Global Equities

Resource Efficiency

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

Global Equities Team

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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.

The world has a finite pool of resources, and one of the great challenges facing societies is how to drive economic growth without straining these resources to breaking point, or degrading our environment through their usage.

Zero hunger SDGs          SDG - 6 Clean water and sanitation          SDG - 12 Responsible consumption and production


This is the art of doing more with less, and doing it cleanly and sustainably. Examples of resource inefficiency are distressingly common. Only 50% of the edible food we produce is ever actually eaten. In the UK, trucks on average carry only a 27% load factor, meaning a remarkable 73% of haulage capacity is wasted. Despite being the most abundant compound on the planet, one in nine people do not have access to clean, safe water.

Corporations can and must be at the forefront of driving a more efficient use of energy, water and other vital materials, whether at the stage of extraction, transport or consumption. In our Responsible Global Equity Strategy, we are invested in some of the world’s most innovative companies whose products and services are driving resource efficiency. An outstanding example is Xylem, whose mission statement is simply “to solve water”. Xylem helps companies acquire, move, treat and test water efficiently, minimising losses. Driving resource efficiency not only brings about a more sustainable planet; it can also make businesses less wasteful and more profitable.

Our global economy was built on a linear system, where we use resources once and then dispose of them – we urgently need to shift to a circular economy.

Nick Henderson, Director, Portfolio Manager, Global Equities

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.

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

Engagement in focus – here we detail the businesses we own within the ‘resource efficiency’ theme, alignment between their activities and the SDGs together with our engagement efforts.

Company No. of employees Company description SDG Alignment Number and subject of engagement(s)

AO Smith Corp Capital Goods
UNITED STATES

15,100

Manufacturer of residential and commercial water heating and water treatment equipment.

+ Target 6.4; Share of company revenue 100%
Enables greater water efficiency through the provision of water filtration products

 

3: Climate change, Labour standards, Corporate governance

Kubota Corp
Capital Goods
JAPAN

41,027

Manufacturer of farm machinery and industrial machinery, and associated products.

+ Target 2.4; Share of company revenue 83%
Supports sustainable food production through the sale of agricultural machinery


+ Target 9.1; Share of company revenue 16%
Promotes sustainable infrastructure, particularly in water where it has a range of engineering solutions and products

1: Climate change, Environmental stewardship, Corporate governance

Rotork PLC
Capital Goods
BRITAIN

3,686

Specialist in actuators, systems and related products to the valve industry.

+ Target 9.1; Share of company revenue 100%
Supports more resilient infrastructure through the production of a wide range of industrial instruments and products

 

4: Climate change, Labour standards, Corporate governance

Smurfit Kappa Group PLC
Materials
IRELAND

46,000

Manufacturer of a range of paper packaging products.

+ Target 12.5; Share of company revenue 100%
Provides environmentally sustainable paper-based packaging, reducing waste generation

 

4: Environmental stewardship, Labour standards, Corporate governance

Suez
Utilities
FRANCE

88,576

Global waste and water utility company. The company collects, treats, and distributes drinkable water, and provides services for waste collection, recycling, recovery, treatment and disposal.

+Target 6.1; Share of company revenue 27%
Supports universal access to affordable water through its water utility services, including customers in emerging markets and low-income countries


+Target 6.3; Share of company revenue 14%
Improves water quality through its water technology solutions


+ Target 6.4; Share of company revenue 23%
Tackles water scarcity through its operations in emerging markets and low-income countries


+ Target 12.4; Share of company revenue 36%
Provides waste and recycling services

5: Environmental stewardship, Business conduct, Labour standards, Public health, Corporate governance

Tractor Supply Co
Retailing
UNITED STATES

16,000

Farm and garden retailer in the United States.

n/a

0

Xylem Inc/NY
Capital Goods
UNITED STATES

17,000

Equipment and service provider for water and wastewater applications across the full cycle of water services.

+Target 6.4; Share of company revenue 71%
Enables greater water efficiency through its comprehensive range of water solutions


+ Target 9.4; Share of company revenue 29%
Supports greater water resource efficiency by producing measurement and control systems

1: Environmental stewardship, Labour standards, Public health

1 Source: World Health Organization, Universal Health Coverage Monitoring Report, 22 September 2019. https://www.who.int/news-room/detail/22-09-2019-countries-mustinvest-at-least-1-more-of-gdp-on-primary-health-care-to-eliminate-glaring-coverage-gaps

Where company revenues do not add to 100%, then there is no SDG link for the remainder of the business revenues

Read our BMO Responsible Global Equity Strategy ESG Profile and Impact Report 2020

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