When Capital Generates Social Impact And Financial Returns

When Capital Generates Social Impact And Financial Returns

September 2016


Michael Baldinger is RobecoSAM’s CEO. Before being appointed CEO, he was the Head of Global Clients & Marketing at RobecoSAM and was a member of RobecoSAM’s Executive Committee. Prior to joining RobecoSAM, he was Head of Distribution in the Americas for the Credit Suisse Asset Management division in New York. Previously, Michael Baldinger worked at Bear, Stearns & Co. Inc. (New York), where he was responsible for large institutional clients and brand development for Bear, Stearns & Co. Inc. in Switzerland. Michael Baldinger began his career at Credit Suisse First Boston in Zurich, where he was responsible for foreign equities trading.

Christopher P. Skroupa: For years, investors have seen rate of return as the sole barometer of fund performance, with environmental, social and governance (ESG) on the sidelines as a “nice to have” concept. In your experience, is this still the case?

Michael Baldinger: At RobecoSAM, we’ve been doing Sustainability Investing (SI) for over 20 years, our core belief has always been that integrating ESG into our clients’ portfolio would result in both better informed investment decisions and performance. For us, integrating ESG criteria into an investment strategy is a way of positively influencing the rate of return. An increasing number of investors are taking advantage of this, while also making a positive impact. In fact, today, one out of every three dollars is invested responsibly. The Global Sustainable Investment Review states that sustainably invested assets went from $13.3 trillion dollars to $21.4 trillion dollars between 2012 and 2014. That’s a 61% increase, making SI the fastest growing segment in finance, not a “nice to have” concept.

The World's 50 Most Sustainable Companies 2016

Skroupa: Do you believe ESG is core to the creation of long-term value? If so, how is ESG factored into the investment process?

Baldinger: Absolutely. Companies that score well on environmental, social, and governance criteria are more likely to maintain a competitive advantage and generate long-term competitive returns for shareholders.

In the most fundamental sense, ESG factor integration involves the adjustment of financial model assumptions based on the sustainability performance of a company. We believe that financial analysis is not complete if it ignores material extra-financial factors.

Every year, RobecoSAM conducts the Corporate Sustainability Assessment (CSA), an ESG analysis of 3,800 listed companies. Over time this has led us to develop one of the most comprehensive ESG databases in the world. It is our main tool to identify companies that are better equipped in responding to emerging opportunities and risks, which result from global sustainability trends. The insight derived from the CSA accomplishes an array of measurements. Not only does it power the Dow Jones Sustainability Indices (DJSI) which we cofounded in 1999, but it is also fully integrated into our asset management, engagement and sustainability benchmarking activities, as well as the mainstream fundamental, quantitative equity and corporate credit strategies of our parent company, Robeco.

Skroupa: Taking this one step further to gender diversity. Studies show that companies perform better when there is diversity of thought–this includes input from women at the top and throughout a company. How is this addressed in your new strategy?

Baldinger: The RobecoSAM Global Gender Equality Impact Equities Strategy invests globally in companies that are leaders in promoting gender diversity and equality. Each company that we assess as part of the CSA receives a “RobecoSAM Gender Score” based on questions that specifically address gender equality and diversity issues.

We believe that promoting gender diversity and equality must go beyond the board because ensuring diversity and equality at only the most senior levels does not result in the trickle-down effect necessary to realize actual change. Therefore, in addition to looking at whether companies have a policy in place to promote gender diversity in its board nomination process, we also evaluate other factors that are important contributors to the long-term success of a company such as retention, remuneration, and employee satisfaction levels. We are the only asset management company that is able to do this, thanks to our leading corporate sustainability database.

Skroupa: Why would this strategy be attractive to institutional investors?

Baldinger: Institutional investors are realizing that they can make a significant positive impact on behalf of their stakeholders, they too, have a responsibility to fulfill in order to advance future generations.

RobecoSAM’s new gender equality strategy offers investors the opportunity to make a positive societal impact in areas related to gender diversity and equality via a well-structured investment approach that integrates information from one of the world’s most comprehensive ESG databases, all while generating attractive returns. And I am very pleased to say that even though we only just launched the strategy, we already have several institutional investors who have committed to the strategy.

Skroupa: Do you plan to bring this strategy to the U.S. market?

Baldinger: Now that the strategy is launched, one of the geographies we are focused on is the U.S. We have been encouraged by the discussions that we have had with U.S. investors thus far–this is clearly a market that has a strong interest in a product that combines both attractive returns along with positive impact. Gender is a major topic in the U.S, in comparison, Europe still has some work to do, to catch up. We look forward to sharing this very unique offering with many more people soon.


This article was written by Christopher P. Skroupa from Forbes and was legally licensed through the NewsCred publisher network.

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