Our 2022 engagement priorities to address climate change and biodiversity

COP26 served to further highlight the scale of the challenge in addressing climate change.
January 2022
  • Engagement priorities for 2022 include climate change and biodiversity, the chemicals industry, human rights and ESG risk metrics in executive pay
  • 1773 engagements with 940 companies in 2021 sees continued engagement momentum to facilitate positive ESG and investment outcomes

LONDON, 24 January 2022 – BMO Global Asset Management (EMEA), now part of Columbia Threadneedle Investments, today announces its engagement priorities for 2022, as it continues to guide companies in support of positive sustainability outcomes.

 

In the year ahead, BMO GAM (EMEA) has pledged to continue to prioritise engagement with companies on key environmental issues including climate change and biodiversity, as well as human rights issues and executive pay.

 

Claudia Wearmouth, Co-Head of BMO GAM (EMEA)’s Responsible Investment team, said: “The events of the past year, including the ongoing Covid-19 pandemic and extreme weather events, have reinforced the importance of creating a more resilient future. Climate change, biodiversity loss and human rights are all issues that require urgent action.

 

“Active ownership is a key cornerstone of our work and we have a role to play as a conduit to concentrate and amplify our clients’ voices with companies. It can take time to build consensus for change within a business and to develop the tools to do so. We support companies on that journey, but in 2022, a key focus of our work will also be holding companies accountable on their commitments.”

 

BMO GAM Engagement Priorities in 2022

 

Addressing climate change and biodiversity remains a core focus

BMO GAM (EMEA) has been engaging with companies to encourage the adoption of climate-friendly business models for more than two decades. This focus will continue in 2022, with climate engagement activity focusing on the phase-out of unabated coal generation by 2030 for developed markets, and 2050 for developing markets, both of which are essential to achieve the Paris goals. While engagement will span all sectors, BMO GAM (EMEA) will concentrate activity on the mining and utilities industries, building on its efforts in 2021, which saw engagement across these sectors, identifying laggard countries and companies where there is the most potential for change, including the US, Japan and South Korea.

 

Further, BMO GAM (EMEA) will hold companies to account on net zero pledges, engaging with financial institutions to ensure the thorough implementation of net zero strategies, including a carefully managed decline of coal, oil and gas within lending and underwriting portfolios.

 

Alice Evans, Co-Head of BMO GAM (EMEA)’s Responsible Investment team, continued, “COP26 in November last year served to further highlight the scale of the challenge in addressing climate change. But it also proved a catalyst for action, with the push for private sector commitments resulting in over 3,000 corporates and financial institutions, representing $130 trillion in assets, taking on net zero commitments. Concerns on net zero-washing abound and our 2022 engagement agenda will have a sharp focus on implementation, ensuring that these commitments are backed up by concrete actions to decarbonise.”

 

In 2021, BMO GAM (EMEA) highlighted biodiversity as a key focus area, one that will continue this year, with increased engagement with companies in the most critical sectors including food and beverage, extractives, materials, transportation and finance to set out strategies, governance, targets and metrics to mitigate biodiversity risks.

 

ESG risk metrics in executive pay

 

Robust net zero strategies will require bolstering board-level expertise and oversight of climate risks and opportunities, as well as linking executive remuneration to the achievement of climate-related objectives. As part of its efforts to hold companies to account, BMO GAM (EMEA) will engage with companies across industries including oil and gas, mining, materials, electric utilities, transportation and automotive and financial institutions on how executive pay is linked to climate strategy.

 

Specifically, BMO GAM (EMEA) expects targets to be constructed to align executive incentives to the interests of long-term shareholders. It will advocate for the introduction of risk-related preconditions to bonus awards, ensuring inappropriate incentive payments are not awarded in the event a company’s financial strength or credit quality might deteriorate.

 

A spotlight on the chemicals industry

 

With climate change causing changes to the scale and impact of extreme weather events, BMO GAM (EMEA) will engage with companies with supply chains or operations in areas of high vulnerability, to improve their current risk assessment and mitigation efforts, with a focus on the chemicals industry. It will also seek to encourage chemicals companies towards a sustainable transition by reducing greenhouse gas emissions, minimising harmful effects on local communities, reducing plastic waste and investing in recycling technologies to “close the loop” on plastic waste through the adoption of a circular economy.

 

Protecting human rights within supply chains

 

Effective supply chain management practices are essential to ensuring the protection of human rights and in 2022 BMO GAM (EMEA) will engage with corporates on implementing human rights due diligence across supply chains, as part of efforts to protect human rights, and enhance business continuity and general supply chain management practices.

 

Furthermore, with an over-reliance on social audit firms to assess supplier compliance, BMO GAM’s Responsible Investment team will focus on ensuring audit quality, and for companies in apparel, retail and service sectors, on appropriately fulfilling their human rights and labour standards obligations.

 

BMO GAM (EMEA) has a 25-strong responsible investment team engaging with companies across sectors. In 2021, the team engaged with 940 companies across 49 geographies resulting in 388 milestones (outcomes as a result of direct engagement).

 

Now part of Columbia Threadneedle Investments, the combined group will continue to leverage BMO GAM (EMEA)’s leading responsible investment expertise, as it seeks to drive real world change, deliver client outcomes and help achieve a sustainable future, through active management.

 

Media Contacts:

 

BMO Global Asset Management

Campbell Hood

[email protected]

Tel: +44 (0) 20 7011 4243

 

FTI Consulting

[email protected]

Tel: +44 (0) 20 3727 1888

 

About BMO Global Asset Management (EMEA)

 

BMO Global Asset Management (EMEA) is part of Columbia Threadneedle Investments, a leading global asset management group that provides a broad range of actively managed investment strategies and solutions for individual, institutional and corporate clients around the world.

 

Together BMO Global Asset Management (EMEA) and Columbia Threadneedle Investments have more than 2500 people, including over 650 investment professionals based in North America, Europe and Asia[1]. We manage £530bn / €617bn / US$714bn[2] of assets across equities, fixed income, multi-asset, solutions and alternatives.

 

Columbia Threadneedle Investments is the global asset management group of Ameriprise Financial, Inc. (NYSE:AMP), a leading US-based financial services provider, which has total assets under management and administration of more than $1.3 trillion[3].  

 

 

 

[1] As at 8 November 2021, Columbia Threadneedle Investments including BMO GAM (EMEA)

[2] As at 30 September 2021

[3] As at 30 September 2021