Robeco has launched three products to add to its suite of climate indices, designed to cater to a broad base of investors at different stages of their climate investing journey.
The Robeco Developed Low-Carbon Climate Leaders Tilt Equities index, offers a low-tracking error alternative to a passive market-cap weighted index, which Robeco said is suitable for climate-conscious investors aiming to mitigate climate risk and support companies aligned with the Paris Agreement while obtaining the equity premium.
The Robeco Developed Paris-Aligned Climate Leaders Tilt Equities index targets investors who want to meet the minimum requirements for EU Paris-Aligned Benchmark, but are keen to integrate more forward-looking climate metrics and want more exposure to climate solutions providers.
And the Robeco Developed Climate Leaders Equities index focuses on climate leaders, designed to appeal to investors looking to capitalise on the climate transition by investing in solution providers expected to lead the transition to a low-carbon economy.
Joop Huij, head of Robeco indices, commented: “We’re excited to launch this climate index family to offer investors a more nuanced approach to climate index investing, compared to carbon emissions’ focused indices. Our index construction approach takes turnover and liquidity into account to provide highly investable indices. We welcome an active dialogue with clients to develop custom indices that align with their climate and financial goals.”
According to the firm, investors are increasingly seeking sophisticated climate indices that go beyond reducing backward-looking carbon emissions and incorporate forward-looking, multi-dimensional climate metrics.
In response, Robeco has integrated some of the advanced climate metrics it has developed – such as the Climate Traffic Light and Climate Beta – into this latest set of indices, depending on the specific climate objectives and risk profiles.
The team also developed an index construction algorithm that aims to ensure relatively low turnover and high liquidity compared to other index providers, which they assert is crucial for investors coming from passive.
Lucian Peppelenbos, climate strategist at Robeco, added: “We decided years ago to not only focus on carbon emissions data when looking at climate investing. We invested in resources to also evaluate other climate characteristics of companies such as their alignment with the Paris Agreement, whether companies provide solutions to lower the world’s future emissions and their level of climate transition risk. We have developed these metrics in-house and integrate them into our investment solutions. It’s great that our climate IP is now being made available to an even larger group of investors.”
