Robeco expands its climate investment offering with new index line-up.
Robeco, a global asset management leader, is launching a new suite of climate-focused indices targeting a wide range of investor needs. From innovative climate metrics beyond mere carbon emissions, these solutions work toward different climate-related investment goals. Both portfolio alignment with climate objectives, like the Paris Agreement, and management of the associated climate transition risk can be facilitated through these new solutions for investors.
Introduction of Three Different Climate Indices
The new range comprises three indices, each designed to address a specific climate investment requirement of an investor, namely:
Robeco Developed Low-Carbon Climate Leaders Tilt Equities Index: this index is for those investors who want to minimize their climate risk but at the same time be on the side of companies that will be aligned with the Paris Accord. The method provides a low-tracking-error alternative to the standard market cap-weighted index, and it aims to achieve equity returns with minimal climate-related risk.
Robeco Developed Paris-Aligned Climate Leaders Tilt Equities Index: It targets those investors that want to meet the minimum requirements of the EU Paris-Aligned Benchmark. The metric is also a bit more forward-looking and covers more climate solution providers.
Robeco Developed Climate Leaders Equities Index: An index designed for investors who want exposure to companies that will lead the transition to a low-carbon economy. It identifies companies that are set to be major participants in the shift toward sustainability and therefore be considered climate leaders.
Advanced Climate Metrics
One of the main features of Robeco’s new indices is their incorporation of advanced, forward-looking climate metrics. Over the years, Robeco has developed a range of intellectual property regarding the scoring of a range of climate-related factors. These include:
Climate Traffic Light: a metric that measures alignment by a company with the goals of the Paris Agreement.
The SDG framework is a tool that aids in identifying companies offering solutions for addressing climate-related challenges presented in terms of the Sustainable Development Goals. Climate Beta : It refers to a quantitative measure of the exposure of a company to climate transition risks. These metrics are applied to various degrees across the three indices depending on the specific climate goals and the risk profiles they were designed to address.
Personalised Solutioning to Investor Requirements
Robeco’s new indices are designed to be flexible; investors can therefore always adapt the indices to their preferences. This is actually one of the strong points for the Robeco Indices team because it allows for bespoke solutions with a specific investment objective or decarbonization target.
At Robeco, the indexing construction algorithm is optimized for minimal portfolio turnover and maximum liquidity. This is particularly important for those investors transitioning from passive into active investment strategies, hence making these indices highly investable.
A Nuanced Approach to Climate Index Investing
By doing so, Robeco’s contribution is much farther ahead than the more traditional indices that focus primarily on historical carbon emission data. The expansion of the range of climate metrics at Robeco should therefore give investors a more subtle approach to the complex nature of the risks and opportunities relating to climate change.
This family of new indices enables investors to select products more precisely matched to their particular climate and financial objectives, whether the goal is climate risk reduction, supporting the transition to a low-carbon economy, or investing in those companies that are at the forefront of providing climate solutions.
Conclusion
Robeco has today set the new bar in climate-focused investment solutions with the launch of the new Climate Index range. With the offering of indices that are made with advanced multi-dimensional climate metrics, investors should have everything they need to align their portfolios with their climate objective. From mitigating climate risk to alignment with the Paris Agreement, to climate leaders investing, Robeco’s indices offer solutions for these diverging needs.
Source: Robeco