Partner Insight: Tick tock - Can responsible investing move the dial on the most urgent global priorities?

clock • 4 min read
Partner Insight: Tick tock - Can responsible investing move the dial on the most urgent global priorities?

BMO’s Claudia Wearmouth and Vicki Bakhshi on how they focus their approach

With the world running out of time to tackle a huge diversity of environmental and social problems, a key challenge for responsible investing teams is choosing which battles to fight, and how to fight them. So how do Claudia Wearmouth, Co-Head, and Vicki Bakhshi, Director, of BMO's Responsible Investment team - one of the industry's largest and longest-established - pick their ground?

"In the summer of each year we gather ideas from the team, our clients, our engagement service and our Responsible Investment Advisory Council (RIAC) - an external panel of sustainability experts - about what our engagement and policy priorities should be for the coming year," says Bakhshi. "RIAC is continually scanning the horizon for issues," says Wearmouth, "and we say to clients: You're buying into a responsible investing approach that is continuing to evolve so tell us what you care about and what you think."

But not every eye-catching issue can make it onto their priority list. "We need to figure out if we can actually do anything about it," says Bakhshi. "For example, what would an engagement project look like? Is it already being done by others, or is this something where we can move the dial?"

THREE THEMES

For 2021, BMO has chosen to highlight the three themes of net zero emissions and climate change, inequality and social justice, and biodiversity, but the team needed to focus their approach. "For instance, within climate change, this year we picked phasing coal out of global power generation as one of the most urgent issues," says Bakhshi. "We've been engaging not just with the developed economy giants, which get lots of investor attention, but with companies in India and China, where engaging is a tougher job but where you can potentially move the dial much more."

"In the banking sector," she says, "we are now engaging with companies who are financing fossil fuels rather than just those producing them, and we are also working hard on the investment industry's Net Zero Asset Managers' initiative, which now has commitments from investors with $37 trillion in assets under management."  

It's not just the Responsible Investment team engaging with companies, says Wearmouth, as her team also supports BMO's portfolio managers in identifying the key issues and asking the right questions.

MIGHTY MICROBES

In addition to their 2021 themes, the team continue to work on issues that are less on the public radar. "For a couple of years now we've been working on antimicrobial resistance (AMR)," says Bakhshi, "which is potentially as big a public health issue as Covid, though for the moment a slow boiling rather than acute emergency."

One of the key reasons for picking AMR was that the team felt it was something that companies could do something about but might not be prioritising. "Success often comes from pushing things up the agenda, to senior management and board level, and forcing them to confront it, rather than from telling them something shiny and new about the world that they didn't realise before," says Bakhshi.

"But you also want a tangible commitment and a target date - not just warm words. So with something like AMR, we want a policy change, such as phasing out the routine use of antibiotics, and a target year for that to happen," she says.

Click here to learn more about the team's work and their approach to building deeper, more forward-looking sustainability analyses

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The funds mentioned are either sub funds of BMO Investment Funds (UK) ICVC, BMO Investment Funds (UK) ICVC V, both open ended investment companies (OEIC), registered in the UK and authorised by the Financial Conduct Authority (FCA); or BMO Investments (Lux) I Fund, a société d'investissement à capital variable (SICAV), registered in Luxembourg and authorised by the Commission de Surveillance du Secteur Financier (CSSF).

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