BMO Global Asset Management (EMEA) today announces that 12 percent of its assets under management (AUM) will be managed in line with net zero principles, representing 50 percent of active equity exposure for BMO GAM (EMEA).
BMO GAM (EMEA) will seek to further expand this proportion over time, in line with its commitment to implement a net zero approach across all AUM.
To deliver on this commitment, BMO GAM (EMEA) has constructed a net zero methodology, based on the Net Zero Investment Framework developed by the Paris Aligned Investment Initiative.
The announcement follows an update from the Net Zero Asset Managers Initiative, with signatories disclosing their net zero AUM targets and methodologies.
BMO GAM (EMEA)’s climate strategist co-chairs the IIGCC’s Implementation Working Group for the Net Zero Investment Framework, which provides guidance to asset managers and asset owners on portfolio-level targets, analysis of underlying assets and investment in solutions.
BMO GAM (EMEA) Funds managed in line with net zero
- BMO Responsible Global Equity Fund (UK)
- BMO Responsible Global Equity Fund (Lux)
- BMO AM Responsible Global Equity ESG Fund (Canada)
- BMO Sustainable Opportunities Global Equity Fund (UK)
- BMO Sustainable Opportunities Global Equity Fund (Canada)
- BMO SDG Engagement Global Equity Fund (Lux)
- BMO SDG Engagement Global Equity Fund (Canada)
- BMO Responsible Global Emerging Markets Equity Fund (Lux)
- Responsible Emerging Markets Equity ESG Fund (Cayman)
- Responsible Emerging Markets Equity Screened ESG (Cayman)
- Responsible Emerging Markets Equity ESG Fund, LLC (Cayman)
- BMO LGM Responsible Asian Equity Fund (Ireland)
- F&C Investment Trust PLC (UK)
- BMO Responsible UK Income Fund (UK)
- BMO Responsible UK Equity Fund (UK)
Vicki Bakhshi, Climate Strategist at BMO GAM (EMEA), comments: “As a founding signatory to the Net Zero Asset Managers Initiative, BMO GAM (EMEA) is committed to contributing towards the global goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius.
“We recognise that asset managers have a unique and critical role to play in the transition to global net zero emissions. Strong action by global leaders at this week’s COP26 conference is also essential to set the world on a trajectory to a more stable climate and a healthier planet.
“As part of the collective investor voice, we call on governments to be visionary and ambitious in the way they approach the COP26 negotiations. Actions by our leaders, not words, is imperative as we move from commitment to implementation.”
BMO GAM (EMEA)’s principles of action
To guide the implementation of a net zero aligned portfolio, BMO GAM (EMEA) has established three key ‘principles of action’ to ensure effective governance of the net zero commitment approach which are aligned to the IIGCC’s PAII Framework. These include:
- Principle 1: Focus on real-world emissions reductions
Using the power of its engagement, and working in collaboration with other investors, to influence companies to act. As companies’ emissions fall, so then will the carbon content of investment portfolios. However, engagement cannot be open-ended. If companies fail to respond and remain fundamentally misaligned with a low-carbon future, BMO GAM (EMEA) will re-consider its investments in them.
- Principle 2: Work in partnership with clients
By working in partnership with clients, providing education on what the low-carbon transition means when applied to portfolios, BMO GAM (EMEA) may be able to move some of its assets to a net zero-aligned pathway earlier than others.
- Principle 3: Transparency
The risks of ‘net zero-washing’ are real. Methodologies on net zero investing are still emerging, and disclosure by corporates is patchy, despite the progress made since the publication of the Task Force on Climate-related Financial Disclosures. Indeed, the UK Government’s Roadmap to Sustainable Investing policy paper announced in October 2021 is a helpful development. However, the urgency of the issue is too great to wait until all the building blocks are fully in place. BMO GAM (EMEA) is engaging with clients about the limitations posed by gaps in data or inconsistencies between methodologies.