Robeco has rolled out a strategy that it says aims to reduce the environmental footprint for greenhouse gas emissions, water use, waste generation, and energy consumption in emerging markets.
The fund seeks to better the environmental, social and governance criteria benchmark set by the MSCI Emerging Markets Index by 20% while still providing alpha.
Using a values-based exclusion list, the fund uses a quantitative stock selection strategy ranking stocks according to sustainability criteria, as well as expected future relative performance.
The Dutch fund manager’s active ownership team will also carry out voting and engagement.
The strategy is overweighted towards stocks with a strong sustainable profile, attractive valuation, a profitable operating business, strong price momentum, and positive recent revisions from analysts.
The Robeco QI Emerging Markets Sustainable Enhanced Index Equities offers an alternative to passive investing, according to Wilma de Groot, head of core quant equities at the firm.
De Groot claimed it can generate stable outperformance after costs with low tracking error.
“Our Enhanced Indexing strategies have a similar absolute risk profile as passive strategies, but can generate better returns by actively integrating sustainability criteria,” she said.
The strategy builds on the expertise of the existing Emerging Markets Enhanced Indexing strategy, and the sustainability approach of the existing Developed Markets Sustainable Enhanced Index strategy and Active Emerging Markets Sustainable strategy.
Robeco was one of a number of fund managers that recently stepped up pressure on the energy sector to meet the climate targets set out by the Paris Agreement.
The call came following a report by the investor-backed Transition Pathway Initiative which found that just 31 out of the top 109 energy companies are in line with the emission reduction pledges made by national governments in the accord.
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