Robeco is set to launch a range of transition investing strategies across several asset classes in the coming months, capturing alpha in industries that are enabling the sustainable transition.
According to research commissioned by the UN High-Level Climate Action Champions, an estimated $125trn is needed to transform global emerging economies to net zero by 2050. As a result, Robeco’s transition investing approach will focus on financing companies that make progress in sustainable development, while adhering to key principles such as intentionality, measurability and credibility.
As these strategies will not exclude high carbon-intensive sectors, Robeco said it would make use of specific frameworks producing forward-looking metrics that can credibly distinguish transition leaders from laggards.
Mark van der Kroft, chief investment officer at Robeco, said the firm recognises the urgent need for transition finance to support global sustainability goals, and is pleased to also introduce investing in actual transition assets in public markets.
“Our commitment stems from the understanding that effective transition is about more than just investing in green technologies; it’s about driving meaningful change across all sectors.
“Investing in green technologies and renewable energy is important, but they make up less than 8% of the global economy. To get to net zero, a progressive decarbonisation of all sectors of the economy is needed. Positive change is expected when we make today’s high-emitting companies part of the solution by supporting their transformation towards a low-carbon future. Vice versa, the risk lies with transition laggards without adaption prospects.”
According to Robeco, transition investing is mostly focused on private markets and real estate. With its public market frameworks for bonds and listed equities, the company is hoping to make transition investing available to broader audiences, starting where the investment opportunities are most stark – in Asia and emerging markets. It’s Asian Bond fund, for example, is set to transform into a transition investing-ready vehicle.
Regulators are already indicating they would like listed companies to make transition plans with a view of making them public, highlighting the importance of listed companies as part of the transition effort.
“Transition investing presents challenges due to the scarcity of publicly available data and metrics. Leveraging our 25 years of experience in sustainable research and investing, we’ve developed proprietary data and frameworks to overcome this lack of transparency. Investments have always been about forward-looking metrics, and this applies as much to sustainability metrics as it does to financial metrics,” added Thu Ha Chow, head of fixed income, Asia, at Robeco.
“Our frameworks allow for diversified, balanced portfolios without embedded sector biases. Our approach emphasises a clear intention to contribute to real-world transition, alongside measurable outcomes and credible progress reporting.”
