Exclusion funds are not sustainable, says Robeco

Fund group's ESG lead says that asset managers must think more strategically about sustainable investment

Investment strategies which select holdings on an “exclusion only” policy should no longer be labelled sustainable, according to asset management group Robeco.

In a paper looking at ways to combat greenwashing, Masja Zandbergen, Robeco’s head of ESG suggests that strategies which use exclusion as their primary investment section tool, are not sustainable.

“Many believe energy companies are both a problem and solution,” Zandbergen wrote. “Investing in these companies and engaging with them might be a better way of creating change.”

In comments accompanying the paper, Zandbergen said that investors needed to adopt “integrated thinking” if they are to avoid corporate greenwashing. This, she said, means fund managers should not operate sustainable investment teams, which are separate from the main investment operation.

“A fund provider is no longer credible if they provide a few very good sustainable investment funds, but are not doing anything in their products or own operations,” she said.

“Fund providers must apply more transparent, integrated thinking to determine sustainability. Our structured, active ownership approach tackles the themes investors have not even considered, providing forward-looking expertise that tracks the progression of companies.”

Robeco’s head of ESG also believes that ESG investing should no longer force investors to contract their investment universe by identifying companies with the best score on sustainable credentials. Instead, she believes that companies with low ESG scores should be encouraged to improve their behaviours, through engagement.

Zandbergen has spent most of her career at Robeco, starting her current stint in 2015. She was previously with the company between 1997 and 2008 in various portfolio manager and sustainable analysis roles.

The full paper is available here.