Fossil fuels: BMO Global AM sets exclusion policy

Fossil fuels: BMO Global AM sets exclusion policy

Canadian investment firm BMO Global Asset Management has announced it will exclude all companies with fossil fuel reserves from its Responsible Funds range, as part of an updated climate change policy.

The policy is effective immediately for the global and emerging market strategies within the Responsible Funds range, and will extend to the full fund range from 1 January 2020.

BMO Global Asset Management said the update forms part of a new policy approach focused on how investors in the Responsible Funds can support the transition to a low-carbon global economy, covering the funds’ approach across all the greenhouse gas-intensive sectors.

The funds that will be covered by the updated policy include:

• Responsible UK Equity Growth Fund
• Responsible UK Income Fund
• Responsible Global Equity Fund
• Responsible Sterling Bond Fund
• Responsible Global Emerging Markets Equity Fund

Commenting on the updated climate change policy, Vicki Bakhshi, director in the governance and sustainable investment team, said: “If all current known reserves are extracted and burnt, we know that the world would not meet the 2 degrees temperature limit established under the Paris Agreement. As such, we have come to the view that investment in companies with fossil fuel reserves is increasingly incompatible with the ethical and sustainability objectives of the Responsible Strategies range that we run.

“We also see a growing investor demand, from both institutions and individuals, for investment strategies that allow them to avoid investment in these companies, yet there is a distinct lack of choice of such strategies in the market. By implementing this policy not just on a single fund but our entire Responsible range, we are offering a set of investment strategies that allow investors to align their beliefs with their desire for long-term returns.

“Having said this, it is not just about what we exclude. On climate change, as with other issues, these funds aim to positively direct capital towards companies operating in a sustainable way, or delivering solutions to global challenges, including climate change.

“We also believe in being a responsible owner of capital. Both in the Responsible Strategies, and more widely across our investments, we continue to use our voice as an investor to engage with companies and policymakers to encourage them to adopt strategies to make the transition to a low-carbon global economy”.

Justin Welby, president, BMO Global Asset Management Responsible Investment Advisory Council, added: “This policy is a most impressive piece of work and puts BMO Global Asset Management in the front line as a leader on the issue of climate change.”

BMO Global AM had total assets under management of CDN$692bn (€463.3bn) as of 31 January 2017.