Emerging Markets

Impact metrics

BMO Responsible Global Emerging Markets Equity Strategy ESG Profile and Impact Report 2020
July 2020

Emerging Markets Team: LGM

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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.

Investing in emerging markets is generally considered to involve more risk than developed markets.

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 stocks or products that may be mentioned.

Expectations of companies’ measuring and reporting on the environmental and social impacts of their businesses continues to grow. While significant progress has been made, challenges remain.

Impact metrics differ from outputs and other performance indicators mainly because they are built to track the outcomes that a company’s operations, products or services have for the environment or on the lives of stakeholders, such as workers, suppliers, and customers. In practice, many companies focus on their own actions as a proxy for impact (e.g. 5,000 new microloans disbursed), rather than diving deeper and using metrics to demonstrate these actions have had a positive effect (e.g. new microloans improved borrowers’ income by x%).

Ideally, impact metrics should also address the multiple dimensions of impact, as set out by the Impact Management Project. We would like companies to consider not just what type of impact they have but also how much; who is affected (e.g. marginalised groups, low-income countries); the contribution their actions have beyond what would have happened anyway; and, where they are forecasting future impacts, the risk that these may not materialise as planned.

We fully acknowledge the significant challenges companies face when trying to develop environmental or social impact metrics that they can effectively track and measure. We have been engaging with some companies in the portfolio to discuss these challenges and offer our support in identifying best practice. Examples in 2019 included discussions with HDFC Bank and BTPN Syariah on how they can best capture the impact of their financial inclusion initiatives.

    Sustainable Investment Awards 2020 Winner ESG research of the year - fixed income 

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.

Investing in emerging markets is generally considered to involve more risk than developed markets.

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 stocks or products that may be mentioned.

We have selected some examples from companies in the portfolio that report impact-related outputs or outcomes to illustrate some of the different metrics being used.

75 million tons CO2
Estimated annual emissions avoided by displacing the use of coal.

China Resources Gas

7 million people
Estimated number of city dwellers in Santiago de Chile provided with access to potable water.

Aguas Andinas

1.3 billion litres of water
Conserved on average every year, enough to fill over 500 Olympic-sized swimming pools.

Taiwan Semiconductor Manufacturing

40 million people
Provided with free dental consultations in India.

Colgate Palmolive India

11 million people
Benefited from improvements in their mental and physical wellbeing via the Vitality programme.

Discovery

45%
Decrease in the percentage of customers using firewood or charcoal briquettes at home in 2019.

BTPN Syariah

25 million people
Estimated number of unbanked and underbanked adults provided with access to finance.

HDFC Bank, BTPN Syariah, Credicorp, Bank Rakyat

3.4 litres of water
Saved for every person on the planet from less water used per ton of production over the past 10 years.

Unilever

1,487 tons of sugar
Prevented from entering the market in 2019 by reformulating private brand products.

Jerónimo Martins

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