Investor pressure leads to climate change improvements

Climate change shareholder resolutions won majority support in 2017 at company meetings, making climate change the most successful area of engagement in 2017, according to BMO Global Asset Management.

In its annual report on responsible investment, BMO said 199 instances of change were seen last year, where companies improved policies or practices following engagement, with the most significant improvements related to climate change. As well as increasing investor pressure, this was driven by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).

In addition to climate change, executive remuneration continued to be a contentious issue, according to BMO. Richard Wilson, CEO, commented: “Asset managers have a privileged and trusted position as stewards of capital, which gives us both influence and responsibility. Through using these effectively, I believe the industry can, and should, make its own contribution towards achieving the world’s sustainability needs, as set out in the United Nations Sustainable Development Goals (SDGs).”

For 2018, BMO predicted that the #metoo movement will have an impact, wth more focus on workplace culture and woman’s representation on boards and in senior management. Another rising issue is expected to be the use of plastic, with more use of policy experiments such as the UK’s plastic bag charge, cutting usage by 85%. Consumer data protection issues and taxes or other measures to reduce the use of sugar are also expected to become more important issues for ESG and engagement.

BMO said that the UN’s 17 Sustainable Development Goals (SDGs) have become important tools for progress on ESG issues. It stated: “We are shifting to a new paradigm where both companies, and investors in them, are expected to recognise that their actions have wider consequences on the economy and society; and to think deeply how they can square their duties to deliver risk-adjusted returns with the imperative to manage these consequences.”