Cooperative engagement

Waste reduction

News

Triodos Investment Management (Triodos IM), Robeco and RobecoSAM have joined forces and developed an engagement program focused on reducing global waste. The program aims to increase the positive impact of companies in the SRI portfolios of Triodos and RobecoSAM. Through this cooperation we aim to maximize the impact of our engagement, especially with smaller listed companies less familiar with investor dialogue on ESG topics.

Growing problem

The world’s rapidly growing population, combined with ongoing economic growth and urbanisation, has significantly pushed up resource consumption and, consequently, caused one of the world’s most pressing environmental problems: waste.

At the current levels of urbanisation and population growth, global waste generation is estimated to rise to 2.2 billion tons per year by 2025, which translates into 1.42 kg of waste per person per day[1]. Waste can pose significant public health and environmental risks. All businesses are legally obliged to safely manage and dispose of their waste. Many countries have been scrutinised for their failure to establish sound waste management systems and are now starting to act. We expect tightening environmental legislation to have direct implications for businesses. 

Don’t waste it

The most efficient way to manage waste would be to simply not produce it. This notion is showing in the upcoming global trend of moving from ‘waste management’ to ‘resource recovery’.

Triodos Investment Management enters cooperative engagement on waste reduction
From waste management to resource recovery

Waste management is not only crucial to protect the environment, it is also in companies’ own interest. Embedding circular principles into operations will reduce resource consumption and improve resource efficiency, thus reducing the overall cost of material use and waste management. Moreover, by tracking and communicating efforts around waste reduction and recycling, companies establish a database that can easily be shared with other industries that may be interested in certain waste streams, or with stakeholders, as a proof of good citizenship.

Engagement objectives

In the second quarter of 2018, Triodos IM, Robeco and RobecoSAM joined forces and started the engagement on this subject. On behalf of Triodos IM and RobecoSAM, Robeco engages with 12 predominantly small/mid-cap companies in our SRI portfolios that operate in solar energy technology (SMA Solar, SolarEdge), industrial waste management and water treatment (Waste Management Inc, Xylem), and technology (Acuity, Cree). The aim is to improve the resource efficiency, the waste reduction, and the public reporting on such issues, thus increasing the positive impact of these holdings.

As a sustainable investor we need companies to report on material ESG issues and we hope to open this discussion using resources efficiency and waste reduction as an ESG topic that is material to their financials.
Arthur van Mansvelt, Senior Sustainability Analyst

The companies are selected not primarily because they produce lots of waste, but because the overall ESG disclosure of these mostly small – and midcap companies is limited compared to their large cap peers. As sustainable investors we need them to report on material ESG issues and we hope to open this discussion using resources efficiency and waste reduction as an ESG topic that is material to the company’s financials (cost savings). Besides the key topic of waste, also a few other ESG topics are addressed that we believe are very relevant for the companies, such as the environmental impact of their products, sustainability reporting and corporate governance. In the first round of conversations in 2018, research addressing the company’s performance was introduced, with concrete recommendations, based on this research. In follow-up conversations, we will discuss more concrete expectation and hope to hear what next steps the companies can take. And finally, companies’ progress will be assessed at the end of the engagement program in 2021.

 

[1] The World Bank: What a waste. A global review of solid waste management (2012). Retrieved from: https://siteresources.worldbank.org/INTURBANDEVELOPMENT/Resources/336387-1334852610766/What_a_Waste2012_Final.pdf

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