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Net zero methodologies have put a heavy emphasis on the decarbonisation of portfolios. However, as investors we also need to focus on our role in shifting in capital allocations toward climate solutions. The scale of capital needed is enormous. Investments will also be needed in adaptation to the changing climate, and to secure emissions cuts in areas including deforestation and land use.
Across our portfolios, we also seek opportunities to invest in solutions which is why our net zero commitment covers all asset classes. However, net zero methodologies are more developed in some asset classes than others. Work underway or planned in other asset classes by BMO GAM includes:
- Property: Our property asset management arm, BMO Real Estate Partners (BMO REP), set out the details of its net zero commitment in October 2021. The approach is consistent with the UK Better Buildings Partnership’s Net Zero Carbon Pathway Framework and will apply across its real estate operations in Europe. It will set short, medium and long-term delivery targets, with the goal of becoming third party certified as carbon neutral by 2032 and culminate in achieving net zero carbon status by 2050.
- Sovereign debt: This will be a future area of focus. We are awaiting the outcome of the ASCOR (Assessing Sovereign Climate-related Opportunities and Risks) Project, which is looking at alignment metrics at a country level, and will draw on this in developing a methodology. In the meantime, we have been reviewing other metrics from sources such as GermanWatch and Climate Action Tracker.
- Private equity: We have been involved in the IIGCC’s Private Equity working group on net zero implementation, to contribute towards a consistent industry-wide approach. In the meantime, we have also included questions on net zero alignment in our regular annual ESG survey with our GPs, asking whether they have a net zero approach. In our latest survey, 17% of the GPs we surveyed have a goal to become net zero, with a further 14% developing this.
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.
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.
Interested in learning more? Download our methodology paper to discover our net zero approach.
Risk warnings
The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.
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.
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