
Robeco has teamed up with Satelligence to detect deforestation in palm oil plantations via satellite data. Satelligence accesses data from satellites that can take high-quality pictures from orbit, allowing ‘before-and-after’ comparisons to be made continuously. The imagery comes from satellites operated by the European Space Agency (ESA), the Japanese Aerospace Exploration Agency and NASA, orbiting 700 km above South-East Asia, West Africa and Central and South America. By collaborating for this pilot, Robeco can be at the forefront of integrating satellite-derived sustainability metrics into sustainability research to support our investment decisions. Together with Satelligence, we are building a system that can monitor the progress of companies towards 100 per cent RSPO-certified plantations, and drive the transformation to a sustainable palm oil industry.
Leading green bond analysis
Robeco's credit team formalized its green bond analysis, which determines the eligibility of green bonds for our investments. This process is one of the first in the market to be aligned with the proposed EU Taxonomy on environmentally sustainable economic activity.
In February 2019, we launched an SDG committee tasked with establishing an SDG mapping framework, systems, and processes that are of the highest quality and auditable. The committee will ensure all investment teams at Robeco and RobecoSAM are 100% aligned, that client reporting on SDGs is consistent and that changes to SDG scores are consistent and implemented in a structured way. The SDG committee also provides a venue to decide on proposed amendments to the SDG measurement framework.
For the Country Sustainability Ranking, we have enhanced the set of indicators with new data, in order to ensure adequate coverage of the most relevant ESG aspects. The number of countries covered by the ranking was also increased from 65 to 125.
Continuing quantitative research efforts on sustainability bore fruit. One prime example is our ‘decarbonized value’ research, which was implemented into quantitative equity strategies in 2019. We have designed a methodology to improve the environmental footprint of the conventional value factor, thus lowering climate risks without lowering its return premium.
The Quantitative Equity team now include RobecoSAM’s sustainability scores when determining (and tilting to) the quality and income characteristics of companies. This was already in place for all core quant developed market strategies since 2010, and is now applied to all strategies.
Furthermore, we worked with clients to provide them with solutions to achieve both their financial and sustainability goals (in line with our mission statement). We won a multi-billion euro advisory mandate for a sovereign bond fund, in which the Country Sustainability Ranking scores play an important role in the composition of the portfolio. We also introduced a Sustainable Core European Government Bond fund. This fund has a dedicated sizeable allocation to sovereign and sub-sovereign, supranational and agency (SSA) green bonds, and the country allocation is directly linked to the Country Sustainability Ranking.
Another example of this is a large mandate awarded by a Dutch pension fund for a sustainable enhanced indexing portfolio. Our approach utilizes our factor expertise from a risk management perspective while optimizing the ESG profile of the portfolio, still aiming for benchmark-like returns.