Asset manager Robeco has launched a new climate index family, leveraging proprietary data to provide investors with forward-looking climate metrics beyond traditional carbon measures.
Netherland-based Robeco has launched a new range of climate indices consisting of three different indexes tailored to meet the needs of investors at various stages of their climate investment journey. The indicators strive to surpass traditional climate measures and include future-oriented, comprehensive climate metrics.
The new range consists of the Robeco Developed Low-Carbon Climate Leaders Tilt Equities Index, the Robeco Developed Paris-Aligned Climate Leaders Tilt Equities Index, and the Robeco Developed Climate Leaders Equities Index. Each index is designed to meet investors’ unique requirements and environmental goals.
According to Joop Huij, head of Robeco Indices, this climate index family is launch generates much excitement. The aim is to provide investors with” a more nuanced approach to climate index investing”, moving away from the traditional focus on carbon emissions. “Our index construction approach considers turnover and liquidity to create indices that are highly investable.”
The Robeco Developed Climate Leaders Equities Index, the most ambitious of the three, is dedicated to investing in solution providers at the forefront of the transition to a low-carbon economy. This index is perfect for investors who want to take advantage of the climate transition and invest in companies leading the way in this significant shift.
For investors seeking a Paris-aligned Benchmark (PAB) product that also offers exposure to solution providers, the Robeco Developed Paris-Aligned Climate Leaders Tilt Equities Index is designed to meet the minimum requirements for EU Paris-Aligned Benchmark while incorporating more forward-looking climate metrics.
The Robeco Developed Low-Carbon Climate Leaders Tilt Equities Index’s third index offers a sustainable alternative to a passive market-cap weighted index with minimal tracking error. This option is ideal for climate-conscious investors who want to reduce climate risk. It allows them to support companies that are in line with the Paris Agreement while also benefiting from the equity premium.
All three indices use Robeco’s exclusive climate intellectual property (IP), which has been developed over the years. This includes the Climate Traffic Light to assess a company’s alignment with the Paris Agreement, the SDG framework to identify climate solutions, and Climate Beta to evaluate climate transition risk.
Lucian Peppelenbos, climate strategist at Robeco, emphasised the importance of taking a comprehensive approach to climate investing rather than solely focusing on carbon emissions data.
“We invested in resources to also evaluate other climate characteristics of companies such as their alignment with the Paris Agreement, whether companies provide solutions to lower the world’s future emissions and their level of climate transition risk. We have developed these metrics in-house and integrated them into our investment solutions. It’s great that our climate IP is now available to an even larger group of investors.”
The construction algorithm used by the index family ensures a lower turnover and higher liquidity than other index providers, making it a valuable choice for investors looking to transition from passive strategies. This approach enables customised solutions that align with specific investment universes or decarbonisation goals.
Overall, Robeco’s climate index family launch aligns with the growing demand from investors for advanced climate indices beyond simply reducing carbon emissions. These indices incorporate forward-looking, multi-dimensional climate metrics to provide a more comprehensive sustainability assessment. This move demonstrates the need for more extensive and nuanced approaches to climate-aware investing.
The new indices are part of Robeco’s commitment to sustainable investing and climate action. By leveraging its proprietary climate IP and data, Robeco aims to provide investors with tools to align their portfolios with climate goals while capturing opportunities from the transition to a low-carbon economy.
Don’t miss Jeroen Nijhoff, Corporate Sustainability Officer at Robeco, speaking at the upcoming Sustainability Expo Europe. Taking place on October 1-2, this 2-day event will bring together over 500 senior sustainability professionals, sharing insights into the essential actions businesses must take to achieve sustainability. Register your place now!
