Climate change has fallen in importance to asset owners, according to Robeco’s surveys, but the expectation is that it will rise again in the next two years. And when it comes to investing in it, “alpha is top of the agenda,” according to Remmert Koekkoek, head of investment solutions at Robeco.  
 
“One of the main reasons is that we have seen some climate strategies struggling over the past years from a performance perspective,” Koekkoek told the Investment Magazine Fiduciary Investors Symposium. 
 
“If you dive in a bit deeper, it often had to do with strategies that were more exclusionary, more backward-looking. If you had strategies that were more focused on transition or more forward-looking, that would not necessarily have been the case.”  
 
But Robeco’s research shows that, in terms of asset owner interest, low-carbon strategies are still beating those that invest in climate solutions and those targeting companies with high carbon and credible transition plans.  
 
“We’ve seen this through history; people starting with decarbonisation and from an impact perspective, more and more asset owners are embracing more forward-looking metrics, transition-based metrics,” Koekkoek said.  
 
“At the same time, when we build portfolios for them, they still want to have a decarbonisation target in there because in the end they need to report on that and they have set targets on that. So we do expect that number one strategy to remain quite high going forward.”  
 
Locally, there are some idiosyncrasies. Australia has a carbon–heavy index, but it’s concentrated in a small number of stocks such as BHP, Rio Tinto and a handful of others. Under Your Future Your Super, excluding those would have a deleterious effect. But the approach might change under transition analysis.  
 
“In more concentrated markets, [decarbonisation] becomes more difficult,” Koekkoek said. “That’s also why as we move from decarbonisation to transition, that allows for more flexible investing.  
 
“In most sectors, we do identify climate leaders versus laggards. But if companies are misaligned, and we’re engaging with them on climate, you can make it part of the solution from an impact perspective. But if you are engaging with them over several years and they don’t pass the test then they do end up on an exclusion list.”  
 
When it comes to how important climate change is to asset owners’ investment policies, regional differences are growing, Koekkoek said.   
 
“What we do every year is ask our clients how important climate change is to their investment policy. What we’ve seen historically is that Europe is on top; five years ago, the US was quite close to Europe. Europe is staying relatively high, Asia is increasing, and we have seen a steady decline in the US.”