Engaging with
corporates to tackle
water risks
RobecoSAM | Peter van derWerf

Zurich, 14 November 2013
Engagement in a nutshell
What?

•
•

Engagement is an active dialogue between investor(s) and a company
Goal of the dialog...
Focused engagement process
Preparation of engagement -> Screening of material themes

Define SMART objectives with (extern...
Water risks are material in
textile and food & beverage
sector
•

Companies need to create resilient and
competitive suppl...
Textile product supply chain water use
•

Example of textile
product supply chain

•

Indicates main impact
upstream in th...
What do we aim for with our engagement?
During our dialogue with companies in these sectors we:
•

Aim to increase awarene...
Mondelez makes good steps in mitigating water risks
RobecoSAM’s Governance & Active Ownership team has been in dialogue
wi...
Still ample room for improvement in transparency
Topics addressed during our dialogue:
•

Focus on water management in the...
Water management as risk for H&M
RobecoSAM’s Governance & Active Ownership team has been in dialogue
with H&M since 2010
I...
Turned into a business opportunity
Conscious collection embeds water stewardship in core business
Examples of some of the ...
Engagement for water management becomes a dialogue on
water stewardship
What?

• We identified water management as a mater...
Disclaimer
“RobecoSAM” is a registered trade mark and trade name of Robeco Groep N.V. (The Netherlands) and hereinafter re...
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Peter van der Werf - robeco sam engaging with corporates on water risk

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Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.

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Peter van der Werf - robeco sam engaging with corporates on water risk

  1. 1. Engaging with corporates to tackle water risks RobecoSAM | Peter van derWerf Zurich, 14 November 2013
  2. 2. Engagement in a nutshell What? • • Engagement is an active dialogue between investor(s) and a company Goal of the dialogue is to improve the Environmental, Social and Governance (ESG) behaviour of the company Why? • Improved ESG behaviour contributes to better risk return profile of the securities and long term performance of the company How? • We use an integrated approach combining a clear investor perspective with knowledge from our corporate sustainability assessment to assess which topics are material to start an active dialogue For whom? • We conduct engagement for funds managed by the Robeco group and for funds managed by external managers of clients who use our engagement overlay service
  3. 3. Focused engagement process Preparation of engagement -> Screening of material themes Define SMART objectives with (external) research provider Analyze case -> establish contact with company Closed unsuccessful Ongoing dialogue -> measure objectives Feedback to portfolio managers & clients Closed successful
  4. 4. Water risks are material in textile and food & beverage sector • Companies need to create resilient and competitive supply chains • Carefully balance commercial imperatives with social considerations • Crucial elements are sound business practices and an effective water strategy • Reputational damage is a huge risk to textile and food & beverage sector companies • Water management is an important factor in brand management to safeguard shareholder value
  5. 5. Textile product supply chain water use • Example of textile product supply chain • Indicates main impact upstream in the supply chain • Cotton production and wet processing are largest water users
  6. 6. What do we aim for with our engagement? During our dialogue with companies in these sectors we: • Aim to increase awareness of materiality of water risks • Call for water impact analysis by companies • Urge companies to develop and implement a comprehensive water policy • Improve their reporting to stakeholders in the public domain on water management • Ask companies to structurally embed water management in the governance structure of the company Why? • Improved ESG behaviour contributes to better risk return profile of the securities and long term performance of the company
  7. 7. Mondelez makes good steps in mitigating water risks RobecoSAM’s Governance & Active Ownership team has been in dialogue with Mondelez since 2010 on water management Issues identified at start of dialogue: • Awareness of water dependency not addressed in CSR report • Targets to reduce water usages not set • Governance of water management on executive level not clear for stakeholders
  8. 8. Still ample room for improvement in transparency Topics addressed during our dialogue: • Focus on water management in their largest supply chains cashew, cacao and coffee • Repeatedly urged the company to report on water to the CDP Water questionnaire and after several years of discussions the company has made its first CDP Water disclosure in 2013 Next steps for remainder of dialogue: • Discuss upcoming sustainability report with the company to assess if they have made the requested progress in terms of disclosure to stakeholders • Discuss current Oxfam Novib campaign Behind the Brands with the company to explore where the company can score better based on their improved water disclosure through CDP Water Source: http://www.mondelezinternational.com/home/index.aspx
  9. 9. Water management as risk for H&M RobecoSAM’s Governance & Active Ownership team has been in dialogue with H&M since 2010 Issues identified at start of dialogue: • H&M did not perform a water impact analysis • H&M did not publish a water policy on their website Topics addressed during our dialogue: • Requested H&M to increase it’s transparency in the public domain on water management, especially with regards to the supply chain • Discussed with H&M their steps towards the launch of their New Water Strategy early 2013 in partnership with WWF • During our last meeting at the World Water Week in 2013 in Stockholm we have discussed how water management is embedded in the core business of H&M Source: http://about.hm.com/en/About/Sustainability/Commitments/Use-Resources-Responsibly/Water.html
  10. 10. Turned into a business opportunity Conscious collection embeds water stewardship in core business Examples of some of the measures taken by H&M are: • A global sustainability e-learning tool will teach all 104,000 employees why water is important • H&M designers and buyers will receive training in the water impact of raw material production as well as wet processes to promote more sustainable choices Next steps after closing of dialogue: • Published best practice article on H&M in our sustainability magazine Advance • Use best practice example of H&M in our dialogues with peers in the textile sector which have not developed such water management strategy Source: http://about.hm.com/en/About/Sustainability.html
  11. 11. Engagement for water management becomes a dialogue on water stewardship What? • We identified water management as a material issue for the textile and food & beverage sector • We engage with companies on water-related issues in our portfolio or our engagement clients portfolio’s • Goal of the dialogue is to improve the Environmental, Social and Governance (ESG) behaviour of the company Results? • We see clear improvements in transparency, disclosure through CDP Water or sustainability reports. This ultimately leads to embedding water stewardship in core business of companies in both sectors
  12. 12. Disclaimer “RobecoSAM” is a registered trade mark and trade name of Robeco Groep N.V. (The Netherlands) and hereinafter referred to as the “RobecoSAM-Brand”. The RobecoSAM-Brand is allowedly being used by Robeco Institutional Asset Management B.V. (The Netherlands) as well as by RobecoSAM AG (Switzerland). Both legal entities are responsible for their own activities or publications related to the RobecoSAM-Brand. For the sake of clarity we would like to state that the team members of RobecoSAM AG’s “Governance & Active Ownership” department are based in the Netherlands and employed directly by Robeco Institutional Asset Management B.V. This presentation has been carefully prepared by Robeco Institutional Asset Management B.V. (Robeco). It is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. The content of this document is based upon sources of information believed to be reliable, but no warranty or declaration, either explicit or implicit, is given as to their accuracy or completeness. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. All copyrights, patents and other property in the information contained in this document are held by Robeco. No rights whatsoever are licensed or assigned or shall otherwise pass to persons accessing this information. The information contained in this publication is not intended for users from other countries, such as US citizens and residents, where the offering of foreign financial services is not permitted, or where Robeco’s services are not available. Robeco Institutional Asset Management B.V.( (trade register number: 24123167) has a license of the Netherlands Authority for the Financial Markets in Amsterdam. Important legal information: The details given on these pages do not constitute an offer. They are given for information purposes only. No liability is assumed for the correctness and accuracy of the details given. Copyright © 2013 Robeco – all rights reserved. Robeco Institutional Asset Management B.V. (trade register number: 24123167) has a license of the Netherlands Authority for the Financial Markets (AFM) in Amsterdam. Robeco Institutional Asset Management B.V. (Robeco) · Coolsingel 120 · 3011 AG, Rotterdam · The Netherlands · www.robecosam.com · info@robecosam.com
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