The Fund's sustainability pillars are, exclusion and integration which are incorporated in the portfolio via exclusion lists on the investable universe and by taking into account environmental, social and governance (ESG) scoring at an instrument level in equity and credit selection.
The portfolios of individual equity and credit holdings in the Fund are built while targeting an ESG score that is at least 20% better than the equity market and better than the credit market in general. ESG scores are measured by RobecoSAM, a related corporate body of the Investment Manager, based on its smart ESG scoring methodology which focuses on long-term industry relevant sustainability factors. The scores are based on RobecoSAM’s Corporate Sustainability Assessment survey which covers over 4500 companies.
RIAM sees sustainability as a long-term driver for structural change in countries, companies and markets. And RIAM believes companies with sustainable business practices are more successful. We exclude from our investment universe the following focus areas:
Robeco acts in accordance with the United Nations Global Compact (UNGC) Principles and the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises to assess the behavior of companies. An enhanced engagement process is applied with companies that have severe breaches of these principles and guidelines. If this enhanced engagement, which may last up to three year period, does not lead to the desired change, Robeco will decide to exclude a company from its investment universe.
Controversial behavior in relation to the production of Palm oil
The production of palm oil is a process with significant environmental and social risks, potentially leading to breaches of the UN Global Compact when this product is not produced sustainably. A transition to a sustainable palm oil industry can be attained by palm oil producing companies moving towards production in accordance with the standards of the Roundtable on Sustainable Palm Oil. Robeco excludes listed companies that have less than 20% of their plantations RSPO certified. Palm oil producing companies are part of an engagement program where Robeco requires them to make progress towards full RSPO certification. Palm oil producing companies that do not reach 50% RSPO certified plantations by 31 December 2021 will then be excluded.
Robeco deems anti-personnel mines, cluster munitions, chemical, biological weapons, depleted uranium weapons and nuclear weapons to be controversial weapons. We exclude manufacturers of products that do not comply with international treaties or legal bans on controversial weapons.
Tobacco is an unhealthy and socially disadvantageous product. Robeco deems investing in tobacco companies an unsustainable investment. Exclusion is applied to companies that are involved in the production of tobacco or suppliers of significant components of cigarettes (such as filters) or companies with a significant ownerships in those companies.
Countries that are subject to a full set of UN, EU or US sanctions are considered as being controversial. Robeco will follow applicable sanctions of the UN, EU or US to which it is subject and follows any mandatory (investment) restrictions deriving therefrom. To identify these countries we use data from:
- World Bank: World Governance Index (WGI) on Political Stability and Absence of Violence/Terrorism
- Freedom House: Freedom in the World (FIW) index on Political rights and civil liberties
- Fund for Peace: Fragile States Index (FSI)
- International sanctions.