Mobilizing capital: Putting sustainability to work

RobecoSAM Voices


exco-michael-baldinger.jpgMichael Baldinger




Michael Baldinger shares some of his impressions from this year's RobecoSAM Forum.

In early October, I was delighted to welcome a record number of investors and company representatives to our 6th annual RobecoSAM Forum.

Planning for the Forum typically begins in early summer, so in July we were thrilled to learn that Investment Week had named last year’s RobecoSAM Forum the "Most Innovative Event" for "holistically supporting the investment ethos and message it was trying to get across." This only motivated us to work even harder to put together an even more engaging, interactive and fun event.

I am incredibly proud of what we accomplished this year, and I believe this year’s RobecoSAM Forum exceeded even our own expectations:

  • We had 270 Forum participants hailing from over 20 countries
  • Assets under management represented by investors at the Forum totaled USD 8 trillion
  • Market capitalization represented by companies at the Forum totaled USD 1.3 trillion
  • 12 small group breakout sessions designed to encourage lively discussions on the myriad of ways investors and companies can put sustainability to work
  • A stellar line-up of 9 keynote speakers and panelists
  • 30 participants took the opportunity to test drive a Tesla

This unique combination of high-caliber speakers and participants, thought provoking speeches, and an idyllic setting were the ideal platform for a vibrant exchange of ideas that extended well into the coffee breaks and social hours.

Setting the stage
On the first day, Nick Robins, Co-Director of The Inquiry into the Design of a Sustainable Financial System, set the stage for us by outlining the goals of the UNEP initiative, which brings together a range of stakeholders, financial market participants, policy makers and sustainability experts. Over the next 15 months, the Inquiry aims to map global best practices and put forward a series of tools and policy recommendations that can help accelerate the transition towards a more sustainable financial system. He listed various factors such as short-termism, perverse incentives, mis-managed risks and information asymmetries that are currently limiting the flow of financial capital towards a low-carbon economy. But he also stated that financial regulation can play an important role in addressing these constraints. The Inquiry will issue its report at the end of next year, and I look forward to reading its recommendations.

Sustainability doesn’t mean less profit, it means profit forever1
Next, it was a pleasure to welcome Robert Eccles, Professor of Management Practice at Harvard Business School, back to the RobecoSAM Forum. He was joined by his former student Erica Karp, Founder and CEO of Cornerstone Capital, for a panel discussion exploring the role of integrated reporting in directing capital towards more sustainable investments. Beyond the playful banter between the professor and his former student, was an engaging discussion on how our terminology might be deterring investors from seeking out ESG factors. According to Erica, we have a language barrier. Rather than talk about non-financial data, we should be talking about "pre-financial" data, as ESG factors are, in fact, financially material – just not today. Basically, she argued, sustainability investing is about enhanced analytics, which helps us identify companies that are achieving corporate excellence, and it would be irresponsible for pension funds to ignore environmental, social and governance factors when making investment decisions. I couldn’t agree more.

"It would be irresponsible for pension funds to ignore environmental, social and governance factors when making investment decisions."

An Asian perspective
In his provocative, yet entertaining keynote speech, Chandran Nair, Founder and CEO of the Global Institute for Tomorrow, challenged the assumption that a Western economic model based on unfettered consumption is the right path for Asia’s economic development. He cautioned that in a resource-constrained world, this would lead to disaster. Instead, he argued, economic progress can no longer rely on underpricing resources and externalizing costs. This means that as a society, we must redefine prosperity so that it is more inclusive and we will need to make tough decisions about what we can and cannot have – and at what price. And of course, this requires tough rules. Following such bold statements, Chandran feared that he might end up eating dinner alone. But in fact, his speech was so inspiring that he was the most popular guest at the dinner table.

Next, Jamie Butterworth, of the Ellen MacArthur Foundation, spoke about some of the challenges as the solutions business are proposing to facilitate a transition towards a more circular economy. At RobecoSAM we remain committed to identifying and investing in companies that are actively developing solutions to the world’s resource challenges that Jamie referred to in his speech.

A call to action for pension funds
Day 2 kicked off with a panel discussion with three high-profile institutional investors: Mats Andersson, Chief Executive Officer, of Sweden’s AP4; Philippe Desfossés, Chief Executive Officer of ERAFP; and Anders Thorendal, Treasurer and Chief Investment Officer, Church of Sweden, who offered insights into how their organizations approach sustainability investing. Philippe praised a best-in-class approach that encourages companies across all sectors to become more sustainable as the most effective way to contribute to a more sustainable economy, while Anders highlighted engagement and voting as an important aspect of being a responsible investor. Mats concluded the discussion by issuing a call to action to any investors still tiptoeing into the field of Sustainability Investing: just pick one approach as a starting point – it doesn’t matter which – and act on it. All approaches, be they impact investing, reducing carbon exposures, best-in-class, or engagement, are perfectly valid.

"Sustainability Investing is a business driver, and not merely a hygiene factor."

I join Mats in challenging investors, particularly pension funds, to incorporate sustainability considerations into their investment decisions. Clearly, there is strong appetite for sustainability investing: earlier this year we asked over 1,200 pension fund beneficiaries in Switzerland whether they want their pension funds to integrate sustainability into investment decisions. 72% of the respondents indicated that they do want their pension fund to incorporate financially relevant ESG factors, and 79% believe that that sustainable investment strategies lead to better long-term investment decisions. Such responses only bolster our conviction that Sustainability Investing is a business driver, and not merely a hygiene factor. Now it is up to all of us to mobilize our capital, and put sustainability to work.

In the meantime, we are already hard at work planning next year’s Forum, which will mark RobecoSAM’s 20th anniversary. I look forward to seeing you there!

1 Phillip Barlag;