Investing to improve
BMO SDG Engagement
Global Equity Fund
Individuals increasingly want to make a positive impact. As consumers, there is a growing recognition that we can align our investment decisions with our values. Ultimately, we want our money to drive improvement in the world around us.
This is exactly what our BMO SDG Engagement Global Equity Fund is designed to achieve.
Risk Disclaimer
The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.
We must strongly accelerate our broader efforts to achieve the Sustainable Development Goals…and we need increased financing for those solutions.
UN Secretary-General António Guterres, 2019
The Sustainable Development Goals – roadmap to a better future
The Sustainable Development Goals (SDG) were developed in 2015 by the United Nations (UN) and cross-industry stakeholders with a view to providing a roadmap towards a more sustainable world by 2030. The SDGs are 17 ambitious, high-level goals with 169 specific targets, that were endorsed by all UN member states.
Achieving these targets typically requires a global perspective together with commitment and coordinated action from international organisations, governments, companies and individuals. We all have a role to play and the SDGs were designed with that in mind.
For example, the UN has estimated that achieving the SDGs will require investment of between US$5-7 trillion each year until 2030. To achieve this, private capital must fund around 85% annually.1
1 United Nations Conference on Trade and Development (UNCTAD), 2014. World Investment Report; Investing in the SDGs, An Action Plan
Invest – quality matters
The bar we set when investing is high.
Containing 40-60 carefully selected small and mid-sized companies, the BMO SDG Engagement Global Equity Fund has a remit to seek investment opportunities right across the world.
Alongside strict criteria around the quality and value of a company, there must be clear opportunity for SDG-linked engagement. We aim to invest for the long term, with low portfolio turnover, facilitating stronger relationships with companies which enhances the effectiveness of our dialogue.
- Quality matters. Alongside factors like ‘competitive advantage’ we look for companies that effectively manage environmental, social and governance (ESG) issues – factors integral to assessing risk and reward potential.
- Well managed. Companies should be run by proven management teams, responsible in how they do business, appropriately incentivised and open to shareholder engagement.
- Price matters. We have a disciplined approach to valuation with a view to investing in companies at an attractive price and maintaining our holding for 5+ years.
- Scope to drive improvement. Only companies where we see scope for achieving improvement towards SDG targets warrant a place in the portfolio.
Image: © QIAGEN, all rights reserved.
Engage – driving improvement
We seek to drive targeted improvement, focusing on how companies address ESG risks, opportunities and impacts. Constructive and informed engagement with companies is a critical component of our approach. For over 20 years, BMO has been an active owner, which plays a major role in allowing us to be better stewards of our clients’ assets.
Engagement is structured around the SDGs and their underlying targets. To engage effectively we strive to understand the company’s corporate strategy, culture and the materiality of ESG factors.
We believe that the best way to achieve our engagement goals is by constructive dialogue with key decision makers on the most relevant ESG issues to each company, in order to drive improvement. Close collaboration between the Global Equities and Responsible Investment teams is at the heart of successful engagement.
We have also developed an online engagement database for over 12,500 companies, allowing us to log interactions, progress and results, which we can do at an SDG target level.
Focusing our dialogue
Investment team, where there is
opportunity
for us to drive change
Improve – measuring our impact
By investing in companies and using the Sustainable Development Goals as an engagement framework, we believe we can contribute to building a more sustainable world.
For each company in the BMO SDG Engagement Global Equity Fund portfolio, we monitor and measure the impact of our dialogue around pre-defined SDG targets. We want to see improvement and continually assess the progress each company is making.
The focus of our engagement varies from company to company depending on the products and services they provide, and how they conduct their business. We log activity and progress on our engagement database. Over time we will assess and report on the progress companies are making.
Our ambition is to deliver attractive investment returns and clearly demonstrate positive progress towards achieving SDG targets
Team in focus – global reach
At BMO Global Asset Management, engagement is a core activity for our investment professionals, spearheaded by our Responsible Investment team, with specialists across a breadth of ESG issues and markets.
Around the world, we work to understand the impact of ESG issues on businesses, build long-term relationships with management, gain local knowledge and use our position as a large investor to engage directly with senior management and board members.
With a strong Responsible Investment team, we’re able to build dialogue with companies around the world on a host of key ESG issues.
Jamie Jenkins
Jamie Jenkins is Co-Head of the Global Equities team, Lead Portfolio Manager of the BMO Responsible Global Equity Fund and Lead Portfolio Manager of BMO SDG Engagement Global Equity Fund. Jamie joined the firm in 2000. Prior to joining the firm, Jamie worked at Hill Samuel Asset Management as a Japanese Equities Fund Manager. He holds an MA in History from the University of Edinburgh, has IMC and IIMR qualifications and is a member of the CFA Society of the UK.
Claudia Wearmouth
Claudia is a Director and Co-Head of the Governance and Sustainable Investment team. She joined the firm in 2007 and leads the GSI team’s ESG research for BMO Global Asset Management’s screened funds, including our Responsible fund range that includes both equity and fixed income investments. In addition, Claudia plays a leading role in managing key reo® client relationships. Claudia previously spent five years at a start-up charity called New Philanthropy Capital where she focused on analysing the impact of charitable giving and advising high net-worths and corporates on their charitable giving strategies. Claudia graduated in 2001 from Durham University with a BA in Economics.
Nick Henderson
Nick Henderson is a Portfolio Manager within the Responsible Global Equities team. He is the alternate manager of the BMO Responsible Global Equity Fund. He joined both the firm and the team in 2008. Prior to joining the firm, Nick graduated with a Bachelor of Science degree in Economics from the University of Bristol and is a CFA Charterholder.
Emma Lupton
Emma Lupton joined BMO Global Asset Management in 2016 as an analyst on the Responsible Investment team. In her role, Emma leads on the work relating to the UN Sustainable Development Goals (SDGs), which includes mapping portfolios to their SDG alignment and how the engagement incorporates the Goals and underlying targets. Emma works closely with the global equities team to help run the BMO SDG Engagement Global Equity Fund. She also engages with companies, in particular the food and beverage and retail sectors, covering issues including water, oceans, supply chain management, natural capital, packaging and pollution. Immediately prior to joining, Emma worked at the environmental data provider CDP driving the corporate water stewardship agenda in Europe and boosting disclosure and transparency on water. Previously Emma worked with Alliance Trust to formalise the integration of water into their investment decision-making process. Emma also managed the corporate water stewardship programme for Global Water Intelligence and has a background in wealth management. She holds an MSc in Environmental Technology, specialising in Water Management (Imperial College London) and the Investment Management Certificate of the CFA Society of the UK.
2019 highlights
Engagement
Outcomes
company
engagements
countries
linked to
environmental issues
linked to social
issues
Facts and stats
The BMO SDG Engagement Global Equity Fund aims to provide capital growth by investing in a well-diversified selection of global small and mid-sized companies. The fund seeks to achieve a positive impact through targeted, impact-focused, active engagement with companies, using the SDG framework.
At a glance
Typical geographic and sector allocations
Source: BMO Global Asset Management, 31-Dec-18, for illustrative purposes only.
Investments in smaller companies carry a higher degree of risk as their shares may be less liquid and investment values can be volatile.