Stockholm (NordSIP) – As the effort to stem the tide of climate change proceeds ahead, despite the COVID-19 pandemic, more and more asset managers have started to apply filters to their investment process to weed out entirely undesirable assets. In the latest such decision, Robeco announced it would begin to exclude investments in thermal coal, oil sands and Arctic drilling from all its mutual funds, on Thursday, September 24th.
“Investing is not only about creating wealth but also about contributing to wellbeing, and we are fully convinced that if you focus on sustainability, you’re going to be a better asset manager,” says Victor Verberk, CIO Fixed Income and Sustainability at Robeco. “Our move to exclude investments in fossil fuels from our funds is a further step in our efforts to lower the carbon footprint of our investments, transitioning to a lower-carbon economy. As a global leader in sustainable investing, we are committed to the Paris agreement, which aims to limit the rise in global temperatures to well below 2°C. This will require substantial reductions in global greenhouse gas emissions over the next few decades,” Verberk adds.
According to Robeco, thermal coal is by far the highest carbon-emitting source of energy in the global fuel mix. Oil sands are among the most carbon-intensive means of crude oil production. Arctic drilling poses higher risks of spills compared to conventional oil and gas exploration. Arctic drilling also has potentially irreversible impacts on the sensitive Arctic ecosystem.
Companies that derive 25% or more of their revenue from thermal coal or oil sands, or 10% or more from Arctic drilling, will be barred from investment portfolios. This step expands the thermal coal exclusion policy that already applied to Robeco’s most sustainable and impact strategies, and now also encompasses companies engaged in oil sands and Arctic drilling. The exclusion applies to all of Robeco’s mutual funds, excluding client-specific funds and mandates but including sub-advised funds. The exclusions policy will also apply to the entire range of our UCITs funds.
However, the above thresholds are the minimum limits applied to the majority of strategies, covered under the heading of “Sustainability Inside” companies. For strategies categorised as “Sustainability Focused and Impact Investing” Robeco will apply stricter thresholds and exclude companies with 10% of their activities in thermal coal and oil sands or 5% in Arctic drilling. The new policy means 236 fossil fuel companies in the energy, mining and utilities sectors will join Robeco’s exclusions list.
The process of excluding fossil fuel companies will be completed by the end of Q4 2020.