Responsible Investment

Technological Innovation

Companies within the technology space vary widely – from hardware manufacturers, to software providers
April 2018

Risk Disclaimer

Past performance should not be seen as an indication of future performance. Stock market and currency movements mean the value of, and income from, investments in the strategy are not guaranteed. They can go down as well as up and you may not get back the amount you invest.

 

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

 

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.

 

A cloud-computing provider in the BMO Responsible Global Equity strategy has reduced the carbon emissions of its clients’ IT operations by 88% on average.

Technology is a critical enabler of impact – but also one where negative impacts pose a substantial risk.

Companies within the technology space vary widely – from hardware manufacturers, to software providers, to IT-focused consultancies. Our investments range across this spectrum, where we look for companies that both operate responsibly and contribute to sustainability solutions.

We selected this theme as a focus area for impact reporting because we believe that it is in a critical position in the impact debate. Technology can deliver positive impact in its own right – through delivering access to essential services, including communications and the internet. But it is also a critical enabler for a far wider spectrum of impact. The effective use of data and technology lies at the heart of delivering every one of the SDGs – as well as being essential in developing the impact metrics to monitor progress.

However, this is also a sector where negative impacts pose a substantial risk. From controversies over labour standards in supply chains, to the harmful effects of social media, and questions over the misuse of data for political purposes, the reach and power of the sector are both its greatest advantage and its greatest vulnerability.

 
Understanding Impact

The objectives of the technology sector span across several of the SDGs, such as improving energy efficiency, which supports SDG7 – Affordable and Clean Energy; providing access to the internet, linking to SDG9 – Industry, Innovation and Infrastructure; and enabling companies to collect and manage data relating to their sustainability performance, supporting SDG12 – Responsible Consumption and Production.

Risk Disclaimer

Past performance should not be seen as an indication of future performance. Stock market and currency movements mean the value of, and income from, investments in the strategy are not guaranteed. They can go down as well as up and you may not get back the amount you invest.

 

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

 

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.

 

“The effective use of data and technology lies at the heart of delivering every one of the SDGs.”

 

David Sneyd, Governance and Sustainable Investment Team

Related capability

Responsible Investment

The diversity of both the type of contribution made by the players involved and the wide range of actual outcomes achieved makes the reporting of consistent impact metrics a challenge. This is reflected in the reporting of our investee companies, where impact metrics are rarely seen and generally not comparable.

 

One of the most significant areas of progress has been in improving energy efficiency. Companies report on their own GHG (green house gases) emissions, percentage of energy sourced from renewables or power usage effectiveness as operators – but few extend this to reflect emissions avoided by their clients through more energy-efficient products. One exception is Amazon.com, whose cloud subsidiary Amazon Web Services – the world’s largest public cloud provider – reports that it has reduced its customers’ carbon emissions by an average of 88%.

 

We continue to engage Amazon.com on improving disclosure on its own climate performance.

 

Other companies provide software solutions that equip clients with the ability to monitor and improve their sustainability performance. The reporting in this area is often case-specific or anecdotal in nature, rather than providing outcome-based metrics.

 

A stronger area for the sector is reporting on providing access to technology to underserved people, particularly through the expansion of internet infrastructure, where the resulting increase in communications access, mobile financial transactions and online education are often quantified.

 

Whilst there is a shortage of impact reporting now, we hope that the sector’s familiarity with data will enable rapid improvements. Below we give examples of metrics we would like to see.

 

Less energy, brighter future: Taiwan Semiconductor Manufacturing Company

We invest in Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor foundry, producing more than 8,600 different products, applying over 200 different technologies for over 440 customers globally. TSMC is increasingly acknowledged for its advanced approach to integrating good ESG practices across its operations and it is one of the leaders amongst global peers. It is Taiwan’s largest purchaser of renewable energy, and publishes a comprehensive sustainability report linking its activities to the SDGs.

TSMC’s success in delivering low-cost, high-precision semiconductors has been a key enabling factor in improving the energy efficiency of a wide range of its clients’ technologies in a cost-effective way. The company now develops chips based on a 7-nanometer process – 7 nanometers being the size of about 20 atoms – which use just 4% of the power of those using the 55-nanometer process that was the industry standard ten years ago.