The Dutch fund manager Robeco Institutional Asset Management has added 232 fossil-fuel producers to its “exclusion list.” The companies range from the Philippines’s Aboitiz Equity Ventures and China’s Zhengzhou Coal Industry & Electric Power to more recognizable names like American Electric Power and Westmore Coal.
The financial firm has become one of the clearest examples of a more transparent, no-nonsense approach to sustainable investing.
Robeco’s announcement accompanied a decision last month that by the end of this year, the firm won’t invest any of its mutual funds’ assets in companies that derive more than 25% of their revenue from thermal coal, 25% of their revenue from oil sands or 10% of their revenue from Arctic drilling.
Robeco is constantly reviewing its exclusion policy. First, it went after companies involved in “controversial behavior” and “controversial weapons.” Then a tobacco exclusion was implemented in 2018, followed by palm oil in 2019 and energy polluters in 2020. In all, there are now more than 350 companies that Robeco avoids.
The money manager, which oversees about 155 billion euros ($183 billion), also stays clear of sovereign debt issued by 16 countries, stretching from Afghanistan to North Korea and Syria to Myanmar. “The exclusion list has grown significantly,” said Peter van der Werf, senior engagement specialist at Robeco. “It represents a group of companies where it’s very difficult to drive significant change through engagement.”
In an industry that’s often opaque, Robeco stands out. New York-based Neuberger Berman Group said earlier this month that it will ban investments in thermal coal across all its mutual funds. Firms such as BlackRock have pledged to take climate change more seriously in the investment process.
Overall, Robeco prefers engaging with companies than selling their shares because it’s the more effective way to get companies to behave responsibly, Van der Werf said.
The firm pointed to a director change at the Italian energy company Enel to support its case. Robeco said it worked with the Italian asset managers association Assogestioni and the Climate Action 100+ initiative to have a former wind power executive added to Enel’s board. It was part of an effort to move the company toward renewables and away from fossil fuels, he said.
Royal Dutch Shell is another. Robeco held almost 3.1 million Shell shares as recently as August. Even though the company’s stock price has dropped 59% this year, tracking the rout in Big Oil shares, Robeco is sticking with Shell.
Robeco said Shell stepped up its plans in April to become carbon neutral because of investor pressure from a group including Robeco and the Church of England. The Anglo-Dutch oil and gas giant aims to have net-zero emissions by 2050.
“This shows once again that engaging with companies we invest in works, and that this is a powerful mechanism, and key differentiator in bringing change to help combat major challenges such as climate change,” said Carola van Lamoen, Robeco’s head of active ownership, following Shell’s announcement earlier this year. ;
Sustainable Finance in Brief
- Investors gauge future climate risks with the help of satellite imaging.
- Exchange-traded funds built on ESG themes have attracted record inflows this year.
- Wall Street tries to predict what issues will be top-of-mind for sustainable investors in 2021.
- Green power is projected to attract $11 trillion worth of investments by 2050.
- Companies are all talk, little action on board diversity goals.
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