Peter van der Welle

Robeco has published the 15th edition of its 5-year outlook, Expected Returns 2026-2030, titled The Stale Renaissance. The report explores a paradoxical economic landscape where technological breakthroughs — particularly in artificial intelligence — coexist with structural macroeconomic challenges and geopolitical uncertainty.

A paradoxical renaissance

Inspired by the contradictions of the historical Renaissance, Robeco’s outlook sees a world where AI systems evolve rapidly, yet their transformative impact is constrained by energy limitations, policy incoherence, and geopolitical fragmentation. The report introduces the concept of the ‘digital Da Vinci’, highlighting how AI agents are poised to revolutionize productivity, even as macro headwinds temper their full potential.

Peter van der Welle, Strategist Multi-Asset Solutions at Robeco: “While AI promises a renaissance in productivity, we believe this revival will appear stale upon closer inspection. Structural inhibitors – from constrained monetary policy to geopolitical restraint – will limit the breadth of economic gains.”

Laurens Swinkels, Head of Solutions Research at Robeco: “In a world where paradox abounds, great inventions will still emerge. Investors must look beyond traditional assets and embrace unloved hedges like commodities and Real Estate Investment Trusts to navigate the coming years. Diversification and strategic hedging will be key.”

Key headwinds

Robeco’s outlook identifies four major headwinds that could inhibit the vitality of this technological renaissance. First, conflicted supremacy reflects the growing challenges to US leadership, which is increasingly hampered by internal policy inconsistencies and rising global skepticism. Second, contained escalation describes a geopolitical environment marked by strategic restraint, where tensions – such as the US-China trade war – remain unresolved but do not escalate into full-blown conflict.

Third, constrained normalisation points to persistent inflation levels that exceed central bank targets, thereby limiting the flexibility of monetary policy. Finally, conditional sustainability captures the evolving nature of climate finance, which is shifting from idealistic ambitions to a more pragmatic focus on measurable impact and accountability. These cyclical challenges are underpinned by deeper structural forces, including persistent labor market challenges, rising sovereign debt, and the erosion of the US dollar’s global dominance.

Base case: The Stale Renaissance (50% probability)

Robeco’s central scenario anticipates moderate global growth, with US real GDP expanding at 2.1% annually. Meanwhile, the eurozone, Japan, and emerging markets are expected to improve their relative growth positions. Inflation in developed markets is forecast to average 2.5%, with the US slightly higher at 2.75% due to falling immigration and rising tariffs. Despite technological progress, policy incoherence and populism are expected to dampen investor confidence and capital flows.

Bull case: The Luminous Renaissance (15% probability)

In this optimistic scenario, AI adoption accelerates across industries, removing barriers to productivity and enabling a synchronized global upswing. Inflation remains at target levels, and geopolitical tensions ease, potentially reviving globalization. Real GDP growth could exceed trend levels, with broad-based investment opportunities emerging.

Bear case: The Exorbitant Decay (35% probability)

This scenario envisions a breakdown of global economic institutions and principles. US policy incoherence undermines the dollar’s dominance, triggering stagflation and fiscal dominance. Trade wars and geopolitical instability lead to a security premium replacing the peace dividend, with central bank independence eroding.

Investment implications

Robeco expects a more concentrated and momentum-driven market, with fewer asset classes delivering above-average risk premiums. Valuations for US equities and high yield bonds appear stretched, suggesting elevated downside risks. In contrast, emerging market assets – particularly debt in hard currency – are projected to offer strong relative returns. Investors should prepare for a more selective environment, where thoughtful allocation and scenario-based planning are key to navigating uncertainty and capturing long-term value.

Special topics

This year’s report also features four special topics that reflect the evolving investment landscape:

• ‘Artificial intelligence for small-cap stock selection’, showcasing how machine learning can uncover alpha in under-researched segments.
• ‘What to do when safe havens turn into stormy waters?’, analyzing the shifting role of sovereign debt amid rising fiscal risks.
• ‘A liquid alternative to private equity’, exploring how public markets can replicate private equity returns with greater liquidity and sustainability integration.
• ‘Staying the course on sustainable investing’, reaffirming the long-term value of stewardship, net-zero commitments, and resilience in a polarised world.

Read the report.

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Anton Eser

Robeco has announced that Anton Eser will be appointed Chief Investment Officer (CIO) and member of the Executive Committee of Robeco, effective 1 September 2025. Eser will succeed Mark van der Kroft, who will retire as of 1 October 2025.

Anton Eser brings more than 25 years of experience in global financial markets. He spent 13 years at Legal & General Investment Management (LGIM), where he was appointed CIO in 2016. During his tenure, he played a pivotal role in transforming LGIM from a UK-focused firm into a global asset manager with over USD 1.5 trillion in assets under management.

He led a 350-strong investment team spanning Index, Active Fixed Income, Global Equities, and Multi-Asset Solutions. He also spearheaded LGIM’s ESG integration across investment teams and was instrumental in developing the Future World fund range.

Since 2021, Eser has served as CIO at 10X Investments, a fast-growing fintech firm specialising in multi-asset solutions for the South African market. Earlier in his career, Eser specialised in global fixed income markets as both an investor and team leader. He began his fixed income career at Aegon UK before joining LGIM in 2006, where he launched and led the firm’s global credit business. In 2013, he was appointed Co-Head of Global Fixed Income, taking on responsibility for a wide range of strategies and teams across the fixed income platform.

Karin van Baardwijk, Chief Executive Officer at Robeco, says: “Anton brings a wealth of global experience and a proven track record in leading diverse investment strategies. His deep expertise aligns seamlessly with our strategic ambitions,”

“We are excited about the fresh perspectives he will contribute to our investment platform and are confident he will play a key role in driving our continued growth. We warmly welcome Anton to Robeco and look forward to taking the company to the next level together.”

Mark van der Kroft has served as CIO at Robeco since 2020 and has been with the company since 2000.

“We are grateful to Mark for his outstanding leadership and dedication in various roles over the past decades. He has played an essential role in shaping Robeco’s investment philosophy and culture, and has been instrumental in building the successful company we are today,” Ms van Baardwijk said.

“We wish him all the best in his well-deserved retirement.”

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Lucian Peppelenbos

Investors are now preparing to adapt to the consequences of global warming that may be irreversible, alongside trying to stop it getting any worse. A new temperature record of 1.55 °C ± 0.13 °C above 1850’s levels was set in 2024, according to the World Meteorological Organisation. Underlying global warming, which is measured over decades, is thought to be about 1.3 °C.

As emissions continue to rise, and as disillusionment grows with governments’ commitment to net- zero initiatives, the fifth annual Robeco Global Climate Investing survey showed a growing proportion of investors think the Paris Agreement is no longer achievable. The Paris Agreement signed in 2015 seeks to limit global warming to 2 °C above pre-industrial levels by 2100, and ideally to contain it to 1.5 °C.

The number of investors who believe that 2 °C is not achievable rose to 44%, up from 41% last year and from 30% in 2023, while those thinking it can still be done rose slightly to 31% from 30%. A quarter of all investors remain unsure.

Meanwhile, only 16% of investors think an orderly transition toward net zero is the most likely outcome in the next decade, while almost half (49%) expect it to be ‘too little, too late’. Some 11% now expect to see a ‘hot house world’ outcome, with very little action taken to meet climate goals and avert physical risks, slightly up from 8% last year.

Accepting the inevitable?

Is it therefore time to recognise that it would be beneficial to invest in measures that can deal with the consequences of climate change, alongside the existing solutions for mitigating it? Almost half of all investors believe that it is.

Some 49% said climate adaptation will become an increasingly attractive growth theme for equity investments over the next three to five years, rising to 62% for European investors. One-third said they are actively seeking to increase exposure to companies providing these kinds of solutions.

Climate adaptation methods range from rebuilding sea defences and making air purification equipment and refrigerants, to new drugs that combat the spread of known and emerging diseases that warming temperatures and extreme weather events may exacerbate. Climate mitigation investment is mainly focused on decarbonization solutions, led by renewable energy and electrification.

But there remain headwinds, as 58% said there was uncertainty about whether adaptation solutions would generate competitive returns, while almost half blamed a lack of suitable investment products from asset managers (47%), or that it was hard to identify credible climate adaptation companies (42%).

Pursuing returns

In contrast, climate mitigation solutions are already well established, with proven returns from electric vehicles and renewable energy infrastructure such as wind turbines, solar panels and hydro-electric dams. Nascent technologies such as battery power and carbon capture and storage are rapidly showing they can provide revenue streams as well.

The pursuit of such returns in climate mitigation is a strong motivator for 77% of global investors, and this is even higher among North American investors (86%). Other motivating factors include achieving a real-world impact in tackling climate change (43%) and mitigating climate risk in portfolios (42%). Subsequently, over a quarter (27%) said they have been more focused on climate mitigation solutions than on adaptation.

Almost one-third (31%) expect to increase tech investments in new/emerging batteries, carbon capture and storage in the next two years, among other types of climate mitigation solutions such as waste reduction (27%), low-emission cement (18%) and green steel (17%). The latter two involve increasing use of electric-arc furnaces rather than coal-powered blast furnaces.

Priorities over the next two years show that electricity grid modernation is the most favoured investment (39%), followed by renewable energy (34%), with lower interest in battery technology (31%) and electric vehicles (28%). Interest in currently nascent technologies like low-emission concrete (18%) and green steel (17%) remain fairly low over the two-year horizon.

“Investors are already active in established areas such as renewable energy and clean power, electric vehicles and electricity grid modernisation,” says Lucian Peppelenbos, Climate and Biodiversity strategist at Robeco. “The next stage of the transition is about scaling investments in climate adaptation and the next-generation mitigation solutions such as hydrogen and low-carbon steel and cement.”

“Investors are on the lookout for these opportunities, but are cautious given the policy uncertainties. These type of investments require clear and consistent long-term policy frameworks. Rolling back the Green Deal or the US Inflation Reduction Act (IRA) does not help in that respect.”

Investment vehicles

In terms of how to invest in climate mitigation solutions, 44% of global investors said they used public market funds, 30% preferred private market funds, and 20% were making direct investments in nascent climate technology.

Robeco manages a range of investment strategies focused mainly on climate mitigation, smart energy solutions, and the pathways to net zero. All of our capabilities can be seen here:

By Lucian Peppelenbos, Climate and Biodiversity Strategist

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Lucian Peppelenbos

A majority (56%) of global investors believe that President Donald Trump’s pro-fossil fuels and anti-clean energy agenda will hamper the net-zero transition, but that momentum will recover once US leadership changes. This is one of the key findings of Robeco’s 5th Global Climate Investing Survey of 300 investors.

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Joshua Crabb

There is a long-term opportunity for investors to gain exposure to Asia Pacific equities given low absolute and relative valuations which are being obscured by geopolitical and interest rate concerns. However, this ignores the region’s solid macroeconomic advantages, according to Robeco’s head of Asia Pacific equities, Joshua Crabb.

Despite headline concerns with some emerging market currencies and banking sector events in the US and Europe continuing to impact sentiment, Mr Crabb said financial risks are lower in Asia given more conservative monetary and fiscal policies over the last few years, and the ongoing reopening backdrop.

“The last time Asia was this cheap, fiscal and monetary policy was a lot weaker than now, yet subsequent market outperformance was dramatic.

“South-east Asian countries in particular are in the sweet spot: supply chain diversification benefits these countries as suppliers of materials, receivers of capex and the home to the next wave consumers. India feels expensive but is becoming more attractive for its structural growth opportunities. Markets such as Korea and Taiwan carry strong prospects of a semiconductor recovery against low valuations. Japan is benefitting from mild inflation and more shareholder friendly policies.

“The long-term structural foundations of the Asia Pacific region will assert themselves over time, making it an opportune time to invest in Asia Pacific ahead of the next era of growth,” he said.

Mr Crabb said despite the promising outlook, the first half of 2023 has been a false start in the asset class, with optimism over China’s re-opening fading and the Federal Reserve’s hawkish stance surviving the ongoing sequence of mid-size US bank failures, supporting the US dollar.

“This has left Asia Pacific markets treading water somewhat and especially as concerns over the outlook for high value exports like semiconductors to the slowing US economy have increased. This absence of short-term catalysts is keeping investors on the sidelines but this creates the opportunity for longer term orientated investors,” he said.

In these periods of risk-off, the US dollar tends to firm and is a headwind for Asia Pacific equities, however this should be viewed by investors as a window to increase allocation to the region.

“Asia Pacific is strategic to the world’s two dominant economies – the US and China – and exposure now will capture upside as the valuation gap narrows. The valuation gap remains enormous, despite the slow-burning banking crisis in the US, and the S&P 500 has outperformed relative to Asia Pacific markets.

“In previous cycles, post the dotcom bubble and after the GFC, this kind of gap has heralded a strong and long period of outperformance for Asia Pacific.

“In addition, Asia Pacific economies are not suffering from high inflation in the same way as Europe, the US or some emerging economies. This is giving governments in the region policy flexibility, and supports the view that macro fundamentals will start to be reflected in relative equity valuations,” he said.

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Colin Graham

Investors are looking forward to a new year that has one redeeming quality – it doesn’t mirror the annus horribilis of 2022. 2023 is likely to see recession, and that investors need to wait for inflation, interest rates and US dollar strength all to peak before the good times resume. 

The current consensus isn’t that rosy, but if history tells us anything, it’s that nothing is ever set in stone. So, what are the possible events  – good and bad – that could derail these central scenarios? Here are the ten potential black swans, and what the consequences may be.

1. Goldilocks revenge

The first is ‘Goldilocks’ revenge’ – the economic porridge won’t be too hot or too cold but just right. Here, US inflation peaks without a recession, the dollar drops, and the US Federal Reserve (Fed) can rest easy but remain vigilant. The post-Covid fiscal expansion slows, acting as the brake on excess demand. The result for multi-asset investors is that high yield bonds become very attractive as default rate expectations fall. 

2. Panic stations

Alternatively, the Fed could tire of low long-term rates and review its inflation target, citing a structural break with the previous regime that had largely been in place since the global financial crisis. It could claim that the two per cent target is far too close to zero, saying the next recession could tip the economy into outright deflation. The result would be panic, and bonds denominated in US dollars would see negative returns for the third year in a row.

3. Deflation disaster

Even worse is the prospect of deflation. While falling prices sounds great, it means consumers would not buy anything as they expect goods to become cheaper in the short term, leading to outright recession. Here, if deflation has a higher number of hits than inflation according to news-flow data from Wall street and Main Street, it means that central banks are driving the economy using the rear view mirror, causing a major bust.

4. Greenwashing and now impact washing

The drive to improve the environmental, social and governance (ESG) characteristics of companies has enormously gained in importance, and is the bedrock of investments at Robeco. The problem is that it has also led to a rise in greenwashing, where companies and investors make ESG claims that cannot be substantiated, often for PR and marketing reasons.

Another growing problem is impact washing, where companies or investors claim to be making an impact on the ground, when proving or even measuring it is doubtful. We see the potential for sustainability claims to be more strongly scrutinised by regulators, media and investors, and as a result, large financial institutions will struggle to evidence their sustainability credentials across facets of their businesses. Rather than focussing on improving their ESG and delivering shareholder value, companies could end up selling or divesting businesses that don’t meet ESG criteria and withdraw from markets where regulators demand higher sustainability credentials. 

5.Rewards for risk

One lesser-known issue concerns risk appetite, where multi-asset investors are asked to state the level of risk that they can tolerate. These risk profile funds are usually labelled as ‘cautious’ – i.e. low risk, focusing on safer government bonds; ‘balanced’ funds that offer more of a mix of bonds and equities; or ‘aggressive’ funds that may well allocate to much riskier stocks. The problem here is that in 2022, there was little difference between any of them. The performance of these profiles was within 20 basis points (in euro terms) by the end of December. If this happens again in 2023, the implication would be we would see a second year of negative returns in balanced funds, similar to the experience following the tech bubble burst of 2001-2002.

6. Give peace a chance

But it’s not all bad news. Much of the consensus opinion assumes that the war in Ukraine which caused so much volatility in markets in 2022 and sparked major inflation across the world will continue. If peace breaks out, a more welcome disruption would occur.

We could see a peace dividend in which Ukraine secures its borders with European ‘aid’ and the flow of wheat, oil and gas resumes, ending the bottlenecks. Other countries would then relax their travel and trade restrictions, allowing inflation to fall and supply chains to re-shore faster. There would be an energy costs windfall for global economies, especially in Europe.

7. Anti-social media

Social media is another battleground, albeit where the participants are armed with words rather than weapons. Stricter regulation against the tech titans that fuelled growth stocks could benefit value stocks instead.

We could see another backlash against social media and more regulation on large technology and social media platforms as data protection issues come to the fore again. The result would be a change in equity market leadership – value companies with capital discipline and quality earnings would be more highly rewarded on a relative basis.

8. Shock regime change

Then there is the possibility of a ‘shock regime change’, as witnessed when the UK which went through three prime ministers in 2022. This is the first year this century without an election in a G7 country. However, we could see a major shift in policy as a ‘major’ regime topples, as witnessed with Boris Johnson and then Liz Truss a month later, resulting in major volatility spikes.

9. Upsetting the applecart

Truss’s brief prime ministership and a disastrous mini-Budget which forced the Bank of England to take emergency measures to protect the pensions industry showed just how fragile certain financial systems can still be. In this scenario, private assets see a liquidity drain, liability-driven investment (LDI) structures are questioned, and there is increased scrutiny on banks following a crypto bust. This would expose investments that were only funded because cash was ‘free’ at the time.

10. Net-zero upside

Finally, the commitment to moving to a net-zero economy could surprise on the upside. There can be no backtracking on climate: the evidence about climate change continues to mount, and COP27 highlighted that political will is key to shaping the balance between climate ambition and implementation. In the long run, achieving energy security means investing more in green technologies and climate solutions to close the gap between ambition and implementation. We could see a multinational ‘super fund’ set up to facilitate the net zero transition, backed by several governments.

By Colin Graham, head of multi-asset strategies

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Lucian Peppelenbos

The COP27 climate summit delivered a few wins, but was disappointing overall. How do we keep on course for net zero in the absence of global cooperation? In our view, the net-zero transition will continue to gain traction, because paradoxically it appears that the lack of global cooperation is helping accelerate the energy transition.

The COP27 climate summit took place as countries around the world face crises involving energy and food, inflation, war, and debt stress. With two of the critical parties to successful negotiations – the US and China –not on good speaking terms, the EU’s leadership has also lost credibility due to its return to coal and massively expanded subsidies to fossil fuels. All this in a year in which climate change continues to have a deep impact across the globe, triggering famine in East Africa, industry lockdowns in China and Europe, and making half a million people homeless from floods in Pakistan.

Two key issues

In this context, COP27 focused on two key issues. The first is climate finance. For years already, industrialised countries have broken their promises to support the Global South in carrying the costs of adaptation and mitigation. This year’s summit also addressed loss and damage: rich economies are called upon to take responsibility over the damage that their historical emissions are causing in vulnerable countries. Here, the summit delivered a historic result – the creation of a loss and damage fund – though we believe it will still take much negotiation before it is operational. In the short term, more climate finance may become available from the multilateral financial institutions that are to be reformed as per agreement in Sharm el-Sheikh.

The summit’s second focus was to advance the implementation of the Paris Agreement. Here, it seems we should be grateful that the lack of progress wasn’t an explicit step backwards. The goal of 1.5 °C barely survived the negotiations, and no agreement was reached on the phasing-down of unabated fossil fuels. In sum, a painful standstill.

A glass half full

So, after this COP, where are we now on the road to net zero by 2050? At Robeco, we see the glass as being half full. Certainly, the summit did not yield much in terms of concrete solutions, while global emissions are still on the rise and climate policies still fall short. The summit leaves us heading for 2.5 °C of global warming.

But five years ago, we were heading for 4 °C of global warming. So, there has been progress: a change of course. In this sense, the ratcheting mechanism of the Paris Agreement, in which climate ambitions are periodically beefed up, is doing its job. The proof of the pudding will be next year’s summit in Dubai, when countries will submit new plans based on the global stock-taking of progress so far. As climate policy expands, such as in the US this year, exponential change could be unleashed, as market forces and human ingenuity seek to create value from the transition to net zero.

Take the transition away from unabated fossil fuels. It advanced this year in the midst of the energy crisis. Despite the massive return to coal-fired power in Europe, the International Energy Agency (IEA) is forecasting a mere 1% increase in emissions from energy this year – much less than the increase in 2021. This is because the deployment of renewable energy and electric vehicles has strongly expanded globally. Hence, hidden in the usual statistics on increased global emissions, we can see an accelerated switch to cleaner energy.

Fast-forwarding fossil fuel use

In its latest World Energy Outlook, the IEA concludes that peak fossil fuel usage has been fast-forwarded to before 2030, as countries seek energy security through investments in renewables and energy efficiency. Such policies have been adopted this year across top emitters including the US, EU, India, Australia, South Korea, Japan and China. In particular, the US’s Inflation Reduction Act, with its USD 369 billion support package, will accelerate technological innovation as it enables US-based companies to better compete with Chinese suppliers of renewable technologies.

We see these milestones adding up to a tipping point, where the net-zero transition gains so much traction that it will continue to unfold and gain pace. While keeping global warming limited to 1.5 °C would be an achievement beyond any historical benchmark, innovation and market forces tend to be exponential, not linear, so who knows?

Investing in the transition

What does this mean for investors like Robeco? We are keeping course on net zero by 2050 and continuing to invest in the transition. Our portfolio decarbonisation currently stands at -43% against our baseline year-end in 2019. We started the year at -35%, which means that during 2022 we continued to decarbonise, despite the re-carbonisation of the market triggered by the increased benchmark weight of the Energy sector.

We should note, however, that such figures provide only a partial picture. Portfolio decarbonisation can be the result of one or a few individual issuers entering or exiting our portfolios. It is equally important to look at the companies themselves and how well they are managing their transition. This is measured by our climate traffic light. It assesses how well the top 250 emitters in our investment universe are aligning with the goals of the Paris Agreement.

In our analysis from this year, we see robust transition strategies amongst 27% of companies, while 21% are clearly working on it, and 52% are not doing enough. The latter group is where we focus our engagement and where we may vote against management.

Transition in the real economy

So far, our decarbonisation performance has largely been the result of the investment strategy of our funds. Our investment teams have picked stocks that they assess as creating value, and while doing so have remained comfortably within their carbon targets. This can only continue if the real economy transitions to net zero. This requires climate action across all sectors of the economy, spearheaded by ambitious policy and regulation.

Our role as investors is to engage with investee companies and policy makers, and to direct capital towards companies that are developing climate solutions and away from assets which are at risk of becoming stranded.

The good news is that, in the middle of rising global emissions, political antagonism and yet another disappointing climate summit, we see strong signals that the transition in the market is clearly underway.

By Lucian Peppelenbos, climate strategist

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Rachel Whittaker

In its annual outlook, Robeco expects a considerable brightening of the return outlook for major asset classes during 2023, but not before inflation, interest rates and the US dollar hit major peaks first. While these peaks are in sight, they have yet to be reached. Central banks are still battling to bring inflation back and their second-to-last hike of the tightening cycle is pending. Short-term sovereign bond yields remain above official rates and the dollar continues to reign supreme. The last leg of a steep climb implies short-term pain as exhaustion and capitulation take hold across the multi-asset spectrum.

As we enter 2023, Robeco expects an earnings per share drop of 20-30 per cent, making high yield valuations look more attractive than those of equities. Yet, as real rates are expected to come down, and the earnings recession gets fully priced into 2023, a major inflection point in risky asset valuations is to be expected towards 2024. Robeco believes that mid-2023, when unemployment surges towards five per cent and disinflation accelerates, will likely create good entry points for long duration in fixed income, followed by decent troughs in risky fixed income and equity markets. It could be an especially good year for emerging market equities, excluding China. Not only do they typically outperform their developed counterparts in a dollar bear market, the downturn in the earnings cycle in emerging markets is also more mature because its central banks have pre-empted developed markets central banks in combating inflation.

In addressing the energy crisis in 2023, Europe will face a trade-off between efficiency and economic security. Increasing energy efficiency will not be enough for the region to wean itself off Russian gas. Price caps to ensure energy security for lower-income households may also increase demand, intensifying the energy crisis. On the other hand, necessity is the mother of invention, and we expect to see energy transition goals lining up with accelerated energy security and reduced carbon footprints.

Robeco expects to see sustainable investing strategies again grow as a proportion of assets under management in 2023 as investors continue to seek solutions to the multiple challenges facing humanity, including climate change, the cost of living crisis and income inequality.

Colin Graham, head of multi-asset solutions: “We think the belief in central bankers’ ability to prevent cyclical downturn and engineer a soft landing in 2023 is flawed. Instead, we expect a hard landing. Moreover, as recessions tend to be highly disinflationary, we believe this will take the sting out of inflation. Once the three peaks in inflation, rates and the US dollar have been reached, 2023 will ultimately contribute to significantly better returns across all major asset classes.”

Rachel Whittaker, head of SI research: “We believe there are several reasons why sustainable investing will grow AuM faster than the industry – one is that there is evidence that integrating ESG considerations alongside financial analysis can support financial returns over the long term, for example through reducing unanticipated environmental or social risks, or identifying new growth opportunities. Additionally, greater societal awareness of sustainability challenges is leading more investors to align their portfolios with their values, while the growing range of sustainable strategies available is making it possible for more investors to target both sustainable and financial goals.”

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Peter van der Welle

Robeco has published its twelfth annual Expected Returns report (2023-2027), a look at what investors can expect over the next five years for all major asset classes, along with macro-economic predictions.

Against the backdrop of many moving and unpredictable market parts, including the energy and food crises, double digit inflation in developed countries, and China’s trajectory as the largest contributor to global growth, Robeco is framing the years leading up to 2027 as ‘The Age of Confusion’. The continued pandemic related fiscal stimulus, supply chain problems, and the Russia-Ukraine war have contributed to unexpectedly high inflation over the past year. Only veteran investors have previously experienced the devastating effect that such high levels have on purchasing power and investment portfolios.

Accordingly, we expect asset returns to remain below their long-term historical averages over the coming five years, mainly due to the low risk-free rate. It’s worth noting that the expected equity risk premium of 3%, for the first time in the 12-year history of the Expected Returns publication, will be below its long-term average of 3.5%. For US dollar-based investors with an international portfolio, perspectives are rosier as other currencies are expected to appreciate against the US dollar, with the USD bull market coming to an end in the next five years.

With its impact permeated the Expected Returns, climate risk has been an integrated part of Robeco’s five-year outlook since last year’s edition. Robeco foresees little to no impact from climate change on developed government bonds and investment grade corporate bonds. For developed market equities, there is a slightly negative signal due to both lower economic growth and physical risks. Commodities are the only asset class to receive a positive climate signal, mostly because the energy transition and physical climate risks will put upward pressure on commodity prices.

In addition to the five-year outlook, the report also covers four special topics, related to the theme:

• the emerging trade-off in global trade
• gaining an edge with alternative data
• the energy transition comes with a price tag
• (no) food for thought.

Peter van der Welle, Strategist Multi Asset at Robeco: ”We find that the bar for inflation becoming entrenched is pretty high and recessions, which we expect one way or another, are highly disinflationary. However, a right-hand skew to the expected inflation frequency distribution for developed economies is a key thread for 2023-2027. “

Laurens Swinkels, Researcher at Robeco: “In this ‘age of confusion’, the future has become less predictable and that includes the consequences of climate risk. The exact magnitude of climate change over the next decades is uncertain, and its impact on asset prices is even more unclear. However, what we do know is that asset allocators need to seriously consider the long-run impact of climate change on asset class returns.”

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Victor Verberk

Robeco has launched its Sustainable Investing Open Access Initiative. This means that Robeco is opening up its Sustainable Investing Intellectual Property. As a first step of this Open Access initiative, clients and a group of academics will gain free access via a portal to the Sustainable Development Goal (SDG) scores of companies Robeco has generated using its proprietary SDG framework.

Robeco started developing its SDG Framework in 2017. The framework allows Robeco to quantify an investible company’s contribution to the SDGs. Data quality is one of the biggest challenges in sustainable investing. Robeco is convinced that the industry should work together to improve data and define standards. With the SI Open Access Initiative, Robeco aims to make a significant contribution to this.

Robeco’s commitment to a more sustainable world also means opening up its intellectual property to a broader audience to help clients make better informed sustainable decisions. Robeco actively seeks for feedback on the data, and is in an ongoing dialogue with its stakeholders, including academics, clients and SI experts. As a result, Robeco expects that this initiative will further enhance the robustness of the data and our methodology. All of this with the aim to contribute and be part of the move towards a more sustainable world. At a later stage, Robeco will also make other SI data and IP available to a broader set of stakeholders.

The SDG framework is used for many of Robeco’s client portfolios. These include some of the world’s biggest asset owners like UBS Global Wealth Management, BBVA AM and pensioenfonds ING, who are all keen supporters of Robeco’s SI Open Access initiative.

Victor Verberk, CIO Fixed Income and Sustainability: “This initiative is right in line with our firm belief in a data and research-driven approach. We were among the first asset managers to construct an effective framework for mapping and measuring SDG contributions that can be applied across investment portfolios. Traditionally asset managers tend to protect intellectual property and use it to add value to their proprietary investment processes. Yet the massive challenges our planet is facing require a different approach. We need to join forces to address these challenges properly. By opening up our SDG data to a broader audience we aim to contribute to improving quality and standards setting across the industry.”

Carola van Lamoen, Head of Sustainable Investing: “We consider this is a landmark move which will bring the sustainable investing industry a step further. Granting clients and academics access to our SDG data and methodology is only the first step. With SDG data clients can measure progress over time against sustainable objectives, steer on exposure to SDGs, and report on them. Robeco is a research-driven investor. We base our investment decisions on empirical research and believe that this also applies to sustainable investing. Furthermore, by publishing our SDG scores we aim to enable academics to develop new insights. We therefore invite them to actively share their feedback on our SDG data and methodology.”

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