Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.
1. Engaging with corporates to tackle water risks RobecoSAM | Peter van der WerfZurich, 14 November 2013
2. Engagement in a nutshell What? Engagement is an active dialogue between investor(s) and a company Goal of the dialogue is to improve the Environmental, Social and Governance (ESG) behaviour of the companyWhy? Improved ESG behaviour contributes to better risk return profile of the securities and long term performance of the companyHow? We use an integrated approach combining a clear investor perspective with knowledge from our corporate sustainability assessment to assess which topics are material to start an active dialogueFor whom? We conduct engagement for funds managed by the Robeco group and for fundsmanaged by external managers of clients who use our engagement overlay service 3. Focused engagement process Preparation of engagement -> Screening of material themesDefine SMART objectives with (external) research providerAnalyze case -> establish contact with companyClosed unsuccessfulOngoing dialogue -> measure objectivesFeedback to portfolio managers & clientsClosed successful 4. Water risks are material in textile and food & beverage sector Companies need to create resilient and competitive supply chainsCarefully balance commercial imperatives with social considerationsCrucial elements are sound business practices and an effective water strategyReputational damage is a huge risk to textile and food & beverage sector companiesWater management is an important factor in brand management to safeguard shareholder value 5. Textile product supply chain water use Example of textile product supply chainIndicates main impact upstream in the supply chainCotton production and wet processing are largest water users 6. What do we aim for with our engagement? During our dialogue with companies in these sectors we: Aim to increase awareness of materiality of water risksCall for water impact analysis by companiesUrge companies to develop and implement a comprehensive water policyImprove their reporting to stakeholders in the public domain on water managementAsk companies to structurally embed water management in the governance structure of the companyWhy? Improved ESG behaviour contributes to better risk return profile of the securities and long term performance of the company 7. Mondelez makes good steps in mitigating water risks RobecoSAMs Governance & Active Ownership team has been in dialogue with Mondelez since 2010 on water managementIssues identified at start of dialogue: Awareness of water dependency not addressed in CSR reportTargets to reduce water usages not setGovernance of water management on executive level not clear for stakeholders 8. Still ample room for improvement in transparency Topics addressed during our dialogue: Focus on water management in their largest supply chains cashew, cacao and coffeeRepeatedly urged the company to report on water to the CDP Water questionnaire and after several years of discussions the company has made its first CDP Water disclosure in 2013Next steps for remainder of dialogue: Discuss upcoming sustainability report with the company to assess if they have made the requested progress in terms of disclosure to stakeholdersDiscuss current Oxfam Novib campaign Behind the Brands with the company to explore where the company can score better based on their improved water disclosure through CDP WaterSource: http://www.mondelezinternational.com/home/index.aspx 9. Water management as risk for H&M RobecoSAMs Governance & Active Ownership team has been in dialogue with H&M since 2010 Issues identified at start of dialogue: H&M did not perform a water impact analysisH&M did not publish a water policy on their websiteTopics addressed during our dialogue: Requested H&M to increase its transparency in the public domain on water management, especially with regards to the supply chainDiscussed with H&M their steps towards the launch of their New Water Strategy early 2013 in partnership with WWFDuring our last meeting at the World Water Week in 2013 in Stockholm we have discussed how water management is embedded in the core business of H&MSource: http://about.hm.com/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water.html 10. Turned into a business opportunity Conscious collection embeds water stewardship in core business Examples of some of the measures taken by H&M are: A global sustainability e-learning tool will teach all 104,000 employees why water is importantH&M designers and buyers will receive training in the water impact of raw material production as well as wet processes to promote more sustainable choicesNext steps after closing of dialogue: Published best practice article on H&M in our sustainability magazine AdvanceUse best practice example of H&M in our dialogues with peers in the textile sector which have not developed such water management strategySource: http://about.hm.com/en/About/Sustainability.html 11. Engagement for water management becomes a dialogue on water stewardship What? We identified water management as a material issue for the textile and food & beverage sector We engage with companies on water-related issues in our portfolio or our engagement clients portfolios Goal of the dialogue is to improve the Environmental, Social and Governance (ESG) behaviour of the companyResults? We see clear improvements in transparency, disclosure through CDP Water or sustainability reports. This ultimately leads to embedding water stewardship in core business of companies in both sectors 12. Disclaimer RobecoSAM is a registered trade mark and trade name of Robeco Groep N.V. (The Netherlands) and hereinafter referred to as the RobecoSAM-Brand. The RobecoSAM-Brand is allowedly being used by Robeco Institutional Asset Management B.V. (The Netherlands) as well as by RobecoSAM AG (Switzerland). Both legal entities are responsible for their own activities or publications related to the RobecoSAM-Brand. For the sake of clarity we would like to state that the team members of RobecoSAM AGs Governance & Active Ownership department are based in the Netherlands and employed directly by Robeco Institutional Asset Management B.V.This presentation has been carefully prepared by Robeco Institutional Asset Management B.V. (Robeco). It is intended to provide the reader with information on Robecos specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. The content of this document is based upon sources of information believed to be reliable, but no warranty or declaration, either explicit or implicit, is given as to their accuracy or completeness. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. 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