Policy makers response is the next pivotal step in sustainable investmen according to Victor Verberk, CIO fixed income and sustainability at Robeco. He predicts that policy makers reaction will appear via taxes or import tariffs with a “devastating impact” on companies that will create winners and losers.
The legislative consequences are already visible in the huge task of readying for EU disclosure regulation, currently dominating sustainability at the asset manager.
“It has created an enormous amount of work; it’s visionary but a little too soon”, said Verberk. Moreover, the task is complicated by the lack of support from policy makers – there is no “help line,” he said – making cooperation with peers all the more important.
Verberk said creating net zero portfolios was also challenged by the lack of data. He noted that the price of data is increasing, and that data ownership is increasingly centralised. Data and IT storage comprise key investments at Robeco, he said.
Elsewhere, the firm has hired strategists to help it report Scope 2 and 3 emissions in its portfolios in a reflection of the growing pool of expertise sustainable investment demands.
You need to be able to multitask, he told delegates, explaining that Robeco’s already expert teams are now supported by data scientists and people with PhDs in sustainability.
“This is the kind of support you need to build around your portfolio manager,” he advised.
Collaboration and working with others are vital to ensure progress in tackling sustainability.
“There are always smarter people outside your firm, no matter how smart you are,” he said, adding that Robeco already works extensively with peer investors and participates in policy initiatives. His key advice to asset owners is to cooperate and collaborate, engage with companies and work with NGOs and regulators in a quest for hard science.
Turning to China, Verberk said despite the obvious opportunity in renewables, investment could stall unless China tackles its human rights issues.
“If China doesn’t manage this, it will hit investor appetite,” he predicted.
That said, he noted how investors are focused on how China navigates growth with lower emissions and said the opportunity to invest in China’s green economy could be huge.
“China is committed to 2060; China could surprise us on their commitment to 2060 targets.”
Verberk said that sustainability is in Robeco’s DNA. Although staying at the frontier of sustainability is hugely challenging it is made easier by the firm’s excellence and leadership in the area. He predicted that sustainable investment will increasingly flow into biodiversity and natural capital.