Peter van der Werf, Engagement Specialist, Robeco

Robeco is an international asset manager offering an extensive range of active investments, from equities to bonds, with $AU279 billion in assets under management as at end of 2020. RIAA spoke with Engagement Specialist Peter van der Werf about Robeco’s extensive work on biodiversity and natural capital.

You spoke at our recent RI Aotearoa New Zealand 2021 conference session on biodiversity, which was a vibrant discussion about an emerging topic for investors. Can you briefly detail why Robeco identified biodiversity as a key focus in its investment process, and when this work began?

Robeco has been working on the topic of biodiversity since 2014 but this really accelerated with the publication of the IPBES report in May 2019 that provided alarming figures on the decline of biodiversity globally.

We conducted an engagement research project on biodiversity loss driven by deforestation in 2020.

This increased awareness at our firm for the systemic risk that biodiversity loss provides to our investments and when the call to action for the Finance for Biodiversity Pledge came, we saw this as an important catalyst to implement a Biodiversity Taskforce.

What are some of the challenges and opportunities in moving to have a more positive impact on biodiversity in your portfolio?

Currently the largest challenge is to define the biodiversity footprint of each portfolio. For that reason, we are one of the founding members of the Partnership for Biodiversity Accounting Financials (PBAF) that aims to develop a biodiversity footprint methodology that can be applied by global institutional investors.

Robeco’s Multi Factor Absolute Return Fund (AUD) – Class B was certified by RIAA in 2020. Can you detail a bit about this fund’s approach to palm oil companies?

In 2020 we focused our work with the companies under engagement on their involvement in the RSPO and how they are making progress in increasing their percentage of certified plantations. We had specific attention to controversies. Several palm oil producers have established subsidiaries in Liberia, which stands out as one production location with many controversies. Systemic risks such as extreme poverty and poor land governance have caused serious issues with human rights due to the lack of free, prior and informed consent, customary rights of local communities that were not respected and ultimately deforestation of high conservation value forest driving biodiversity loss. We continue to challenge the companies to develop structural solutions to the problems they encounter in Liberia.

We also collaborate with the Responsible Investing Charter (IMVB) working group on palm oil where we have initiated a collaboration between Dutch pension funds, where Robeco represents one of our clients, labour unions, development NGOs and the Dutch government. We focus in this program on labour conditions in the palm oil industry in Indonesia and on the human rights issues in Liberia.

As member of the RSPO, Robeco has contributed to the Deforestation working group and actively contributes to the Financial Institutions Consultative Group where Robeco will assume chairmanship of that group in 2021. In addition, we continue to be active in the PRI Investor Working Group on Sustainable Palm Oil as advisory committee member driving the engagement strategy of this collaborative engagement.

Finally, in collaboration with other investors we have joined a collaborative engagement using the deforestation monitoring reports from our partner Satelligence to challenge the companies on their risk management systems to discuss the identified cases of deforestation in their supply chain.

Robeco is leading some really interesting work on sovereign engagement, engaging collaboratively at a country level with governments about the ESG risks that could affect their government bonds. Tell us about your approach to this, why you are doing it, why collaboration is important, and what you’ve been able to achieve so far.

Robeco was one of the founding members of the Investor Policy Dialogue on Deforestation (IPDD) where we started in June 2020 to engage directly with the Brazilian government on deforestation. The group since has held two meetings with Brazil’s Vice President and other government members in an investor policy dialogue focused on better implementation of the country’s environmental laws so that companies that break them are suitably penalised. Brazil has very good laws on deforestation. It is about applying them, and we want to make sure criminal behaviour gets in the courts.

We regard sovereign engagement as a key tenet of Robeco’s sustainability strategy. Working with the PRI, the asset manager is exploring how best to influence sustainable policies at government level. Next on the list is Indonesia, where we engage on deforestation. To encourage other investors to follow, Robeco is drawing up a sovereign engagement framework that will detail which countries to contact and which Sustainable Development Goals (SDGs) to engage on.

What are your top predictions for the coming years, both in terms of biodiversity and natural capital, and engagement?

Robeco is working with a group of investors to develop a proposal for Nature Action 100, to replicate the success of Climate Action 100+ and collectively engage on the urgent action that corporates need to take to set targets to minimise their impact on biodiversity, guided by concrete policies and the right governance framework in the company to manage delivery against these targets.