Robeco has launched an equities strategy focused exclusively on the fashion industry, seeking to generate attractive long-term returns while engaging with all the companies in the portfolio.
Fashion is a growing industry generating US$2.5 trillion in annual sales and employing more than 300 million people globally across its supply chain. The outlook is bright amid rising disposable incomes and conspicuous consumption.
However, the sector faces a host of social and environmental challenges. Garment worker pay is on average 45% below local living wages, Robeco says, citing recent industry studies.
Every year about 100 billion clothing items are produced, of which less than 1% is recycled into new apparel, and the industry is responsible for up to 10% of global greenhouse gas emissions.
It is critical that sustainable solutions are implemented to transform the sector’s operations from a linear, take-make-waste model to a circular one, and that pressing social issues including workers’ rights and living wages are addressed, the Rotterdam, the Netherlands-headquartered asset manager says.
Robeco’s fashion engagement equities strategy will invest in, and engage with, 30 to 40 publicly listed companies across the entire fashion value chain, from sourcing to production, consumption and end-of-life. Companies exposed to casualization, premiumization, circularity and automation megatrends are considered in the stock-selection process.
The team combines disciplined fundamental analysis with tailored, multi-year engagements on key sustainability challenges to construct an investment portfolio with potential for growth and positive change.
“Our conviction is that profit and positive change can go hand in hand,” asserts Robeco portfolio manager Dora Buckulčíková. “Companies with leading sustainability characteristics are likely to do better than laggards in the long run. It is our responsibility as long-term shareholders to encourage transparency and sustainable business practices at the individual company level. We believe this strategy positions investors to benefit from and contribute to the fashion industry’s sustainable transition.”