Other highlights include:
- Opposed management on around 20% of resolutions – including opposing almost 50% of remuneration votes, due to concerns including poor alignment with company performance, excessive payouts and poor disclosure.
- Labour standards were an important focus for engagement in 2020. As well as continuing previous engagement on topics including modern slavery and living wages, BMO GAM also sought to address how companies were protecting their workforce during the COVID-19 pandemic.
- Reduced carbon intensity – The Responsible Global Equity strategy remains well below its benchmark in terms of portfolio-weighted carbon intensity. This measure of climate risk exposure has decreased 35% since BMO GAM started publishing data in 2015. 36% of companies in the strategy have committed to set
targets in line with the Paris climate agreement through the Science-Based Targets Initiative (SBTI). Of these, eight have set approved targets, with six assessed as being compliant with a 1.5-degree global temperature pathway, including Accenture, CVS Health, Mastercard, Microsoft, SAP and Schneider Electric.
Nick Henderson, Portfolio Manager of the BMO Responsible Global Equity Strategy, comments:
“Our Responsible Global Equity strategy, which is now well into its third decade, strives to play its part in mobilising private capital towards securing a more sustainable future for all. We are committed to our task. It is entirely valid to explore what kind of impact can be achieved by investing in listed equities, and our experience leaves us more convinced than ever that it is possible to deliver on our twin ambitions of generating attractive risk-adjusted investment returns and achieving positive non-financial impact.”
BMO Responsible Global Emerging Markets Equity Strategy
BMO GAM engaged with 31 companies in the Responsible Global Emerging Markets Equity strategy over the course of 2020, representing 87% of the portfolio by value. It voted at 64 out of 65 company meetings – voting against management on 13.4% of all resolutions, with capital issuances and director elections the issues of most frequent concern.
Engagement highlights include:
- 32% of engagement focused on corporate governance issues. This focused on addressing board composition and effectiveness to ensure effective oversight of companies’ material sustainability risks, opportunities and impacts and the way these are managed.
- 20% of engagement focused on labour standards. This centred on companies’ actions to minimise business disruptions during the pandemic and maintain good employee relations by protecting the physical health and safety of their workers and giving balanced attention to their mental and financial wellbeing.
The Responsible Global Emerging Markets Equity strategy also remains well below its benchmark in terms of portfolio-weighted carbon intensity, as a result of stringent screening processes as well as the much lower active weight in traditionally high carbon-emitting sectors, such as materials, energy and utilities.
Gokce Bulut, Lead Portfolio Manager for the Responsible Global Emerging Markets Equity Strategy, comments:
“The heightened vulnerability of emerging markets to climate change requires companies to develop strategic responses to manage potential regulatory and physical impacts as well as meet evolving societal expectations. Our climate-related engagement has focused on emissions management and on management of climate risks in supply chains, to encourage companies to better account for overall climate risk.”
