approach to principal adverse impact - robeco · 2021. 3. 9. · 2 • principal adverse impact 1....

Principal Adverse Impact StatementROBECO INSTITUTIONAL ASSET MANAGEMENT

July 2021

2 • Principal Adverse Impact

Contents

1. Summary 3

1.1 Principal adverse impact 3

1.2 Identifying and prioritizing principal adverse impact 3

1.3 Addressing principal adverse impact 3

2. Description of principal adverse sustainability impacts 5

2.1 Sustainable Investing at Robeco 5

2.2 Principal adverse impact 5

2.3 Planned actions to mitigate principal adverse impact 5

3. Description of policies to identify and prioritize principal adverse sustainability impacts 7

3.1 Governance of principal adverse impact 7

3.2 Identifying principle adverse impact 7

3.3 Prioritizing principle adverse impact at product level 8

4. Engagement policies 9

4.1 Corporate Engagement 9

4.2 Public Policy Engagement 9

4.3 Proxy Voting 10

5. Reference to international standards 11

5.1 Approach to Human Rights 11

5.2 Approach to Climate change 11

5.3 Approach to Biodiversity 12

Appendix: Principal adverse impact indicators 13

Principal Adverse Impact • 3

1. Summary

1.1 Principal adverse impactRobeco acknowledges the responsibility of the asset management industry towards climate change

risks and other principal adverse impacts through the investment decisions that we make and the

contact we have with investee companies and other institutions. The concept of Principal Adverse

Impact (PAI) is as follows1:

“Negative, material or likely to be material effects on sustainability factors that are caused,

compounded by or directly linked to investment decisions and advice performed by the legal entity.”

Under SFDR, Robeco considers 18 mandatory indicators on greenhouse gas emissions, biodiversity,

water, waste, and social indicators applicable to companies, sovereigns and supranationals, and real

estate assets. In addition, there are 22 additional climate and other environment-related indicators

defined, as well as 24 additional indicators related to social factors and employees, respect for

human rights, anti-corruption and anti-bribery matters on which reporting and integration is

encouraged.

1.2 Identifying and prioritizing principal adverse impactRobeco has a long history of ESG integration and the use of ESG data in its investment processes and

has due diligence policies in place to identify and prioritize relevant adverse impacts and indicators

on sustainability factors. The requirements under the SFDR RTS are detailed and require additional

ESG data, predominantly on asset-level, that are currently not fully available within Robeco. Robeco

has performed an initial data analysis and is in the process of acquiring additional data from

external data providers to meet reporting obligations under the EU SFDR. Once the relevant data are

available, the methodologies to measure principal adverse sustainability impacts can be finalized

and will be added to this statement (expected in Q4 2021).

On an entity level, taking into account the available sustainability data, Robeco has identified and

prioritized the PAIs and indicators relevant to the organization’s overall investment strategy (see

table on the next page). If the availability of data improves, more indicators may be added.

1.3 Addressing principal adverse impactRobeco takes both mandatory and non-mandatory adverse impacts into account in its due

diligence procedures in the selection and ongoing monitoring of investments through various

methods ranging from ESG Integration, exclusions, reduction of emissions thresholds, voting and

engagement, amongst other planned actions. In addition, as an entity, Robeco has joined the Net

Zero Asset Manager Initiative and signed the Finance for Biodiversity Pledge, which are relevant

to mitigating potential adverse impact as a company. The actions Robeco has taken to avoid and

reduce adverse sustainability impacts are reported on in our annual Sustainability Report which

can be found on our website. As of 2022 reporting will be presented via the template related to PAI

reporting as referred to in the ESA’s final report on the SFDR regulated technical standards2.

1. https://www.esma.europa.eu/press-news/esma-news/three-european-supervisory-authorities-publish-final-report-and-draft-rts

2. JC 2021 03


Table 1: Overview of current PAIs identified

Scope Theme PAI indicator Table Number

Investee companies Climate and other environment-

related indicators

GHG emissions 1 1

Carbon footprint 1 2

GHG intensity of investee companies 1 3

Exposure to companies active in the fossil fuel sector 1 4

Share of non-renewable energy consumption and production 1 5

Energy consumption intensity per high impact climate sector 1 6

Activities negatively affecting biodiversity sensitive areas 1 7

Emissions to water 1 8

Hazardous waste ratio 1 9

Investing in companies without carbon emission reduction initiatives 2 4

Natural species and protected areas 2 14

Social and Employee, Respect for

Human Rights, Anti corruption and

Anti Bribery matters

Violations of UN Global Compact principles and Organisation for

Economic Cooperation and Development (OECD) Guidelines for

Multinational Enterprises

1

10

Lack of processes and compliance mechanisms to monitor compliance

with UN Global Compact principles and OECD Guidelines for


1

11

Unadjusted gender pay gap 1 12

Board gender diversity 1 13

Exposure to controversial weapons (antipersonnel mines, cluster

munitions, chemical weapons and biological weapons)

1 14

Excessive CEO pay ratio 3 8

Sovereigns and Supranationals

Climate and other environment-

related indicators

Share of bonds not certified as green under a future EU act setting up an

EU Green Bond Standard

2 17

GHG intensity 1 15

Social and Employee, Respect for

Human Rights, Anti corruption and

Anti Bribery matters

Investee countries subject to social violations

1

16

Real Estate Fossil fuels Share of investments in real estate assets involved in the extraction,

storage, transport or manufacture of fossil fuels

1 17

Energy efficiency Share of investments in energy-inefficient real estate assets 1 18


2.1 IntroductionAs of 1 January 2022, Robeco will describe in this section adverse impacts that qualify as principal,

as well as the actions planned or targets set for the first reference period to avoid or reduce principal

adverse impact. For now, the following paragraphs aim to provide an introduction to how Robeco

plans to set targets and integrate principal adverse sustainability impacts, given that sustainability is

an essential component of Robeco’s 2021-2025 strategy. This strategy includes, but is not limited to,

the following:

- In line with our Net-Zero Commitment, we will establish an ambitious climate strategy,

including a decarbonization trajectory and forward-looking indicators. Carbon objectives will be

set for all our funds, aiming for an average of 7% reductions per annum, to help meet our net-

zero 2050 ambition. Initially confined to Robeco funds only, the scope of our decarbonization

strategy will gradually increase to include client mandates and reach 100% of AUM.

- Biodiversity loss will have a large impact on the ability of companies to produce food at the

current scale of production. In line with the Finance for Biodiversity Pledge, Robeco will have

assessed its individual biodiversity footprint, set targets and report on progress against these

biodiversity targets by 2024 the latest. In addition, Robeco will continue to collaborate and

engage with stakeholders, continuing to develop thought leadership, and building on the

knowledge gained in advocating for sustainable palm oil production.

- Robeco embraces ‘doing no significant harm’ to the Sustainable Development Goals in its

operations and in its asset management activities.

Robeco’s current approach to doing no significant harm, and thereby mitigating negative impact,

allows for the integration of principal adverse impact, as introduced by the EU SFDR Framework, in

our investment processes.

2.2 Principal adverse impact The concept of Principal Adverse Impact (PAI) is described in the EU Regulation on sustainability-

related disclosures in the financial services sector (SFDR) . The definition of PAI is as follows:

“Negative, material or likely to be material effects on sustainability factors that are caused,

compounded by or directly linked to investment decisions and advice performed by the legal entity.”

More concretely, the SFDR framework will require the consideration of 18 mandatory indicators on

greenhouse gas emissions, biodiversity, water, waste, and social indicators applicable to companies,

sovereigns and supranationals, and real estate assets. In addition, there are 22 additional climate

and other environment-related indicators defined, as well as 24 additional indicators for social and

employee, respect for human rights, anti-corruption and anti-bribery matters on which reporting

and integration should be determined based on the materiality of the financial entity’s investments

and availability of data.

2.3 Planned actions to mitigate principal adverse impactRobeco takes principal adverse impacts into account in its due diligence procedures for investment

selection and ongoing monitoring. Principal adverse impact is also taken into account through

various methods such as ESG Integration, exclusions, reduction of emissions thresholds, and voting

and engagement. In addition, as an organization, Robeco has made several commitments related

to climate change and biodiversity, amongst other topics, which are relevant to mitigating potential

2. Description of principal adverse sustainability impacts


adverse impact as a company. These approaches are explained in the following paragraphs. Robeco

acts in accordance with applicable regulation and aims to lead in the implementation of relevant

Stewardship codes. More information can be found on our approach to the Shareholder Rights

Directive II as well as in in our Stewardship Policy. More detailed descriptions on Robeco’s strategy

to address PAI indicators will be provided by January 2022.

Methods to address principle adverse impact

Method Explanation Example More information

Exclusions

Robeco believes that some products and business

practices are detrimental to society and incompatible

with sustainable investment strategies. Therefore,

certain exclusion criteria are applied.

Applied to Exposure to controversial weapons (Table

1, indicator 14).

Robeco’s Exclusion Policy

ESG Characteristics

For its investment strategies, Robeco applies

different scores (e.g. Smart ESG or Country

Sustainability Ranking) and frameworks (e.g. SDG

Framework or Green Bonds Framework) that shall

integrate PAI indicators. More information on how

PAIs will be integrated will be provided once a data

provider has been selected.

Many strategies integrate reduction targets on GHG

emissions (Table 1, indicator 1 and 2) and aim for a

20% better than benchmark performance.

Robeco is calculating the water footprints of

portfolios vs. benchmarks, and for selected funds

applies a minimum reduction target (20% vs.

benchmark).

Robeco’s Sustainability Policy

Proxy Voting

By Proxy Voting we aim to encourage good

governance principles and address poor governance

by voting against management or filing shareholder

resolutions.

Applied to equity holdings for Board gender diversity

(Table 1, indicator 13)

Robeco Stewardship Policy

Corporate Engagement

Engagement consists of a constructive dialogue

between institutional investors and investee

companies to improve long-term value creation.

Applied to equity and credit holdings, for example in

relation to GHG emissions (Table 1, indicator 1 and

2) and remuneration (Table 3, indicator 8).


Public Policy Engagement

Engagement with governments, government

related agencies, or regulators can add value to our

engagement program. Therefore, we take part in

consultations and provide feedback on regulations

that facilitate a better or level playing for ESG issues.

In 2020, Robeco has participated in multiple

collaborative sovereign engagement efforts to

address deforestation (Table 2, indicator 14), for

example in Brazil and Indonesia.


https://www.robeco.com/en/shareholder-rights-directive-2.html

https://www.robeco.com/en/shareholder-rights-directive-2.html

https://www.robeco.com/docm/docu-robeco-stewardship-policy.pdf

https://www.robeco.com/docm/docu-exclusion-policy.pdf

https://www.robeco.com/docm/docu-robeco-sustainability-policy.pdf





3. Description of policies to identify and prioritize principal adverse sustainability impacts

3.1 Governance of principal adverse impact Robeco’s Sustainable Investing Center of Expertise acts as the focal point for our sustainable

investment activities and delivers expertise and insights to the investment teams, who are then

responsible for the integration of ESG into their individual investment capabilities. Day-to-day

activities are overseen by the Head of Sustainable Investing. The CIO Fixed Income and Sustainability

is ultimately responsible for sustainable investing. Internal controls and monitoring are in place as

described in (docu-robeco-sustainability-risk-policy.pdf). At this point in time, the ownership of

the Principal Adverse Impact Statement is within the Sustainability Impact and Strategy Committee

(SISC). The purpose of the Sustainability and Impact Strategy Committee (SISC) is to oversee,

coordinate and drive sustainability matters from a company-wide perspective. In some cases,

expertise may be requested from the relevant working groups, illustrated below.

Governance may evolve throughout the following months. The first update of this statement will be

made by 1 January 2022.

3.2 Identifying principle adverse impactRobeco has performed an initial data analysis and stakeholder inventarisation, and is in the process

of acquiring additional data to meet reporting obligations under the EU SFDR. Based on the initial

analysis, we have categorized data availability and quality according to the outline in Table 2.

More information on the specific indicators can be found in Appendix A. At this point in time, the

methodologies to measure principal adverse sustainability impacts are not yet finalized. Once

known, the methodologies will be added to this statement (expected in Q4 2021).

https://www.robeco.com/docm/docu-robeco-sustainability-risk-policy.pdf


Table 2: Data availability and quality of principle adverse impact indicators

Data availability and quality Action Example

Low

Acquire additional data from external data providers

Increase data availability through engagement with

companies and industry stakeholders

Participation in collaborations to enhance data, for

example via the Platform for Living Wage Financials.

Medium

Data available for a number of sectors, but with

limited coverage and/or quality

Where possible: integrate in investment decision-making

Increase data availability through engagement with

companies and industry stakeholders

Participation in collaborations to enhance data, for

example via the Climate Action 100+ initiative.

High

Sound data availability and quality across majority

of sectors and sovereigns

Integrate in investment decision-making

Optional: prioritize in invest-ments and include as

binding element in investment strategy

Data in relation to breaches of the UNGP/OECD

Guidelines inform our engagement program.

3.3 Prioritizing principle adverse impact at product levelIn line with the fund classification outlined in the SFDR , Robeco will take into account PAI indicators

per strategy. It is expected that the prioritization of PAI for the different investment strategies will

be following the ESG priorities and sustainable objectives of the funds, and meet our general

expectations of companies to commit to good governance principles outlined in our Stewardship

Policy, and act in accordance with the UNGP and OECD Guidelines for Multinational Enterprises as

captured in the Exclusion Policy.

More detailed descriptions on the prioritization will be provided in the Principal Adverse Impact

Statement and product disclosures by January 2022.




4. Engagement policies

We believe that our engagement with investee companies on financially material sustainability

issues will have a positive impact on our investment results and on society. Robeco’s SI Center of

Expertise and investment teams work closely together in engagement. We focus on a wide range of

themes, jointly determined by the SI Center for Expertise, investment teams, and our clients.

Robeco distinguishes two types of engagement: corporate engagement and public policy

engagement.

4.1 Corporate Engagement Robeco actively uses its ownership rights to engage with companies on behalf of our clients in a

constructive manner. Robeco engages with companies worldwide, in both our equity and credit

portfolios. The outcomes of our engagement efforts are communicated to analysts, portfolio

managers, and clients, enabling them to incorporate this information into their investment

decisions as part of Robeco’s integrated Sustainable Investing framework.

Engagement consists of a constructive dialogue between institutional investors and investee

companies to discuss how they manage ESG risks and seize business opportunities associated with

sustainability challenges. Robeco carries out two different types of corporate engagement with

companies in which we invest: value engagement and enhanced engagement.

- Value engagement is a proactive approach focusing on long-term, financially material ESG

opportunities and risks that can affect companies’ valuation and ability to create value. The

primary objective is to create value for investors by improving sustainability conduct and

corporate governance.

- Enhanced engagement focuses on companies that severely and structurally breach minimum

behavioral norms in areas such as human rights, labor, environment and anti-corruption.

The primary objective of enhanced engagement is to address reported shortfalls against

internationally accepted codes of conduct for corporate governance, social responsibility,

the environment and transparency such as the UN Global Compact and OECD Guidelines for

Multinational Enterprises. In this approach, we monitor companies on several PAI indicators in

relation to human rights, labor standards, the environment and anti-corruption.

Within our engagement program, we consider the principal adverse impacts in relation to

greenhouse gas emissions, biodiversity, water and social and employee matters.

More information can be found in our Stewardship Policy and via a dedicated page on Active

Ownership.

4.2 Public policy engagementRobeco engages in public policy engagement. Engagement with governments, government related

agencies, or regulators can add value to our engagement program. Therefore, we take part in

consultations and provide feedback on regulations that facilitate a better or level playing for ESG

issues. Engagement is never intended to unduly influence the political process and Robeco only

conducts engagement on public policy where it is deemed appropriate and transparent. Most of

our engagement activities on this topic are coordinated through the various investor associations


https://www.robeco.com/en/themes/sustainable-investing/active-ownership/



and collaborative groups of which we are members (for example AGCA and Eumedion). Policy

engagements that are done via these collaborative platforms can be relevant from an equity

investor perspective, from a bondholder perspective, or from both perspectives.

Also, as part of our commitment to making financial markets more sustainable, Robeco works

together with a diverse range of institutions. Our active contribution to these important global

platforms for collaborative action on sustainability issues enables us to help shape the global

investment agenda.

More information on our commitments can be found in the overview of Sustainable Investing

Memberships, Statements, and Principles.

Within our public policy engagement, we focus on the principal adverse impacts in relation to

greenhouse gas emissions and biodiversity. More information can be found in our Stewardship

Policy, via a dedicated page on Active Ownership and in our Sustainability Report.

4.3 Proxy Voting As a shareholder Robeco is co-owner of many companies and has a right to vote on shareholder

meetings for those companies. We use our voting rights with the aim to influence a company’s

corporate governance and other relevant investment related decisions in the best interest of our

clients and society. The Robeco voting policy consists of principles, guidance, and example scenarios

to assist in determining our voting instructions. Broadly, Robeco votes against management

recommendations in case of poor corporate governance practices, when proposals are not in the

best interest of long-term shareholders and on any other proposal that is out of line with our policy

principles. By Proxy Voting policy we aim to encourage good governance principles and address

poor governance by voting against management or filing shareholder resolutions. In our policy,

we outline our principle with regards to several PAI indicators, amongst other in relation to board

diversity and separation of the Chairman/CEO roles.

With our proxy voting activities, we take into account a wide number of principal adverse impacts,

amongst others in relation to remuneration and gender pay gap. In addition, we vote for Robeco

votes for shareholder proposals which aim to increase transparency on material ESG issues, enhance

long term shareholder value creation, address material ESG risks, except when management and

the board have demonstrated appropriate efforts to mitigate such risks in a transparent way and

aim to enforce appropriate conduct, except when their implementation would additionally reward

fundamental behavioral norms. These shareholder proposals could relate to a number of principal

adverse impacts, amongst others in relation to greenhouse gas emissions.

More information can be found in our Stewardship Policy.

https://www.robeco.com/docm/docu-relevant-codes-and-memberships.pdf





https://www.robeco.com/en/about-us/sustainability-report.html



5. Reference to international standards As part of our commitment to making financial markets more sustainable, Robeco works together

with a diverse range of institutions. Our active contribution to these important global platforms

for collaborative action on sustainability issues enables us to help shape the global investment

agenda. The document Sustainable Investing Memberships, Statements, and Principles lists the

SI memberships Robeco participates in, statements we have signed, as well as principles and best

practices that we adhere to. In the next paragraphs, we highlight our approach to Human Rights,

Climate Change and Biodiversity.

5.1 Approach to human rights Part of Robeco’s corporate responsibility is its duty to respect and uphold human rights, as outlined

in the Universal Declaration of Human Rights, and to integrate human rights considerations into its

daily business operations. Robeco expects its employees, suppliers, business partners and portfolio

companies to respect Human Rights in their business activities. Any transgressions will be monitored

and discussed and may lead to enhanced engagement or exclusions. Robeco has signed the United

Nations Global Compact (UNGC) and endorses the OECD Guidelines for Multinational Enterprises

and lives by these principles and guidelines. Robeco’s human rights approach is thus aligned with

the UNGC and OECD Guidelines, as well as the United Nations Universal Declaration of Human

Rights, the International Labor Organization’s (ILO) labor standards and the United Nations Guiding

Principles for Business and Human Rights (UNGPs). Robeco’s efforts in relation to human rights,

relate directly to principal adverse impacts from Table number 1, indicator 10 and 11.

More information on our Human Rights approach can be found in the Sustainability Policy.

5.2 Approach to climate changeRobeco is committed to contribute to the goals of the Paris Agreement and to achieving net zero

carbon emissions by 2050. To this end, Robeco is developing a net zero roadmap with interim

targets for 2025 and 2030 and will publish this roadmap prior to the COP26 in November 2021. Our

interim targets will include carbon footprint reduction targets that apply to all Robeco’s funds.

The portfolio decarbonization targets will be derived from the P2 pathway from the IPCC 1.5-degree

scenario of 2018. This is an ambitious scenario that disrupts from business-as-usual but is also well

aligned with the broader societal development goals.

The P2 pathway is composed of the following emission milestones: 49% reduction of GHG emissions

in 2030 and -89% reduction of GHG emissions in 2050, both relative to 2010 baseline. Initially

confined to Robeco funds only, the scope of our decarbonization strategy will gradually increase to

include client mandates and reach 100% of AUM.

Robeco is partnering with the Inevitable Policy Response Consortium to develop high-conviction

scenarios with the intention to use the corresponding datasets for valuation research and

investment decisions.

Robeco’s efforts in relation to climate change relate directly to principal adverse impacts in relation

to greenhouse gas emissions.

More information on our Climate Change approach can be found in the Sustainability Policy.





5.3 Approach to Biodiversity Biodiversity loss will have a large impact on the ability of companies to produce food at the current

scale of production, due for example to soil depletion, decrease in crop diversity, and ecosystem

collapse. Robeco collaborates with different stakeholders related to this issue, such as universities,

NGOs and the DNB Working Group on Biodiversity, Platform Biodiversity Accounting Financials and

the Taskforce for Nature-related Financial Disclosure (TNFD) to gain input on how to approach this

topic from an investor perspective. In addition, Robeco is one of the 55 financial institutions from

around the globe that have signed the Finance for Biodiversity Pledge. In the Pledge the signatories

call upon world leaders to reverse nature loss this decade and commit to collaborating, engaging,

and assessing their own biodiversity impact, setting targets and reporting on biodiversity matters by

2024 at the latest.

In addition to the formation of a working group to meet those commitments, Robeco has started an

engagement program on Biodiversity, with a focus on the biodiversity impact of deforestation that is

linked to five high-risk crop commodities – cocoa, natural rubber, soy, beef, and tropical timber and

pulp.

Within our efforts to prevent biodiversity loss, we aim to mitigate principal adverse impacts in

relation to the biodiversity metrics.

More information on our approach to Biodiversity can be found in the Sustainability Policy.



Appendix: Principal adverse impact indicators

Adverse

Sustainability

Indicator (Group)

Adverse Sustainability

Indicator

Metric

Current data

availability

Targets and/or planned actions

Greenhouse gas

emissions

1. GHG emissions

2. Carbon footprint

3. GHG intensity of

investee companies

4. Exposure to

companies active in

the fossil fuel sector

Scope 1 GHG emissions

Scope 2 GHG emissions

Scope 3 GHG emissions (from

January 1st 2023)

Total GHG emissions

Carbon footprint

GHG intensity of investee

companies

Share of investments in

companies active in the fossil fuel

sector

High

High

Medium

Medium

High

Medium

High

In the fall of 2021, Robeco will announce its climate strategy that

include specific targets. In addition, Robeco conducts engagement

with high-emitting companies.

Current controls on GHG emissions are expressed in both GHG

intensity (indicator #3) and Carbon Footprint (indicator #2) and

applicable to a subset of funds. SI Focus quant funds aim <20%

intensity below benchmark and SI Inside quant funds aim <0% below

benchmark. Fundamental inside strategies aim for <0% footprint

below benchmark and fundamental focus strategies aim <20%

footprint below benchmark.

In addition, Robeco excludes the most impactful fossil fuel activities

based on company revenue thresholds. Companies that derive 25%

or more of their revenues from thermal coal or oil sands, or 10%

or more of their revenue from Arctic drilling are excluded from our

inside strategies. , or 10% from Arctic drilling, are excluded from

our funds. For SI Focus and Impact funds, these thresholds are 10%

(thermal coal or oil sands) and 5% (Arctic drilling) respectively.

Energy

performance

5. Share of non-

renewable energy

consumption and

production

6. Energy

consumption intensity

per high impact

climate sector

Share of non-renewable energy

consumption and non-renewable

energy production of investee

companies from non-renewable

energy sources compared to

renewable energy sources,

expressed as percentage

Energy consumption in GWh per

million EUR of revenue of investee

companies, per high impact

climate sector

Medium

Medium

Within Robeco’s engagement themes that relate to climate, energy

performance is an important element of discussion.

Within Robeco’s engagement themes that relate to climate, energy

performance is an important element of discussion.

Biodiversity

7. Activities negatively

affecting biodiversity

sensitive areas

Share of investments in investee

companies with sites/operations

located in or near to biodiversity

sensitive areas where activities

of those investee companies

negatively affect those areas

Low

Robeco is developing methods to measure the materiality of

biodiversity for our portfolios, and the impact of our portfolios on

biodiversity. Based on such measures we will set quantified targets in

order to combat biodiversity loss, latest by 2024.

In addition, Robeco has an exclusion policy in relation to Palm

oil and a company engagement program on commodity-related

deforestation

Water

8. Emissions to water

Tonnes of emissions to water

generated by investee companies

per million EUR invested,

expressed as a weighted average

Medium

Robeco is calculating the water footprints of portfolios vs.

benchmarks, and for selected funds (Sustainability Focus) applies a

minimum reduction target (20% vs. benchmark).

Our current controls are that in case our controversy assessment finds

a company with significant negative impact on local water supply or

waste issues which is a breach of UN Global Compact principle 7, we

will apply enhanced engagement that could, in case of insufficient

remediation, lead to the exclusion from our investment universe.

EU SFDR ANNEX 1 - Table 1


Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


Waste

9. Hazardous waste

ratio

Tonnes of hazardous waste


per million EUR invested,


Medium

Robeco is calculating the waste footprints of portfolios vs.

benchmarks, and for selected funds (Sustainability Focus) applies a

minimum reduction target (20% vs. benchmark).

Social and

employee matters

10. Violations of

UN Global Compact

principles and

Organisation

for Economic

Cooperation and

Development

(OECD) Guidelines

for Multinational

Enterprises


companies that have been

involved in violations of the UNGC

principles or OECD Guidelines for


High

Robeco acts in accordance with the UNGC Principles and OECD

Guidelines for Multinational Enterprises to assess the behavior

of companies. An enhanced engagement process is applied with

companies that have severe breaches of these principles and

guidelines. If this enhanced engagement, which may last up to a

period of three years, does not lead to the desired change, Robeco

will decide to exclude a company from its investment universe.

11. Lack of processes

and compliance

mechanisms to

monitor compliance

with UN Global

Compact principles

and OECD Guidelines

for Multinational

Enterprises


companies without policies

to monitor compliance with

the UNGC principles or OECD

Guidelines for Multinational

Enterprises or grievance /

complaints handling mechanisms

to address violations of the UNGC

principles or OECD Guidelines for


Medium

12. Unadjusted

gender pay gap

Average unadjusted gender pay

gap of investee companies

Low Via proxy voting, Robeco encourages good pay practices across all

pay levels.

13. Board gender

diversity

Average ratio of female to male

board members in investee

companies

Low

Via proxy voting, Robeco encourages board gender diversity.

Human rights

14. Exposure to

controversial weapons

(antipersonnel mines,

cluster munitions,

chemical weapons

and biological

weapons)


companies involved in the

manufacture or selling of

controversial weapons

High

For all strategies Robeco deems anti-personnel mines, cluster

munitions, chemical, biological weapons, white phosphorus,

depleted uranium weapons and nuclear weapons that are tailor

made and essential to be controversial weapon. These are excluded

from all investments.

Environmental 15. GHG Intensity GHG intensity of investee countries High For climate fixed income funds data is used for the construction of

the benchmark as well as the investment strategy.


Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


Social

16. Social violations

Number of investee countries

subject to social violations

(absolute number and relative

number divided by all investee

countries), as referred to in

international treaties and

conventions, United Nations

principles and, where applicable,

national law

High

Social violations scoring data are part our Country Sustainability

Ranking (CSR) as well as the country SDG ranking which is currently

being developed. Via the CSR they are part of the country research

process and F-scores.

Social violations scoring data are part of our screening for country

exclusions.

Fossil fuels

17. Exposure to fossil

fuel through real

estate assets

Share of investments in real estate

assets involved in the extraction,

storage, transport or manufacture

of fossil fuels

NA

Robeco manages a portfolio of listed real estate assets and are not

directly involved in the day to day management of individual assets.

Robeco does manage the overall portfolio in terms of GHG reduction

(>20% lower footprint versus benchmark).

Energy efficiency

18. Exposure to

energy-inefficient real

estate assets

Share of investments in energy-

inefficient real estate assets

NA


Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


Emissions

1. Emissions of

inorganic pollutants

2. Emissions of air

pollutants

3. Emissions of ozone

depletion substances

4. Investing in

companies without

carbon emission

reduction initiatives

Tonnes of inorganic pollutants

equivalent per million EUR

invested, expressed as a weighted

average

Tonnes of air pollutants

equivalent per million EUR

invested, expressed as a weighted

average

Tonnes of ozone depletion

substances equivalent per million

EUR invested, expressed as a

weighted average


companies without carbon

emission reduction initiatives

aimed at aligning with the Paris

Agreement

Low

Low

Low

Medium

In the fall of 2021, Robeco will announce its climate strategy that

include specific targets. In addition, Robeco conducts en-gagement

with high-emitting companies.

Energy

performance

5. Breakdown of

energy consumption

by type of non-

renewable sources of

energy

Share of energy from non-

renewable sources used by

investee companies broken down

by each non-renewable energy

source

Low

Water, waste and

material

6. Water usage and

recycling

Average amount of water

consumed and reclaimed by the

investee companies (in cubic

meter) per million EUR of revenue

of investee companies

Weighted average per-centage

of water recy-cled and reused by

inves-tee companies

Low

Low

7. Investments in

companies without

water management

policies

1. Share of investments in

investee companies with no water

management initiatives

Low

8. Exposure to areas

of high water stress


investee companies with sites

located in areas of high water

stress

Low

9. Investments in

companies producing

chemicals


companies the activities of which

fall under Division 20.2 of Annex I

to Regulation (EC) No 1893/2006

Low



Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


10. Land degradation,

desertification, soil

sealing


companies the activities of

which cause land degradation,

desertification or soil sealing

Low

11. Investments in

companies without

sustainable land/

agriculture practices


companies without sustainable

land/agriculture practices or

policies

Low

12. Investments in

companies without

sustainable oceans/

seas practices

1. Share of investments in investee

companies without sustainable

oceans/seas practices policies

Low

13. Non-recycled

waste ratio

Tonnes of non-recycled waste


per million EUR invested, expressed

as a weighted average

Low

14. Natural species

and protected areas

1.Share of investments in investee

companies whose operations

affect threatened species

Low

Robeco currently engages with companies in the engagement

themes ‘Palm oil’ and ‘Biodiversity’. In addition, Robeco has an

exclusion policy in relation to Palm oil. By 2024, Robeco will set

targets in order to combat biodiversity loss.

2.Share of investments in

investee companies without a

biodiversity protection policy

covering operational sites owned,

leased, managed in, or adjacent

to, a protected area or an area of

high biodiversity value outside

protected areas

Low

15. Deforestation

Share of investments in companies

without a policy to address

deforestation

Medium

Deforestation due to expansion of palm oil production is one of

the key drivers of biodiversity loss due to the destruction of tropical

forest habitat. By investing in companies that have not committed

to the principles & criteria of RSPO Robeco runs a significant risk to

negatively impact biodiversity. Therefore, Robeco has an exclusion

policy with regards to unsustainable production of Palm oil.

Green securities

16. Share of securities

not certified as green

16. Share of securities not certified

as green under a future EU legal

act setting up an EU Green Bond

Standard

High

Green securities

17. Share of bonds

not certified as green

under a future EU

act setting up an EU

Green Bond Standard

Share of bonds not certified as

green

High


Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


Greenhouse gas

emissions

18. GHG emissions Scope 1 GHG emissions generated

by real estate assets

Low Robeco does not invest directly in Real Estate Assets

Energy

consumption

19. Energy

consumption intensity

Energy consumption in GWh of

owned real estate assets per

square meter

Low

Waste

20. Waste production

in operations

Share of real estate assets not

equipped with facilities for

waste sorting and not covered

by a waste recovery or recycling

contract

Low

Resource

consumption

21. Raw materials

consumption for new

construction and

major renovations

Share of raw building materials

(excluding recovered, recycled

and bio sourced) compared to the

total weight of building materials

used in new construction and

major renovations

Low

Biodiversity

22. Land

artificialisation

Share of non-vegetated surface

area (surfaces that have not been

vegetated in ground, as well

as on roofs, terraces and walls)

compared to the total surface

areas of the plots of all assets

Low


Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


Social and

employee matters

1. Investment in

investee companies

without workplace

accident prevention

policies

2. Rate of accidents

3. Number of days

lost to injuries,

accidents, fatalities or

illness

4. Lack of a supplier

code of conduct

5. Lack of grievance/

complaints handling

mechanism related to

employee matters

6. Insufficient

whistleblower

protection


investee companies without a

workplace accident prevention

policy

Rate of accidents in investee

companies expressed as a

weighted average

Number of workdays lost to

injuries, accidents, fatalities or

illness of investee companies



companies without any supplier

code of conduct (against unsafe

working conditions, precarious

work, child labour and forced

labour)

Share of investments in

investee companies without any

grievance/complaints handling

mechanism related to employee

matters

1. Share of investments in entities

without policies on the protection

of whistleblowers

Low

Low

Low

Low

Low

Low

7. Incidents of

discrimination

1. Number of incidents of

discrimination reported in

investee companies expressed as

a weighted average

2. Number of incidents of

discrimination leading to

sanctions in investee companies


Low

Low

8. Excessive CEO pay

ratio

Average ratio within investee

companies of the annual total

compensation for the highest

compensated individual to

the median annual total

compensation for all employees

(excluding the highest-

compensated individual)

Low

Poor remuneration practices are addressed via Proxy Voting and

Engagement.



Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


Human rights 9. Lack of a human

rights policy

Share of investments in entities

without a human rights policy

Low In Q4 2021, Robeco will expand its global controversy engagement

program.

10. Lack of due

diligence

Share of investments in entities

without a due diligence process

to identify, prevent, mitigate and

address adverse human rights

impacts

Low

In Q4 2021, Robeco will start an engagement program focused on

improving human rights due diligence.

11. Lack of processes

and measures for

preventing trafficking

in human beings


investee companies without

policies against trafficking in

human beings

Low

In Q4 2021, Robeco will expand its global controversy engagement

program.

12. Operations and

suppliers at significant

risk of incidents of

child labour

1. Share of the investments in

investee companies exposed

to operations and suppliers at

significant risk of incidents of child

labour exposed to hazardous work

in terms of geographic areas or

type of operation

Low


program.

13. Operations and

suppliers at significant

risk of incidents of

forced or compulsory

labour

1. Share of the investments in

investee companies exposed

to operations and suppliers at

significant risk of incidents of

forced or compulsory labour in

terms in terms of geographic

areas and/or the type of

operation

Low


program.

14. Number of

identified cases of

severe human rights

issues and incidents

Number and nature of cases of

severe human rights issues and

incidents connected to investee

companies on a weighted average

basis

Low

Poor performing companies under this PAI will become part of the

Enhanced Engagement program.

Anti-corruption

and anti-bribery

15. Lack of anti-

corruption and anti-

bribery policies


entities without policies on

anti-corruption and anti-bribery

consistent with the United Nations

Convention against Corruption

Low

16. Cases of

insufficient action

taken to address

breaches of standards

of anti-corruption and

antibribery


companies with identified

insufficiencies in actions taken to

address breaches in procedures

and standards of anticorruption

and anti-bribery

Low

Poor performing companies under this PAI will become part of the

Enhanced Engagement program.


Adverse

Sustainability

Indicator (Group)


Indicator

Metric

Current data

availability


17. Number of

convictions and

amount of fines for

violation of anti-

corruption and anti-

bribery laws

Numbers of convictions and

amount of fines for violations of

anticorruption and anti-bribery

laws by investee companies

Low

Social

18. Average income

inequality score

The distribution of income and

economic inequality among

the participants in a particular

economy including a quantitative

indicator

Medium

Similar metrics are part of the Country Sustainability Ranking

(CSR) as well as the country SDG ranking which is currently being

developed. Via the CSR they are part of the country research process

and F-scores.

19. Average freedom

of expression score

Measuring the extent to which

political and civil society

organisations can operate freely

including a quantitative indicator

explained

Medium

Human rights

20. Average human

rights performance

Measure of the average human

right performance of investee

countries using a quantitative

indicator

Medium

Governance

21. Average

corruption score

Measure of the perceived level of

public sector corruption using a

quantitative indicator

Medium

22. Non-cooperative

tax jurisdictions

Investments in jurisdictions on

the EU list of noncooperative

jurisdictions for tax purposes

Medium

23. Average political

stability score

Measure of the likelihood that the

current regime will be overthrown

by the use of force using a


Medium

24. Average rule of

law score

Measure of the level of

corruption, lack of fundamental

rights, and the deficiencies in

civil and criminal justice using a


Medium


1443

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21

Contact Robeco Institutional Asset Management B.V.

Carola van Lamoen

Head of Sustainable Investing

Weena 850

3014AD Rotterdam

The Netherlands

[email protected]

www.robeco.com

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