Chief Executive Officer
This is an exciting time in the Sustainability Investing (SI) industry. Within the past year, several large public sector funds have demonstrated leadership in seeking out innovative approaches to integrating environmental, social, and governance factors into their investment portfolios. Some were driven by the desire to reduce their portfolio’s environmental footprint, while others sought to find ways to mobilize their capital to meet the Sustainable Development Goals (SDGs), and reassuringly enough, some share our conviction that integrating sustainability leads to better-informed investment decisions.
But one of the key themes that emerged among institutional investors in recent years is the need to shift away from a short-term mindset and reorient corporate and investment strategies towards generating long-term value. At RobecoSAM, we are also convinced that by evaluating corporate sustainability practices, we are sending the message that investors expect companies to focus on long-term value drivers, rather than on short-term profits. Throughout the year, we held numerous discussions with our clients and partners on the topic of long-termism. Such discussions were the catalyst for the development of one of the most recent additions to the growing family of sustainability indices jointly maintained by S&P Dow Jones Indices and RobecoSAM: the Long-Term Value Creation Global Index (LTVC). This innovative index is built using a selection of criteria from our Corporate Sustainability Assessment (CSA) that we believe best captures a company’s quality of management and potential to create long-term value.
But we have also been hard at work developing a range of new SI solutions based on data from the assessment. Although the CSA is best known for the aggregate Sustainability Scores that determine the components of the Dow Jones Sustainability Indices and members of The Sustainability Yearbook, we have come to realize that the true power of all the data we have been collecting since 1999 lies within the individual data points. Manjit Jus, Head of Sustainability Application and Operations at RobecoSAM, provides a few recent examples to illustrate how we have been increasingly unlocking the full potential of the CSA by identifying, selecting and combining subsets of sustainability data to develop customized solutions that address our clients’ specific sustainability or impact objectives.
As a growing number of investors wish to measure and manage the environmental and social impacts associated with their portfolios, they need quantitative sustainability data that is comparable, financially relevant, and speaks the language of business. Companies understand the importance of actually measuring the monetary value of those impacts: only by knowing the value of something can you begin to make business decisions that are more likely to generate long-term value. To understand how companies are measuring their impacts and where they are struggling, RobecoSAM introduced an Impact Measurement and Valuation criterion into the CSA. Sustainability Investing Analyst Rashila Kerai highlights some of the preliminary findings of this new criterion, and talks to Akzo Nobel’s Director of Sustainability André Veneman to learn more about his company’s innovative approach to impact valuation.
Over the past few years, investors, consumers and society at large have been paying closer attention to companies’ social impacts, particularly in the area of human rights. With the launch of the UN Guiding Principles for Business and Human Rights in 2011, companies have also begun to recognize that the protection of human rights is not the sole responsibility of the state, and that they too are also responsible for ensuring that their activities do not have a negative impact on people. RobecoSAM’s Human Rights criterion evaluates the strength of companies’ commitments to human rights issues. Sustainability Investing Analyst Melissa Castillo Spinoso examines where our assessment has identified leadership in this area, and makes the case that protecting human rights is about more than just mitigating business and reputational risks, it is also about generating long-term value.
By leveraging the wealth of data from the CSA, RobecoSAM is uniquely positioned to develop solutions that are tailored to meet our clients’ Sustainability Investing ambitions.
As always, The Sustainability Yearbook provides an overview of the results of our annual Corporate Sustainability Assessment and highlights key trends shaping each of the 60 analyzed industries. Each year, the selection criteria for inclusion in the Yearbook become more rigorous, and only the top 15% of the companies within each industry are selected. Companies that have demonstrated the most leadership in the area of corporate sustainability are recognized with either the RobecoSAM Gold Class, RobecoSAM Silver Class or RobecoSAM Bronze Class distinction.
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. The companies’ responses to our questionnaire help us understand how their businesses impact our planet and society at large. By leveraging the wealth of data from the CSA, RobecoSAM is uniquely positioned to develop solutions that are tailored to meet our clients’ Sustainability Investing ambitions. And I am excited to continue to work with companies, investors and external partners to shape the SI landscape by challenging companies to improve their sustainability performance and by delivering cutting-edge investment products for our clients.