International asset manager Robeco announced today the launch of a new Net Zero 2050 Climate Equities strategy, targeting the world’s leaders in decarbonization and companies enabling the low carbon transition.
According to the fund’s Portfolio Manager Chris Berkouwer, in order to avoid becoming “yet another environmental fund,” the new strategy will apply strict criteria for inclusion, specifically targeting companies that are transitioning, unlike other climate strategies that target green industries that are already close to or are at zero emissions.
Eligible companies include those that have a clear decarbonization pathway to becoming net zero by 2050, as well as those that can help others to achieve this, such as mining equipment suppliers, nature-based assets or transition capital providers.
“We need to invest in those companies actively offering solutions to climate change through decarbonization of one form or another. It’s not a case of targeting the companies that already have a low carbon footprint. Instead, we’ll look for the companies leading the transition in the real economy, and also those whose businesses activities can help other companies to get there.”
In addition to its high-conviction strategy, the fund will follows the MSCI World Climate Change Index, a dedicated climate transition index, as its benchmark, rather than a standard index, enabling assessment of both carbon footprint and measure performance.
“We’re one of the first asset managers actually using a dedicated climate benchmark as well, not just for assessing carbon footprint purposes, but also for performance measurement. We need to practice what we preach and be prepared to be judged on it.”
The fund will also seek to invest in companies that have made decarbonization process. According to Berkouwer, the starting point is a 30% lower carbon footprint than the market, followed by seeking decarbonization pathways of 7% a year to meet the Paris targets.
In addition, the fund will focus on the “just transition,” through the incorporation of social factors, such as retraining workers vulnerable to potential job losses from high emitting companies. According to Berkouwer, as some businesses become impacted by the net zero transition, companies will be forced to radically altered business models, “so we should work to make sure that the negative social impact is minimized.”
Lucian Peppelenbos, Climate Strategist at Robeco, said:
“We are now so aware of the physical impacts of climate change – we feel nature speak to us. There is a clear shift to making a real world impact, with an increased realization that real assets are directly linked to real impacts, particularly when we talk about climate and biodiversity.”