The index aims to make a positive contribution to the UN Sustainable Development Goals and applies Robeco’s SDG Framework, and obtain a significant carbon footprint reduction compared with market cap indices. The seven regions covered are: global all country, global developed market, emerging markets, US, Europe, Asia-Pacific, and Japan.
“In addition to private transparency for our clients, the SDG Low-Carbon Indices have low turnover, liquidity and transaction costs taken into account in the index construction and the high capacity is monitored and managed,” said Joop Huij, Head of Sustainable Index Solutions.
The SDG Low-Carbon Indices use negative screening to exclude negatively scored stocks based on the SDG Framework from the index universe.
It combines index investing and sustainable investing, and is a sustainable alternative to passive market cap indices, according to the asset manager. It incorporates input from the Robeco’s Climate Strategy team and the SDG framework to differentiate between climate laggards and climate leaders.
“Climate leaders are companies that might have a relatively high carbon footprint based on their current and past emissions, but are driving green innovations and are therefore essential in the transition to a low-carbon economy,” explained Lucian Peppelenbos, leader of the Climate Strategy team.
Robeco’s SDG Framework has been used in the asset manager’s management of fixed income and equity strategies since 2018, currently covering approximately EUR9bn ($10.1bn) in assets.
“We expect this to grow further as the world moves towards positive impact and the sustainable indices are an innovative investment solution for those investors looking to make this move,” said the asset manager.
Robeco is originally a Dutch asset management firm, and was sold by Rabobank Group to Orix Corporation in 2013. It had an AUM of EUR199bn as at September 2021, according to Robeco’s website.
Last month, Robeco’s Active Ownership team announced four engagement themes for the year to preserve natural resources amid the drive for net zero emissions. The asset manager has also partnered with the World Wide Fund for Nature Netherlands to integrate biodiversity into asset management.