Long-term commitment to sustainability
BMO GAM launched Europe’s first ethical strategy, the Responsible UK Equity Growth Fund in 1984.
The firm was a founder PRI signatory in 2006, and declared support for the UN SDGs and aligned initiatives with them in 2016.
In 2017 BMO published the second versions of the ESG Profile and Impact Reports for the Responsible Global and Responsible Emerging Markets strategies, which map the performance and results of the individual companies in the portfolio against the SDGs.
BMO has set enterprise carbon emission reduction targets since 2008 and been carbon neutral since 2010.
Broad offering across the SRI Spectrum
BMO has over $3 billion AUM in Responsible fund strategies, with products covering global, UK and emerging markets.
The philosophy for these funds is based on three pillars:
- invest in companies that are making a positive contribution to society and the environment;
- avoid investment in companies with damaging or unsustainable business practices; and
- improve, using influence as investors to encourage best practice of ESG issues through engagement and voting.
BMO provides a range of solutions: specialist ESG strategies, investment strategies with ESG integration and engagement incorporated, Responsible Engagement Overlay services (voting and engaging on behalf of clients). This is available for equity and fixed income portfolios. BMO has created dedicated green bond mandates for European clients, with invested and committed capital. BMO has implemented in-house analysis and screening for these bonds,
As a long-term investor, BMO GAM aims to build an understanding of the fundamental factors shaping the risks and opportunities of the entities that issue the equity or the debt the firm invests in. The investment professionals at BMO GAM believe that ESG issues can have a material impact on their performance and on the economy as a whole, and that a robust commitment to ESG drivers is an integral part of good risk management.
ESG issues fall within the mandates of the Board of Directors and several of its committees. The bank-wide Sustainability Council, established by the CEO and comprised of senior leaders from across the bank, provides insights and guidance on a range of current and emerging issues.
The ESG Team is accountable for identifying and understanding current and emerging ESG issues that may have an impact on stakeholders and business. The global Responsible Investment Committee has ultimate responsibility for signing off the responsible investment policies followed by BMO Global Asset Management.
Dedicated industry specialist ESG team
Investment teams lead BMO GAM’s approach to identifying and integrating material ESG issues into each of their standard investment processes. They have access to a range of ESG data and research — both third party and proprietary — which are used to systematically flag potentially material issues that are then subject to further analysis to determine the relevance to the investment case with the support of the specialist RI team.
RI staff and fund managers collaborate closely including through joint company meetings and regular internal seminars discussing key ESG trends such as climate change, bribery and corruption, and tax policies, and their relevance to company valuation. ESG factors are part of our investment analysis across asset classes including equities, corporate credit, sovereign credit, private equity and real estate, with a tailored approach being taken dependent on the specificities of each of these.
Dedicated engagement resources
In 2017, BMO had 1,063 engagements with 676 companies, 37% on environmental, 21% on social and 42% on corporate governance issues.
The firm mapped engagements against the SDGs. Engagements in 2017 targeted companies in all major markets, covering 62 countries in total. 199 instances of change by companies were recorded following engagement. The most significant changes were in relation to climate change. The other significant area of progress was on promoting good corporate governance standards.
In 2017, BMO voted on more than 97,000 resolutions at nearly 9,500 company meetings worldwide, on behalf of in-house BMO Global Asset Management (EMEA) holdings and clients. Votes are based on in-house Corporate Governance Guidelines, which are updated annually. BMO supported management in 72% of proposals. As in previous years, executive remuneration continued to be the most dividing issue.
Awards & Recognitions
BMO Financial Group was recognized by Ethisphere Institute as one of 2018 World’s Most Ethical Companies. BMO was named among the 2017 Global 100 Most Sustainable Corporations for the fourth year in a row, received the 2017 Thomson Reuters/S-Network ESG Best Practices Award and is listed on the Dow Jones North America Sustainability Index, the FTSE4Good Index and the Euronext Vigeo index: World 120. BMO was a 2017 Catalyst Award winner for industry-leading work to accelerate diversity and inclusion, ranked #19 out of 6,000 publicly traded companies in the 2017 Thomson Reuters Diversity & Inclusion Index and was named to the 2017 Bloomberg Financial Services Gender-Equality Index for gender disclosures and best-in-class policies and practices.
- BMO Responsible Global Equity – Moneywise Fund Awards 2018 – Best Ethical Fund
- Best ESG Research Team 2018 – Sustainable Investment Awards (Investment Week)
- Best Sustainable Investment Fund Management Group 2016 – Sustainable Investment Awards (Investment Week)
- Best Ethical Investment Fund Management Group 2016 – Sustainable Investment Awards (Investment Week)
- ESG Manager of the Year – Pensions & Welfare Italia Awards 2016
- Local Authority Pension Fund (LAPF) Awards 2018 – GEM Manager of the Year
- Local Authority Pension Fund (LAPF) Awards 2017 – GEM Manager of the Year
- Italian Pension Awards 2017 – Emerging Markets Manager of the Year
- Irish Pension Awards 2016 – Emerging Markets Manager of the Year
Source: BMO, PRI Transparency Report