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BMO (F&C) Responsible Global Equity 1 Acc (OEIC/Unit Trust)

SRI Style: Ethically Balanced
Fund Type: OEIC/Unit Trust
Region: Global
Asset Type: Equity
Launch Date: 13/10/1987

SRI / Ethical Overview

Investment is concentrated in companies in any market whose products and operations are considered to be making a positive contribution to society. The Fund seeks to avoid companies which, on balance, are felt to be harming the world, its people, its wildlife or which trade extensively with oppressive regimes. The Fund aims to achieve long term capital growth.

 

SRI / themed / ethical assets under management – overview 

 

  • Fund Size (GBP):    £366.5m    as at 31 March 2018
  • Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds under management:    £1,847m   as at 31 March 2018
  • Total value of assets covered by responsible ownership policy:   As at 31 March 2018 our flagship reo® service, a global engagement and proxy voting service that can be applied across equities and corporate credit, covered a total of £143,779m of assets for internal holdings and external clients.
  • Total assets under management:    £185,517m as at 31 March 2018

 

SRI Policies (Primary strategy in bold)

  • Environmental policy Find investment funds with environmental policies - ie that consider issues such as pollution, climate change, resource management, environmental impact. This will include options from all of the different SRI Styles, including funds where their core strategy is to focus on other areas such as ethical funds. See fund information for fund specific policy details.
  • Limits exposure to carbon intensive industries Find environmental, sustainable investment, ethical fund and other options that aim to significantly reduce or limit exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Funds vary - strategies may involve excluding sectors such as coal, oil & gas, mining or airlines - or may indicate a 'best in sector' approach is taken. See fund literature for details.
  • Measures positive impacts Find funds that measure the positive effect of their investment decision making on society and/or the environment. (This may involve eg carbon saved or jobs supported.) Managers aim to quantify the benefits they deliver (relative to other strategies or other benchmarks) to ensure they are delivering positive benefiting. This is a new and evolving area. See fund literature for information
  • Sustainability policy Find fund options that consider issues relating to the sustainability agenda (e.g. resource management, environmental impact, climate change and/or social issues such as equal opportunities, human rights and adherence to recognised codes). This will include funds from all of the different SRI Styles. See fund information for explanations of the different strategies.
  • Ethical policies Find funds with 'traditional' ethical investment policies. These typically focus on avoiding companies that are involved in the armaments industry, tobacco, gambling and/or pornography. Options will include funds where their core strategy or style may be to focus other issues - like sustainability or the environment, not just 'ethical funds'. Strategies vary significantly. Check fund literature for details.
  • Social policy Find fund options that consider social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). This will include funds in most of the different SRI Styles as this is considered a core issue. See fund information for detail.
  • Governance policy Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices.
  • Animal welfare policy Find ethical fund options that have policies that require specific animal welfare standards to be adopted by investee companies in order for them to be considered for inclusion within the fund.
  • Nuclear exclusion policy Find ethical funds (and other options) that have a published policy that sets out the fund's position on avoiding or limiting exposure to nuclear power. See fund literature for details of their policy.
  • Animal testing exclusion policy Find ethical investment options that avoid companies that are involved in testing their products on animals. Ethical fund strategies vary - some exclude all companies that test on animals, others allow companies that test for medical purposes or where required by law. Read fund details for fund specific information.
  • Tobacco production avoided Find fund options that exclude manufacturers of tobacco (or related) products. This typically relates to ethical funds however funds from other SRI Styles commonly avoid this area also. Strategies vary and funds may invest in retailers of such products (e.g. supermarkets or hotels.) See fund information for further information.
  • Armaments manufacturers avoided Find ethical fund (and other SRI) options that avoid avoids companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non strategic military products. Read fund literature for specific details.
  • Coal, oil &/or gas majors excluded Find sustainable investment and ethical fund options that avoid significant involvement in coal, oil and/or gas producing companies. Funds vary. See individual fund literature to confirm details.
  • Climate change / GHG policy Find sustainable investment and ethical fund options that pay significant attention to climate change related issues such as greenhouse gas/carbon emissions. Strategies vary, see fund literature for individual fund information.
  • Invests in clean energy/renewables Find ethical, sustainable investment and other environmentally aware fund options that aim to invest in companies in the clean technology and renewable energy sectors. Fund strategies vary. Some funds may have limited exposure to this area, others may have significant exposure. Check fund literature for details.
  • Alcohol production excluded This filter helps you to find ethical funds - and other options - that avoid investment in alcohol production. See fund literature for further information.
  • Fracking and tar sands excluded Find fund options that avoid companies involved in fracking and tar sands - which are widely regarded as more controversial methods of oil and gas extraction.
  • Gambling avoidance policy Find ethical fund options (and other options) that avoid companies with significant involvement in the gambling industry. See fund policy for details.
  • Human rights Find funds that consider human rights practices when approving companies for investment. Such funds will require decent standards of human rights to be demonstrated - which typically means adherence to international norms as a minimum standard.
  • Water / sanitation policy (new) Find funds that have policies that focus on the the water industry and/or sanitation.
  • Resource efficiency policy or theme (new) Find funds that have a a policy or theme that relates to managing natural resources more efficiently
  • Sustainable transport theme or policy (new) Find funds that have stated policies or thematic investment approaches that relate to supporting more sustainable (environmentally aware) transport
  • Positive social impact theme (new) Find funds that specifically state that they aim to deliver positive social (ie people related) impacts and/or outcomes
  • Responsible supply chain policy or theme (new) Find funds that have policies or a themed that considers the responsible management of supply chain related issues (these may relate to employment, product sourcing, sustainability or other issues)
  • Positive environmental impact theme (new) Find funds that specifically set out to help deliver positive environmental impacts, benefits or outcomes
  • Plastics policy / reviewing plastics (new) Find funds that are specifically managing or reviewing how they manage issues relating to the over use plastics (particularly single use plastics) as part of their investment processes

SRI Features

  • Balances company 'pros and cons'/best in sector Find ethical funds and other options that consider both the 'positive' things companies do and the 'negative' things they do in order to make balanced, often complex decisions about where they might invest. Such funds often invest in the best/most ethical companies across most industries ('best in sector'), rather than excluding entire sectors. The fund manager may combine this with 'responsible engagement' activity to encourage better business practices. See fund literature for specific policy explanations.
  • Favours companies with strong social policies Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. Read fund literature for further information.
  • Sustainability themed Find funds where there is a significant emphasis on sustainability issues either as its primary strategy or as a core strategy that compliments other criteria. (This may apply to a number of different SRI Styles). Such funds will consider environmental and social issues when making stock selection decisions. Read fund literature for further information.
  • Eurosif transparency Find funds that meet the standards of the EUROSIF transparency Code. This means that they are a leading fund in terms of openness and transparency, publishing - for example - extensive information about where they invest and how they deal with companies.
  • Positive selection bias Find funds where their main 'ethical approach' is to invest in companies that are considered to be positive/good or useful to people and/or the environment. The fund may also have negative avoidance criteria - see fund details to read more about fund strategies.
  • Over 50% large cap Find funds that invests more than half of their money into what are commonly regarded as 'large companies'. This will typically mean that the market capitalisation (or value) of the companies they hold is in excess of £5 to £10 billion.
  • Favours cleaner, greener companies Find funds that aim to nvest in companies with strong environmental policies and practices. This may mean it invests in smaller companies offering market leading environmental services or products and/or larger companies that are working towards the improved management of their negative impacts. Read fund literature for further information.
  • Strictly screened ethical fund Find funds that have a high level of negative ethical avoidance. These funds are likely to exclude more companies than other ethical (and SRI) fund options. Read fund literature for further information.
  • Aims to generate positive impacts Find funds that aim to help deliver positive social or environmental impacts or outcomes through their investment decisions - which typically involves holding companies that are viewed as being necessary or beneficial. Strategies and approaches vary. A small number of funds have recently started to measure outcomes (see 'Measures Impacts' in the Policy filter). This is a new area - so most funds do not do this yet. See fund literature for further information.
  • Available via an ISA Find funds that are available via a tax efficient ISA product wrapper
  • Clean energy themed Find funds that in clean technology / clean energy companies. See fund information for further details.
  • Responsible ownership / stewardship policy (new) Find funds that have a policy that sets out what they do with regard to responsible investment ownership - also known as 'stewardship'. This typically relates to issues such as dialogue with companies and shareholder voting.
  • ESG integration strategy (new) Find funds that factor in 'environmental, social and governance' issues as part of their investment decision making process. (These typically relate to improved risk management.)
  • Combines norms based exclusions with other SRI criteria (new) Find funds that make significant use of internationally agreed 'norms' (eg United Nations Global Compact - UNGC - or the UN Sustainable Development Goals - SDGs) as part of their investment selection process ALONGSIDE additional SRI criteria such as positive or negative stock selection policies and/or stewardship strategies.
  • Combines ESG strategy with other SRI criteria (new) Find funds that have an ESG strategy (which is typically focuses on avoiding companies that post environmental, social or governance related risks) with additional criteria such as positive and/or negative screens or engagement/stewardship strategies.
  • Invests mostly in large cap companies (new) Find funds that have SRI strategies and focus their investment stock selection on larger companies (eg over £1bn)
  • Employ external oversight or advisory committee (new) Find funds that have a external committee that helps steer or advise fund managers on SRI policy or strategy related issues. These people may be paid for their time but are not employees of the fund manager.

Corporate Activity

  • ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
  • Responsible Ownership policy for non SRI funds Find funds run by fund managers that apply Responsible Ownership or 'Stewardship' policies to all or most of their investment assets. This means that active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
  • Integrates ESG factors into all/most fund research Find fund management companies that research environmental, social and governance (ESG) issues when deciding whether or not to invest in a company. This typically applies to all funds, not only those which are promoted as being 'ethical' or 'SRI themed'. This is increasingly often used as a risk management tool.
  • Vote all* shares at AGMs/EGMs This fund manager votes or aims to vote all* the shares they own at Annual General Meetings and Extraordinary General Meetings. A commitment to voting shares is a key indicator of 'responsible share ownership' - where fund managers consider - and express their views on - the key business issues effecting the companies they part own. (*Allowance is made for exceptional situations such as when shares are in the process of being sold.)
  • In house responsible ownership/voting expertise Find fund / fund management companies where there is in-house expertise that enables the fund manager to make their own decisions on issues such as shareholder voting, setting of in-house guidelines - for example - particularly with regard to environmental, social and governance (ESG) issues.
  • Responsible Ownership/ESG a key differentiator The fund managers have said they consider this area to be a key differentiator for their business
  • UK Stewardship Code signatory Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave as responsible 'company owners'.
  • Publish Responsible Ownership/Stewardship report Find fund management companies that publish information on their approach to responsible investment ownership - also known as 'Stewardship' - following the introduction of 'the Stewardship Code'. This sets out their approach to voting, dialogue with company management and any related activity. This is publicly available.
  • Publish full voting record Find fund management companies that publishes a full record of how they vote at AGMs and EGMs. This information is publicly available.
  • Regularly lead collaborative ESG initiatives Find funds managed by fund management companies that regularly initiate or help run industry wide (collaborative) investor projects aimed at raising environmental, social and governance standards amongst investee companies.
  • PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
  • UKSIF member (new) The fund management company is a member of UKSIF - the UK Sustainable Investment and Finance association
  • Climate Action 100+ or IIGCC member (new) Involved in collaborative institutional investor initiatives that are encouraging companies to address climate change (ie reduce carbon emissions)
  • Encourage board diversity eg gender (new) Fund managers encourage the companies they invest in to have more diverse board structures (eg more women on boards)
  • Encourage responsible corporate taxation (new) Fund management company is working with the companies it invests in to encourage more responsible corporate taxation (new)
  • Encourage carbon / GHG reduction (new) The fund management company is working with the companies it invests in to encourage reductions of carbon dioxide and other greenhouse gas emissions.
  • Employ specialist ESG/SRI/sustainability researchers (new) The fund management company directly employs specialist ESG/SRI/sustainability researchers or analysts
  • Use specialist ESG/SRI/sustainability research companies (new) The company makes use of expert external research
  • In house carbon/GHG reduction policy (new) The fund management company is working to reduce its own carbon/greenhouse gas emissions.
  • Full SRI policy information on company website (new) All information that relates to the filter options that the fund manager has selected on this fund can be found on their company website

SRI / Ethical Policy

All stocks considered for investment first undergo screening by members of the GSI team, to determine if they meet the criteria for inclusion in the portfolio’s investable universe. The GSI team has created a thorough and robust process to analyse companies to determine whether they meet the Fund criteria:
 

  • The Fund will exclude companies with exposure to any business activities deemed to be socially or environmentally damaging, with particular tolerance thresholds. These excluded activities are rooted in the Fund’s heritage in Quaker principles and have also adapted over time with the development of major social and environmental issues.

 

  • The Fund will also exclude companies which do not meet sufficiently high standards in how they operate, based on a detailed assessment of their policies and performance with respect to overall sustainability management. The focus will vary by sector according to relevance and includes certain absolute exclusions in company behaviour but is otherwise often a qualitative judgement. In order to make these assessments, BMO Global Asset Management have established particular positions on a range of relevant issues, such as climate change and what we consider to be progressive approaches to these issues by companies. These positions are based on a range of inputs that include evolving international norms and agreements, extensive primary research, including field visits and the input of our Responsible Investment Advisory Council.

 

  • The external Responsible Investment Advisory Council is also involved in reviewing the approvability ratings of companies as well as in developing the screening criteria for the Fund and targeting engagement activity. Input is also frequently sought from a range of stakeholders. We provide below a brief snapshot of the criteria (not an exhaustive list of screens):

 

Product-based Criteria:

  • Alcohol
  • Gambling
  • Nuclear power generation
  • Oil, gas and coal reserves
  • Pornography
  • Tobacco
  • Weapons

 
Conduct-based criteria:

  • Environment
    • Arctic and ecologically-sensitive operations
    • Environmental management
  • Social
    • Animal Welfare
    • Health and safety
    • Human rights and oppressive regimes
    • Labour standards
  • Governance
    • Business ethics

 
The GSI team has a quarterly monitoring system to identify:
 

  • Changes to business e.g. through mergers and acquisitions
  • Whether the criteria continues to be met by the company (ethical, environmental and social) 
  • Any controversies that may affect the company rating (e.g. mis-selling, environmental damage or corruption).

 
 

Resources, Affiliations & Corporate Strategies

The F&C Responsible Global Equity Fund is managed by three distinct teams with the process led by the Responsible Global Equities team. 
 

  • 1. The Responsible Global Equities Team manages the strategy using fundamental, bottom-up research to construct a portfolio of companies from the acceptable universe. The Fund management team initially identifies companies for possible inclusion and they submit the companies to the GSI team for assessment against the ethical and sustainable screening criteria. Following approval for inclusion in the investable universe the investment team is then responsible for deeper investment analysis, portfolio construction and ongoing monitoring. 

 

  • 2. The Governance and Sustainable Investment Team (GSI Team) undertakes extensive research on ethical and environmental, social and governance issues for each company proposed for inclusion or actively held within the Fund as outlined above. They reach a conclusion about whether a company should be included in the investable universe in conjunction with input from the Responsible Investment Advisory Council. The GSI Team is then responsible for managing ongoing engagement and proxy voting for all companies owned in the fund. 

 

  • 3. The independent external Responsible Investment Advisory Council is an external body of sustainability experts who focus on providing advice on ethical and sustainability criteria, helping the firm maintain the integrity of the standards by which the Funds are run.

 
BMO Global Asset Management draws on a range of specialist ESG research sources to inform proxy voting and engagement activities. We are using Institutional Shareholder Services (ISS) for global proxy voting research and vote execution services. In addition, we are using Institutional Voting Information Service (IVIS) for supplementary advice on FTSE All-Share companies. Other relevant resources include sell-side brokers (corporate governance and sustainability research) and MSCI (ESG factors). We also consider research by broader stakeholders including NGOs such as Transparency International (anti-corruption), Oxfam and Human Rights Watch.
 
Our research is also informed by our networks that may provide briefings and publications, including the UN PRI, International Corporate Governance Network (ICGN) and the Asian Corporate Governance Association (ACGA). We may also draw on external consultants with expertise in particular areas, although presently we have no such arrangements underway. We are also part of a global asset management firm with investment professionals and other expert resources spread across the world, and we of course have access to their insight and expertise on an as needed basis.
 
 

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