Our latest engagement: a focus on the environment

Discover our Q4 2020 engagement on the environment.
February 2021

Risk warnings

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.

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.

To secure a sustainable future, we must take better care of our planet. We engage companies on environmental issues, including climate change, deforestation and plastic pollution – discover our engagement highlights from the final quarter of 2020.

Banks up the ante on climate risk management

Engagement update

In the world of banking, Q4 2020 was dominated by a handful of 2050 net-zero pledges and communication around respective implementation plans. Banks such as JPMorganChase, Morgan Stanley, HSBC and NatWest all announced net zero financed emissions plans and provided additional detail on their implementation during dedicated investor meetings. Barclays publicly outlined its progress in implementing the net zero commitment that shareholders had requested at its annual general meeting this past April.

An important element of a robust net-zero strategy is a well-anchored climate risk management system. To strengthen our own engagement efforts in this regard, we have joined a working group under the umbrella of the Institutional Investors Group on Climate Change (IIGCC) created to help align the banking sector with the goals of the Paris Agreement. We also teamed up with engagement consultants Asia Research and Engagement (ARE) and a small set of other investors to jointly reach out to the five biggest banks in China to enter a dialogue on climate risk and opportunities management, and related transparency.

An important element of a robust net-zero strategy is a well-anchored climate risk management system.

Vicki Bakhshi, Director, Responsible Investment

Collaborating to address deforestation issues in Brazil’s Cerrado biome

Engagement collaboration

In Q4, the Cerrado Manifesto Statement of Support (SoS) group, of which BMO GAM is a leading investor, made a joint effort to re-energise engagement with a group of global soft commodities traders sourcing soy from the Cerrado region of Brazil. Joint letters were sent in October to affected companies to request the setting of time-bound deforestation and traceability targets, clear reporting on volumes of soy sourced from recently deforested land, and a clear and time-bound response to noncompliant suppliers.

While the traders’ responses varied in terms of addressing the key points, we were overall disappointed by the long timeframes and lack of time-bound targets for achieving a deforestation-free supply chain, and the absence of traceability and transparency metrics, especially for indirect suppliers. We also undersigned a second SoS letter to focus the traders’ attention on two key requests: commit to and announce a deforestation- and conversion-free (DCF) cut-off date for soy sourced directly or indirectly from within the Cerrado biome, and to adopt more robust traceability and transparency processes to ensure that the soy supply chain can be effectively monitored to combat deforestation.

Risk warnings

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.

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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Interested in discovering more of our Q4 engagement and voting highlights, as well as company case studies? Download our Stewardship Report to learn more.

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