The question of whether humans contribute to global warming is one of the most divisive questions of our time. Reasons for this may vary, from the impact on
individual liberties by governments wielding green agendas, to a suspicion of cynical corporate eco-friendliness.
So what does Daniel Wild, head of research at RobecoSam, the Dutch asset management business with sustainability at its centre (and which won Funds Europe’s Thought Leadership Award in 2012) think? Are we responsible for climate change?
In short, the answer is “probably”.
Wild bases his position on reports – the Intergovernmental Panel on Climate Change being the chief one – which agree that the earth’s climate is increasing and point towards greenhouse gasses that result from human activity being the main cause rather than sun activity or earth reflectivity.
“It is not the final proof but it is the best-guess assumption to make,” he says.
Zurich-based RobecoSam, which has €8.6 billion under management and is part of the wider Rotterdam-based asset management company, Robeco Group, is in the business of potentially rewarding companies that confront environmental factors (and social and governance factors, collectively known as ESG).
For a start, it might invest in them; but the asset manager also offers companies that are serious about their ESG factors a rating through its annual Sustainability Yearbook.
The most recent report, released in January, assessed over 2000 entrants and 67 companies were awarded gold.
To sceptics, the report might simply point to the phenomenon of corporate ‘greenwashing’, but Wild says too much rigour is put into the survey for that.
“We are looking for real KPIs (key performance indicators] and real outcomes.”
But can an oil driller or a miner ever be a green leader?
“We do not think it is enough if they have a little business unit called ‘green energy’. We look at how they deal with the type of incidents that these industries have and what measures they take to reduce the numbers of such cases.”
He adds that companies are scored on an industry-specific basis relative to peers.
Sustainability is genuinely important for companies, Wild says. As evidence he offers the fact that participation in RobecoSam’s corporate sustainability assessment (CSA) – an initiative seeking to measure the effect of sustainability issues on long-term corporate performance – is increasing at a rate of 7-8% a year.
“We are now at 790 participating companies. These companies invest over 200 hours to prepare their entries in the questionnaire. It is not something they do just to be nice.”
After the global financial crisis of 2008, Wild expected a lull in participation, but a “big jump” happened instead.
Investor pressure is part of the reason for corporate interest in sustainability.
“There is more and more demand from investors, particularly institutions in their RFP [request for proposals] processes. Nearly all of them over the last 2-3 years include sustainability questions and not just for niche products like climate change strategies, but also for plain vanilla products.”
Talking of niche strategies, a private equity portfolio that invests in clean-tech is a RobecoSam product. It was entered for the Funds Europe Thought Leadership Award along with the Sustainability Yearbook and CSA initiatives.
Asked which of the clean-tech technologies have made the most impact on confronting problems associated with the environment, Wild says “Renewable energy is a good example. In 2011, 5% of the world’s power generation was produced with renewable energy, not including large hydro power. Wind energy globally is at par with the cost of coal and in some places it is even cheaper.”
He adds that solar is reaching parity in more remote regions, too.
But he also highlights “efficient irrigation”, which can more than double water efficiency in agriculture, which uses 70% of the global water supply.
“If you can cut it by half, you could end water scarcity in many regions.”
©2013 funds europe
