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BMO Global Asset Management (EMEA) (Corporate Activity)

SRI Style: ESG Integration
Fund Type: Corporate Activity
Region: Not Set
Asset Type: Unclassified
Launch Date: 01/01/1970

SRI / Ethical Overview

BMO Global Asset Management (EMEA) has an in-house Governance and Sustainable Investment (GSI) team of ESG experts, with extensive experience gained in financial services, the media, consultancy, public policy and industry. The team is responsible for all ESG research, engagement and voting. We take an investment-driven perspective on ESG risks and engagement. Our analysis and engagement results are therefore of direct relevance to the integration of ESG issues into the investment process and can be used to support this effectively.

As a long-term investor, we aim to build an understanding of the fundamental factors shaping the risks and opportunities of the entities that issue the equity or the debt we invest in. We 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 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.

Asset management teams lead our 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 our specialist Governance and Sustainable Investment Team. The GSI group 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.

The application of integration varies across investment styles and asset classes and is described in more detail below.

At a more thematic level, over the last year, the GSI team has also held meetings with fund managers on topics including stranded assets, aggressive corporate tax strategies and the risks associated with bribery and corruption in China. ESG research is now incorporated as part of the research process for strategies across the business, both in equity and fixed income asset classes.

SRI Policies (Primary strategy in bold)

  • 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.

SRI Features

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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 always votes the shares they own at annual general meetings (and extraordinary general meetings). This is a key indicator of 'responsible share ownership' and companies taking an interest in the future of the companies they part own.
  • 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

To continue from discussions in Question 2 on our ESG integration; from an educational perspective, we prefer not to have a formulaic educational process in place. Instead, we provide individual and group training on specific ESG issues as required or requested by investment desks. This allows us to tailor the educational experience to the particular needs of an investment team. We also take input and guidance for developing our policy and approach to engagement.

Across our funds, ESG considerations are taken into account by BMO Global Asset Management (EMEA)’s Fund Managers when assessing companies. These considerations depend on the nature of the company, the sector, the region and the likely impact on valuation and long-term investor returns. We actively monitor investee companies, including performance and internal and external developments that drive the company’s value and risk. Among other things, this includes regular meetings by fund managers with management to discuss strategic, financial and operational matters, voting on fund holdings and engaging with Boards and management of companies, when relevant, on governance, social, ethical and environmental themes.

To support this activity we have developed an in-house quantitative ESG risk tool, based on selecting the most relevant data points from our provider MSCI ESG. This provides ESG related scores and analysis on 6,000 companies and serves as an initial filter to identify which companies have clear shortcomings in environmental, social or governance issues. The tool captures ESG risks faced by a company as a result of its own policies and performance, controversies, as well as those faced more broadly as a result of sector and countries of operations. This data is distributed to fund managers to support the integration of ESG issues in the investment process and is used to identify companies for proactive engagement by our specialist Governance and Sustainable Investment (GSI) team. The tool allows us to identify the most-at-risk investments from an ESG perspective which allows the investment teams to delve further into the issues by accessing company disclosures and meetings alongside external and internal research. To further capture breaches of ESG norms we monitor data on United Nation Global Compact (UNGC) breaches, which is reviewed on a quarterly basis. Following investment, we exercise our shareholder rights as responsible stewards of capital by actively engaging with companies and voting at annual shareholder meetings.

Different approaches are used across asset classes as appropriate. In relation to sovereign debt, for instance, country-level ESG scores are constructed from a range of sources such as the World Bank and Transparency International and considered alongside traditional risk factors by the team. In Private Equity, we regular survey all General Partners (GPs) on their approach to integrating ESG factors and regularly publish client reports on the outcomes of this process.

Resources, Affiliations & Corporate Strategies

All members of the GSI team are specialists within specific sectors. Details of their roles and experience can be viwed on the overlay entry of corprate activity. Our sources of research, help link specialist and nonspecialist in-house team:

  • MSCI ESG and Governance Metrics International: BMO Global Asset Management (EMEA)’s ESG risk data is provided by MSCI ESG and Governance Metrics International. The latter is now a subsidiary of the former following its acquisition in 2014.
  • Governance Metrics International (GMI): company-specific corporate governance data, providing company research and ratings for 4000 companies in the US, Europe, Asia and Emerging Markets.
  • 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.


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