Investors should move beyond negative screening to get the most out of a sustainable approach to portfolio allocations, according to a new report.
In the forthcoming “Big Book of Sustainability Investing,” to be published on Friday, Robeco argues that investors must move beyond simply excluding assets if they are to harness the full potential of incorporating ESG metrics in investment strategies.
The report states that discussions relating to exclusion and ESG do not go far enough, noting that “the actual socioeconomic impact” of exclusion-only strategies is debatable.
“We believe it is time to move beyond exclusion,” the report continues. “We believe an economically efficient, sustainable global finance system, is a necessity for long-term value creation.”
Robeco’s report suggests that sustainability is increasingly a theme that is becoming core to investor portfolios as opposed to being on the periphery. The company said that wider acceptance of ESG approaches meant that sustainable investment approaches were no longer limited to “a handful of industries and sectors.”
It identified three megatrends which are likely to dominate investment approaches in the coming years: climate change, social inequality and cyber security issues.
In a media statement promoting the forthcoming launch, Gilbert Van Hassel, Robeco’s chief executive officer, said that there would be a change in investment thinking in the years ahead.
“We believe the investment industry will move from creating wealth to creating wealth and well-being,” he said. “[Avoiding companies] that have a negative impact, to investing in companies with a positive one.”