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BMO Global Asset Management (EMEA) (Corporate Activity)

SRI Style: Responsible Ownership
Fund Type: Corporate Activity
Region: Not Set
Asset Type: Unclassified
Launch Date: 29/01/2016

SRI / Ethical Overview

At BMO Global Asset Management (EMEA), we have been a leader in the development of responsible investment strategies for almost three decades. Responsible Investment is central to our corporate identity and integral to our global investment philosophy. We offer a range of screened funds – the Responsible Funds range - and advisory solutions for retail and institutional investors across the investment spectrum from corporate credit to public and private equity. Our track record in ESG dates back to 1984, when we launched the UK’s first ethical strategy, the F&C Responsible UK Equity Growth strategy (formerly stewardship Growth). Our range has since broadened to include a range of ethical and thematic strategies, as well as a comprehensive approach to engagement and voting. In 2000, we launched our flagship reo® service which continues to be a market-leading engagement overlay service. As at 31 December 2015, reocovered a total of £71 billion in assets under engagement for both internal and external assets.

We have a range of policies in relation to our responsible investment activities which include:

  • Responsible Ownership Policy, giving an overview of our activities on integration, engagement and voting;
  • Corporate Governance Guidelines, which form the basis of our approach to voting as well as to engagement on governance issues. These guidelines are updated annually on the basis of international best practice and our own views. We believe in a transparent approach and publish all our voting decisions, as well as the rationale for these;
  • Responsible Investment Conflicts of Interest Policy, setting out how we identify and manage any potential conflicts relating to our activities in this area;
  • Statements of compliance against the UK Stewardship Code and transparency report for the UN Principles for Responsible Investment.


We are actively engaged in efforts to improve regulation and policies related to ESG issues, both through our membership of collaborative organisations such as the UN PRI (United Nations Principle for Responsible Investment), International Corporate Governance Network (ICGN) and Asian Corporate Governance Association (ACGA) and through our own policy work.

Engagement (underpinned by in-house and third party research), proxy voting and reporting have been an integral part of our reo® service since its launch in 2000.

SRI Policies (Primary strategy in bold)

  • - No primary policy area

SRI Features

-

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.
  • Review(ing) carbon/fossil fuel exposure for all funds Find funds / fund managers that are reviewing or have reviewed their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. This work is being carried out in the context of climate change related concerns, and may often reference international agreements.
  • 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.

SRI / Ethical Policy

We have long believed that ESG factors can influence company performance and that consideration of ESG factors in the investment process can reduce investment risk and underpin long-term returns. We believe this is an important consideration that has relevance across asset classes and investment styles. ESG integration involves consideration of factors such as environmental performance, human rights, business ethics and corporate governance as a part of the investment decision-making process; we believe it should be a standard part of analysing the true long-term value of a business.

BMO Global Asset Management was a founder signatory to the UN PRI and has been committed since the launch of UN PRI in 2006. We receive annual feedback from the UN PRI on how we implement the six voluntary principles. In the last publishable scoring provided in 2011, we ranked top quartile on all six principles compared to our investment management peers.

For further information on BMO Global Asset Management’s capabilities in this area, a comprehensive range of related literature is available for download at the following address: http://www.bmogam.com/uk/institutional/products/responsible-investment/.

BMO Global Asset Management (EMEA) has a robust and well-established process in selecting companies and issues to engage with. We engage: proactively – by identifying through analysis weaknesses in companies; reactively – as incidents and events take place; and thematically – by identifying issues that are relevant across sectors or regions.

We measure our engagement success through “milestones,” which are positive engagement outcomes with companies. A milestone is an improvement in company ESG policy, management systems or practices, directly as a result of BMO Global Asset Management (EMEA) engagement.

BMO Global Asset Management (EMEA) offers a unique combination of specialist knowledge in the area of corporate governance and significant investment expertise. This gives us a deep understanding of the potential impact of corporate governance issues and matters arising from the Annual General Meeting (AGM)/Extraordinary General Meeting (EGM) business on company performance. Our GSI team approaches proxy voting analysis through an investment lens, with our voting decisions and our corporate governance guidelines and proxy voting policies informed by our experience of investing in and engaging with companies globally. We report to clients on our voting and engagement activities on a regular basis and publish our voting decisions immediately after company AGMs.

It is hard to identify a single pattern in our engagement outcomes, but some of the areas where we believe we have been particularly successful are:

  • Engagement with companies in historically under-engaged markets, where we have local language and knowledge. Although building relationships takes time we find that once trust is there, significant change can be achieved. Our Japanese team member is currently seeing major governance improvements in that market (in part a result of a changed political environment, but also investor pressure). Our Chinese team member is encouraged by a marked improvement in the quality of dialogue Chinese companies are willing to have, but this remains a market where the timescales for change are slow.
  • Engagement on corporate governance issues, particularly in markets where remuneration votes are mandatory (e.g. UK, US). Increasingly, we find companies approaching us for advice or consultation well ahead of their AGM, particularly given our status as a large asset manager. This means we can achieve results before the issue even goes to a vote.
  • Engagement with extractives companies. We have highly experienced engagers specialising in the mining and oil and gas sectors. As well as relationships with the majors, they have also engaged with lesser-known companies in their sectors, using the knowledge gained from their larger peers. They have also been engaging extensively on the ‘stranded assets’ issue; by its nature, the results of this will only be seen over time.

Resources, Affiliations & Corporate Strategies

The GSI team is based in our Head Office in London and is outlined below:

  • Vicki Bakhshi, Head of GSI, Region Covered: Global, Themes/Sectors Covered: Climate Change, 15 years sustainability/investment experience, 9 years at firm
  • Claudia Wearmouth, Director, Region Covered: Global, Themes/Sectors Covered: Responsible Funds, 13 years sustainability/investment experience, 8 years at firm
  • Matthias Beer, Associate Director, Region Covered: Europe, Themes/Sectors Covered: Oil and Gas sector, 14 years sustainability/investment experience, 6 years at firm
  • Juan Salazar, Associate Director, Region Covered: Latin America, Themes/Sectors Covered: Mining Sector / Human Rights, 17 years sustainability/investment experience, 6 years at firm
  • Yo Takatsuki, Associate Director, Region Covered:  Asia, Themes/Sectors Covered: Pharmaceuticals, 12 years sustainability/investment experience, 4 years at firm
  • Kalina Lazarova, Associate Director, Region Covered: Europe, Themes/Sectors Covered: European / Governance, 12 years sustainability/investment experience, 1 year at firm
  • Manuel Isaza, Associate Director, Region Covered: US & Latin America, Themes/Sectors Covered: North American Governance / Banks, 13 years sustainability/investment experience, 1 year at firm
  • Liat Reback, Analyst, Region Covered: Global, Themes/Sectors Covered: Consumer Staples, 2 years sustainability/investment experience, 2 years at firm
  • Tenisha Elliott, Data & Systems Analyst, 6 years sustainability/investment experience, 3 years at firm
  • Olivia Baker, Data & Reporting Analyst, 4 years sustainability/investment experience, 2 years at firm


Our in-house quantitative ESG Risk Tool, provides ESG related scores on more than 6,000 companies around the world. This includes input from external providers such as MSCI ESG. We focus on companies which represent the most material financial holdings in reo® clients’ portfolios. Our ESG Risk Tool captures ESG risks faced by a company as a result of its own policies and performance, as well as those faced more broadly as a result of sector and countries of operations.

BMO Global Asset Management (EMEA) 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), MSCI (ESG factors), Governance Metrics International (corporate governance risk ratings). 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 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. Our providers are reviewed on a regular basis to ensure we are getting the best possible quality of service and analysis.

At BMO Global Asset Management (EMEA) we have always seen the importance of working with collaborative organizations and initiatives to achieve effective change. We are actively engaged in efforts to improve regulation and policies related to ESG issues, both through our membership of collaborative organisations such as the UN PRI, Investment Management Association (UK), Eumedion, Institutional Investors Group on Climate Change, International Corporate Governance Network, and through our own policy work.

The initiatives and organisations that we are involved with to promote ESG best practice are:

  • UN Principles for Responsible Investment (UN PRI) including workstreams on Human Capital, Palm Oil and representation on the Clearinghouse Steering Committee (Signatory at launch in 2006)
  • Carbon Disclosure Project (CDP) and CDP Carbon Action (Signatory at launch in 2000)
  • Institutional Investors Group on Climate Change (IIGCC) 2001
  • Access to Nutrition Index 2013
  • Global Network Initiative (GNI)
  • Interfaith Centre on Corporate Responsibility (ICCR)
  • Eumedion
  • Ceres
  • International Corporate Governance Network (ICGN)
  • Asian Corporate Governance Association (ACGA)
  • Global Investor Governance Network (GIGN)
  • Investment Management Association (IMA)
  • 30% Club (on board diversity)
  • Council of Institutional Investors (CII)
  • Extractives Industry Transparency Initiative (EITI)
  • The UK Sustainable Investment & Finance Association (UKSIF)


Examples of our work with various initiatives to promote responsible investment include our long term support of the UN Environment Programme Finance Initiative (UNEP FI), which our parent company, Bank of Montreal, is a member of. In 2009 we were a signatory to the 2009 Investor Statement on the Urgent Need for a Global Agreement on Climate Change, an initiative led by UNEP FI. We continue to collaborate with the initiative. An example of our work with UNEP FI is our recent endorsement of an investor statement encouraging the International Organization of Securities Commissions (IOSCO) to improve global corporate ESG disclosure. The Investor Initiative for Sustainable Exchanges (IISE), in which BMO Global Asset Management (EMEA) has participated actively for the past two years, collaborated with UN PRI and UNEP FI to launch this investor sign-on statement encouraging IOSCO to take specific steps to improve the state of global corporate ESG disclosure including: new rules assessing the current state of sustainability reporting and spearheading conversations with the regulatory community about setting global standards for ESG disclosure.

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