Responsible Investment at VanEck: A View From the Top

How Would You Describe VanEck’s Broad View of Responsible Investment?

I think it’s important, first, to talk a little about our beginnings. Why? Because there is a parallel between the firm’s history and the role today of our asset management business which manages nearly $90 billion in active and passive strategies.

Since our founding in August 1955, we have assumed the responsibility of providing opportunities to investors to participate in the growth of a regenerating world. We have provided our clients with opportunities they might not otherwise have to help foster change and improvement.

Also going back to our start, the one ideal that was a key thesis then, and still applies, is that good governance is crucial when building an investment case. And, for us, well-governed companies are expected to have high environmental and social standards in addition to being able to demonstrate superior financial returns.

In addition to governance, we have launched several environmentally-themed funds over the past decade.

I think, though, it’s also fair to say that our ability to consider environmental, social or governance factors in the relevant investment processes can still be limited by the information that companies provide. We are, though, now, receiving far more information today than we were receiving five years ago.

What Approaches Are You Taking to Responsible Investing?

Our research priorities continue to center on developing our own metrics, particularly when it comes to environmental impact. One such set of metrics we call “CLAW”—climate, land, air and water. We try to take a more comprehensive view and don’t limit our analysis to carbon dioxide (CO₂) emissions alone.

In addition, we continue to research agriculture and food, which necessarily means also discussing the critical influence of water and land use in overall climate change and environmental sustainability. This approach obviously also touches on how environmental mandates overlap with social sustainable development goals.

We take active ownership seriously. Across our strategies, we’re often large shareholders and, therefore, positioned favorably not only to “do our part” as such but also to discharge the duties we owe to our clients. We may actively engage directly with issuers on a range of topics both when we deem it necessary and, at times, when asked to do so by the issuers themselves. There’s a level of experience and expertise among our investment teams that comes with longevity and we have always taken pride in being a firm where exchanges between our people and issuers are both transparent and open.

In the past, the subjects we’ve discussed with company boards and senior management have ranged from CO₂ and greenhouse gas emissions and energy efficiency to acceptable levels of executive compensation (and incentivization), through representative boards to (an example from the emerging markets) how both to protect, and be seen to protect, the interests of minority shareholders.

What Are Some of the Initiatives of Which You Are Particularly Proud?

The first thing that comes to mind is becoming a signatory to the Principles for Responsible Investment. Not least, for several years now, VanEck has had a formal Responsible Investment Policy which outlines not only how we interact with issuers, but also how, amongst other things, we regard topics, which are generally considered to fall under ESG. We have also developed a formal Engagement Policy.

Together, these policies were discussed by, and created with input from, an internal ESG Committee, with representation across different departments and our global offices. Following our lead in the U.S., our colleagues in Europe, who have a number of different and some additional concerns, have recently created their own responsible investment policy. Our Australian business has also had one for some time now.

From an investment perspective, an issue that continues to be especially relevant to both the organization and our clients is the resource transition and carbon reduction. Because of the asset classes with which we’re associated, the importance of both issues is major and we feel they are areas in which our contributions may be particularly constructive.

For many years, we’ve had not only one of the largest real assets (including gold) investment teams on Wall Street but also one with a considerable breadth and depth of experience. For some time now, our active investment team members have focused on evaluating how the transition and decarbonization affect their investment universe—both positively and negatively—with implications to other areas such as emerging markets, fixed income, and equities.

In Europe, in addition to a number of other offerings, we now have quite a satisfactory roster of exchange traded funds (ETFs) that are categorized, in line with the Sustainable Disclosure Regulation (SFDR), i.e., either funds that “promote environmental and/or social characteristics and invest in companies/corporates/sovereigns that follow good governance practices” (Article 8) or those that have a “sustainable investment objective” (Article 9).

Do You Have Any Concluding Remarks?

I would like to mention our involvement in the production of a new documentary film, “Beyond the Trees”, that highlights the creativity in managing a sustainable redwood forest over several decades.

The fight for forest protection began long ago when my uncle Fred van Eck, a private equity investor, bought the van Eck Forests. Fred was fueled by his passions for both finance and wildlife, and he found one way to help satisfy these at the same time was to buy forests!

For decades now, the van Eck Forests in Northern California and Oregon—which were put in trust when he died—have been managed by Pacific Forest Trust, a conservation trust on a mission to unite ecological safeguarding with economic benefits, using an innovative model at a cross-section of conservation, climate, and commerce.

In addition to the forests continuing to produce income, with all net revenues going to help fund forest research at Purdue University (neither we at VanEck nor my family benefit in any way), they have reduced carbon by the equivalent of removing over 400,000 cars from the road.

It has been inspiring working with the talented people at Imaginary Forces, the film’s production company, to help tell the story of my uncle Fred and Laurie Wayburn of the Pacific Forest Trust.

Finally, I really do hope audiences will recognize the importance of the two core values underlying their vision and, essentially, ours too at VanEck: innovation and having a long-term perspective.

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