Michael Baldinger, Chief Executive Officer RobecoSAM
“Starting with their own corporate pension funds, Sustainability Leaders are in an ideal position to encourage investors to integrate sustainability into their investment strategies.”
Over the last few years, financial materiality and integrated reporting have dominated much of the discussions surrounding Sustainability Investing and corporate sustainability. In addition to publicly recognizing the companies that have excelled in corporate sustainability, the 2014 edition of The Sustainability Yearbook offers some insights into these topics.
This year’s publication begins with a guest article by Yvo de Boer, Global Chairman Climate Change & Sustainability Services at KPMG International, in which he examines the current corporate sustainability reporting landscape. Although sustainability reporting was once merely considered an ‘optional but nice’ activity, it now appears to have become practically mandatory for most multinational companies. Yet companies still struggle to communicate how environmental, social and governance factors affect the long-term financial performance of their business.
And here lies the challenge for companies and investors alike: How does one determine whether or not a sustainability factor is financially material? But this is nothing new to RobecoSAM. As an asset manager dedicated exclusively to Sustainability Investing, we have always focused on identifying financially relevant sustainability factors. Based on rigorous research and continuous dialogue with thousands of companies over the years, we have continuously refined our methodology to ensure that our analysis remains focused on financially material criteria. Christopher Greenwald, RobecoSAM’s Co-Head of Sustainability Investing Research sheds light on how RobecoSAM determines financial materiality of sustainability.
This year, we were pleased to see a 31% increase in participation in the Corporate Sustainability Assessment from companies based in the emerging markets. Over the last few years, companies in the emerging markets have increasingly embraced corporate sustainability as a source of competitive advantage. In the third chapter of The Sustainability Yearbook, Guido Giese, Head of Indices, and Kathelijne Marritt-Alers, Senior Relationship Manager of Sustainability Indices at RobecoSAM, explore some of the drivers behind this growing interest in sustainability, and highlight some of the countries and industries in these regions that have emerged as sustainability leaders.
As multinational companies increasingly expand their operations, sales and distribution activities to other regions – including the emerging markets – companies must be willing to interact with local stakeholders to understand the full economic, environmental and social impact of their business activities. With the rise of social media in an ever more globalized world, local stakeholders have the power to disrupt local operations, production or sales, causing reputational and financial damage to the company. For this reason, RobecoSAM recently introduced an enhanced framework for assessing companies’ stakeholder engagement strategies. We highlight the preliminary findings of our evaluation of companies’ approaches to stakeholder engagement and talk to Stefan Seidel of PUMA.Safe to learn why stakeholder engagement is an important component of his company’s corporate sustainability strategy.
As always, The Sustainability Yearbook also provides an overview of the results of our annual Corporate Sustainability Assessment and highlights key trends shaping each of the 59 analyzed industries. The top scoring company in each industry is named the RobecoSAM Industry Leader, and companies listed in the Yearbook are classified into three categories: RobecoSAM Gold Class, RobecoSAM Silver Class and RobecoSAM Bronze Class.
A record-breaking number of companies took part in this year’s assessment. I am delighted to see that every year, a growing number of companies demonstrate their commitment to sustainability by actively participating in the Corporate Sustainability Assessment. But companies still face many challenges in convincing investors to embrace sustainability as a means of generating shareholder value. I am confident that we can change this. Starting with their own corporate pension funds, Sustainability Leaders are in an ideal position to encourage investors to integrate sustainability into their investment strategies. Therefore, with the publication of the 2014 Sustainability Yearbook, I would like to issue a challenge to the Sustainability Leaders: talk to your pension fund managers. Help them understand the financial and competitive benefits of corporate sustainability strategies and how these translate into shareholder value.
I hope this edition of the Yearbook helps spark a much needed discussion within companies and among investors, helping to bring about the necessary changes in order to create long-term value for all stakeholders: investors, companies and society alike.