5 responsible investment themes to watch

Green_energyMale dominated industries will come under increasing spotlight as the awareness-raising  #metoo campaign continues this year, a fund management firm predicts.

BMO Global Asset Management highlights five responsible investment themes to watch in 2018, including a “watershed for working culture” following the scale of sexual assault and harassment that Me Too revealed, particularly in the workplace.

The five themes are found in the firm’s ‘Responsible investment report’ published today, along with the finding that shareholders concerned about climate change had their most successful year in 2017.

BMO GAM said there were 199 instances of corporations responding to shareholders over climate change by improving policies or practices following engagement, including agreements to improve public reporting and changes to business strategy.

“Intensive investor pressure” was partly behind the momentum, as was the publication of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), BMO GAM said.

The five themes to watch this year are:

    •  A “watershed for working culture” may occur as the initial outrage and anger from #metoo is now being mobilised toward action to tackle the root causes. “In 2018, we believe there will be heightened focus on workplace culture – particularly in male-dominated industries – and on women’s representation not just on Boards, but in senior management,” the firm said.

    • With more than eight million tonnes of plastic discarded into the oceans every year, expect to see more policy initiatives with single-use plastic bottles a likely target.

    • Automated commerce is now at the cutting edge of retail technology, but with its reliance on consumer dat, regulations on data use, such as the EU’s General Data Protection Regulation, are becoming far more stringent, with high penalties for misuse.

    • Regulatory and consumer pressure on sugar rises as health evidence mounts up. Obesity, formerly seen as a rich-world problem, is increasingly rife in many emerging markets. Governments are getting tougher, looking at measures including labelling schemes and taxation. Food and beverage companies will have to re-formulate recipes. Those who mismanage the process may lose customers – but those slow to act are open to longer-term risks of diminished sales and reputation.

    • The UN’s 17 Sustainable Development Goals (SDGs) are a “blueprint for a better world” and identify 169 targets to track progress towards a 2030 target date. Increasingly, companies, and investors are expected to recognise that their actions have wider consequences on the economy and society.

BMO GAM’s Europe, Middle East and Africa business voted at nearly 9,500 company meetings worldwide in 2017 and last year the firm took action on fossil fuel companies.

Vicki Bakhshi, director of governance and sustainable investment at the firm, said: “Engagement by investors continues to be a powerful tool both for tackling ESG [environmental, social, governance] risks at the companies we invest in, and achieving wider societal change.”

Bakhshi took part in a Funds Europe ESG panel last year.

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