To secure a sustainable future, we must urgently address climate change. The relentless rise in greenhouse gas emissions must be reversed, and rapid progress made towards net zero greenhouse gas emissions globally, in order to limit global warming to below 1.5°C. But this will not happen if left to governments alone – robust action from investors and corporates is essential.
BMO Global Asset Management has been active on climate change for many years. Our corporate engagement on the topic started in 2000, and is now fully integrated with our voting approach. We have engaged over many years with governments to encourage robust policy approaches. And we are carbon neutral in our own operations, as part of a commitment made by BMO Financial Group in 2010.
But with the urgency of the issue ever more apparent, it is time to step up and go further, and adopt an ambitious approach in relation to the climate impact of our invested assets.
In December, BMO Global Asset Management1 joined a group of asset managers representing over $9trn AUM to launch the Net Zero Asset Managers initiative. Through this initiative, we are all committing to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C. As part of the initiative, we have committed to:
- Work in partnership with asset owner clients on decarbonisation goals, consistent with an ambition to reach net zero emissions by 2050 or sooner across all assets under management
- Set an interim target for the proportion of assets to be managed in line with the attainment of net zero emissions by 2050 or sooner
- Review the interim target at least every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included
Partnering for success
Asset managers have a unique and critical role to play in the transition to global net zero emissions. We look forward to building partnerships both with our asset owner clients, and with the companies we invest in, to move together on the journey to making this a long-term shared goal.
Kristi Mitchem, CEO, BMO Global Asset Management
What about financial returns?
Maximising our clients’ long-term risk-adjusted financial returns remains our objective. We have long believed that the consideration of ESG issues is supportive of this objective, by helping us to better identify risks and opportunities. In the case of climate change, the systemic financial risks associated with unabated climate change are becoming ever more apparent, and the adoption of net zero goals by governments and corporates is rapidly gaining momentum. In this context, we believe that supporting net zero-aligned investing makes sound long-term financial sense for our clients, but as a client-focused asset manager will ensure that any changes we make are fully consistent with the mandates we have with them, as well as with local regulations.
Across the financial sector, there is growing recognition that whilst of course delivering financial returns is our objective, we also need to analyse how our actions – or inactions – have an impact on meeting the world’s needs.
Alice Evans, Managing Director, Co-Head, Responsible Investment
This communication is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance.
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