Robeco, The Investments Engineers

04-18-2022 · Insight

Engagement considered important by four in five investors

Some 80% of investors say engagement will be a significant factor in their investment policy in the next two years, the Robeco Global Climate Survey has found.

    Authors

  • Peter van der Werf - Head of Engagement

    Peter van der Werf

    Head of Engagement

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The survey showed that 61% of investors thought engagement was “quite effective” in fostering change and progress on ESG policies at the investee companies and they expect their impact to grow in the future. Some 11% thought it was “very effective” while 25% were neutral.

Three quarters of investors said 74% said net-zero emissions will become the biggest engagement theme over the next two to three years in the drive to achieve carbon neutrality by 2050.

And active ownership is the favored approach to dealing with contentious sectors such as oil and gas, where voting and engaging to secure decarbonization commitments have proved particularly effective. Some 28% say they will be an active owner in oil and gas companies in the next two years.

How investors view engagement.

How investors view engagement.

Source: Robeco, CoreData

Views of 300 investors

The results are contained in the 2022 Robeco Climate Survey, which gathered the views of 300 global investors on their approaches to decarbonization, climate change, biodiversity and engagement. It is the second survey of its kind following the success of the 2021 report.

The research was carried out via an extensive global online survey conducted by CoreData Research during January 2022. Collectively the investors questioned have assets under management of USD 23.7 trillion, ranging from under USD 1 billion for the smallest to over USD 1 trillion for the largest.

Respondents were asked about their attitudes towards active ownership and engagement, which is not practised by all. Robeco has operated an Active Ownership and engagement team since 2005, and sometimes engages or votes on behalf of others.

Some of the other key findings of the survey were:

  • Active ownership and engagement is now a key part of investment policies for almost 73% of investors, while 80% said its importance will increase in the next two years.

  • 73% of European investors and 61% of investors globally say engagement strategies are quite effective as a successful tool to foster change and progress on ESG policies at investee companies.

  • 60% of investors say that they have a very good or reasonable level of knowledge and understanding of engagement with companies in order to drive change on carbon emissions.

  • 66% of investors say they are motivated to use active ownership/ engagement to ensure that governance standards comply with good practices

  • While investors generally want better data on ESG issues, corporate governance data is currently used by only just over half of investors. Lack of data is consistently cited as one of the biggest obstacles to sustainability.

Proven to get results

“It’s not surprising that engagement has such a high priority among investors as it has consistently proven to get results, particularly in the climate change arena,” says Peter van der Werf, Senior Manager for Engagement at Robeco.

“Engaging with the higher-carbon emitters to encourage them to switch to lower-carbon business operations is an effective way of decarbonizing as we pursue net zero emissions. We run engagement programs at Robeco with that objective, often in collaboration with groups such as Climate Action 100+.”

“This has already shown some success in persuading the oil and gas industry to move away from fossil fuels and develop renewable energy sources, and in getting the steel and mining industries to develop stronger operational carbon reduction targets. We note from the survey that 28% of investors say they will be an active owner in oil and gas companies in the next two years, and that can only help pursue this agenda.”

“We also practice ‘engagement with teeth’ where we remind companies that they risk being excluded if they cannot show progress on the topics under engagement, such as decarbonization or the general reduction in emissions. The threat of divestment that many investors are now widely considering does make an impact and bring these companies to the table.”

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