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Supporting a sustainable COVID-19 recovery through ESG engagement
9 April 2021

Supporting a sustainable COVID-19 recovery through ESG engagement

Insight Partner

Investor engagement on Environmental, Social and Governance (ESG) issues has evolved from a niche practice to a mainstream investor activity. This year, we are celebrating 20 years of engagement, having engaged more than 5,500 companies across 87 countries during this time period.

2021 will be a year like no other as we look to recover from the COVID-19 pandemic. The UK will host the delayed UN Climate Change Conference (COP26) and we are now less than 10 years to the target date for achievement of the UN Sustainable Development Goals.

Therefore, what do BMO Global Asset Management see as our three engagement priorities for 2021?

In the year ahead, we’re pledging to continue to prioritise our engagement around:

  • Climate change – driving action towards a net zero emissions global economy 
  • Biodiversity
  • Inequality & social justice.
The race to net zero

In a continuation of our 2020 commitment, we remain focused on climate change. We will continue to push for the adoption of targets consistent with net zero emissions globally by 2050, and for robust strategies to implement these. We’ll also continue to focus on financial institutions, pressing for climate change to be fully integrated into lending and investment policies, and for the adoption of net zero aligned strategies – as we ourselves have adopted, as a founding member of the Net Zero Asset Managers Initiative. We’ll also add a new sector to our engagement, engaging with the real estate sector on energy-efficient buildings. And we will back up this engagement with our voting activity – pinpointing companies that fall short of our expectations, where we will vote against directors or a key resolution such as report and accounts.

“2021, with the rescheduled COP26 climate negotiations, offers a real opportunity to close the gap between the current trajectory of greenhouse gas emissions and the radical cuts needed to keep on track to limit the global temperature rise to 1.5 degrees Celsius. Action by financial institutions and corporates will be critical, with the UN’s Race to Zero Campaign serving as a central reference point. We will increasingly be holding companies to account on the detailed strategies underpinning their climate pledges, to ensure commitments will contribute to meaningful change.”


Vicki Bakhshi, Director, Responsible Investment


Addressing biodiversity loss

The current scale of biodiversity loss globally poses an existential threat to the ecosystems that support global economic and social wellbeing. In

2021, we’ll seek to drive positive biodiversity outcomes, through a continued and expanded engagement programme with companies to curb deforestation, manage soil and freshwater resources and address ocean pollution. Engagement will focus on the most critical sectors to reducing negative biodiversity outcomes, including the food and beverage, transport, extractives and financial sectors.

Supporting social justice and reducing inequality

We have a long-standing and successful history of engaging on issues from the living wage, gender diversity and access to healthcare. This year we’ll continue to engage on these topics, whilst developing our efforts to encourage companies to improve management of racial and ethnic diversity, contribute to a just transition in response to climate change, and tackle emerging issues in human rights in industries like IT, power generation and metals & mining. We’ll focus in particular on human rights issues inherent in the energy transition, including longstanding challenges in the fossil fuel extractives chain and new issues arising in the renewable energy sector.

“The economic turmoil and social upheaval from the pandemic has put long-term sustainable challenges at the heart of the global agenda. Heightened public consciousness of social inequality, climate change and loss of biodiversity are putting pressure on global leaders to adopt immediate, integrated action. As investors, we have a central role to play in driving this action, through the responsible allocation of capital and engagement with companies to encourage positive change. Engagement with a wider pool of stakeholders alongside company dialogue is crucial to success, and to meet the 2030 Sustainable Development Goals (SDG) targets. A unified voice, across business, charities, governments and, increasingly, the public is our most powerful tool as we pursue a sustainable recovery, the SDG, and, ultimately, a sustainable world.”


Claudia Wearmouth, Managing Director, Co-Head, Responsible Investment

 

To conclude

As stewards of our clients’ capital, engagement is critical to ensure we ultimately create positive impacts on society and the everchanging world around us.

Notes/Sources
Risk warnings

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

© 2021 BMO Global Asset Management. BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management services, institutional client services and securities products. Financial promotions are issued for marketing and information purposes; in the United Kingdom by BMO Asset Management Limited, which is authorized and regulated by the Financial Conduct Authority. 1198611 (03/21). This item is approved for use in the following countries; UK.

This article was featured in Pensions Aspects magazine April 2021 edition.

 

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Last update: 27 April 2021

Vicki Bakhshi
Vicki Bakhshi
BMO Global Asset Management
Director, Responsible Investment

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