Download - Responsible For professional investors only Global Equities · 2019-10-01 · Lightening the load Classification: only to be shown if not public 11 1Obesity costs US healthcare system

Classification: only to be shown if not public

Embracing sustainability in global

equitiesJamie Jenkins, Nick Henderson

Mark Bain

Responsible

Global

Equities

770757 – UK

For professional investors only

Classification: only to be shown if not publicInvestment risk

2

The value of investments and any income derived from them can go down as well as up as a result of

market or currency movements and investors may not get back the original amount invested.

Screening out sectors or companies may result in less diversification and hence more volatility in investment

values.

Certain investments may be difficult to sell or buy at a suitable time or at a reasonable price and may

adversely affect the value of your investment.


Nick Henderson

Director, Global Equities

Nick Henderson is a Portfolio Manager in the Global Equities team. He is the alternate manager of the BMO

Responsible Global Equity Fund. He joined both the firm and the team in 2008. Prior to joining the firm, Nick

graduated with a Bachelor of Science degree in Economics from the University of Bristol, he has the IMC qualification

and is a CFA Charterholder.

Biography – Global Equities team

Jamie Jenkins

Managing Director and Co-Head of Global Equities

Jamie Jenkins is Co-Head of the Global Equities team. Jamie joined the firm in 2000 and is the lead manager of the

BMO Responsible Global Equity Fund. Prior to joining the firm, Jamie worked at Hill Samuel Asset Management as a

Japanese Equities Fund Manager. He holds an MA in History from the University of Edinburgh, has IMC and IIMR

qualifications and is a member of the CFA Society of the UK.

3


4

1. What does sustainability mean to the team and how

does this link to our search for high quality

companies?

2. Which key themes are driving the challenges and

opportunities the team seek to embrace?

3. Engagement matters! How does BMO seek to lead

on transparency and disclosure to investors?

Key learning

outcomes:

Classification: only to be shown if not publicKey facts

5

Source: BMO Global Asset Management as at 31-Aug-19.

Responsible Global Equity has key attributes investors seek in

a core global equity portfolio.

£587MTotal AUM

Has scale and

importantly

scalabilitySince

1987Launched in

5 Investment

Professionals

14 Average Years of

Experience

Team at a glance

50stocksFocused portfolio of 40-

60 stocks

89.9%

Active share

“”

We believe that quality,

responsible investing

should be considered

mainstream, not just for

those with specific “ethical”

investment requirements

Classification: only to be shown if not publicMaking a positive impact

6

Source: BMO Global Asset Management as at 31-Sept-19. ESG = Environmental, Social & Governance.

Jamie Jenkins

Portfolio Manager

(22)

Nick Henderson

Portfolio Manager

(11)

Andy Penman

Analyst

(26)

Laura Wood

Analyst

(7)

Harry Waight

Analyst

(6)

Ambition

• We focus on quality, growth companies that are demonstrating a clear commitment to sustainability

• We are long-term, stock-picking investors with a high active share

• Engagement is an integral part of our investment philosophy

• We believe our responsible approach can enhance returns and reduce risks for our clients

• Our ambition is to deliver top-quartile returns and to be a leader in specialist, global ESG investing

Classification: only to be shown if not publicQuality meets sustainability

7

ESG = Environmental, Social & Governance.

• Proven

management

team

• Consistent

execution

• Responsible

capital

allocators

• Appropriate

incentives

• Competitive

advantages

• Long-term growth

drivers

• Strong sustainability

characteristics

• Understandable

• Identification of

long-term value

creators

• Sustainable

superior returns

• Margin of safety

• Use of discounted

cash flow &

relative valuation

Classification: only to be shown if not publicSustainability challenges create opportunities

8

This does not constitute a recommendation to buy or sell any particular security.

To address… … and grow

Inefficient use of global

resourcesby providing mitigating products/services

Global healthcare challengesthrough innovative testing and

diagnostics solutions

Unhealthy lifestylesby addressing nutritional needs

and providing food solutions

Energy intensive industries by reducing Scope 1,2 & 3 GHG emissions

A lack of access to finance by education for financial inclusion

Classification: only to be shown if not publicA thirsty world

9

Average annual impact from

inadequate drinking water

and sanitation services*,

water-related disasters,

epidemic and earthquakes

and conflicts.

*In 2015, an estimated 2.1 billion people lacked access to safely managed drinking water services and 4.5 billion lacked access to safely managed sanitation services (WHO/UNICEF, 2017a). However, there are no data available estimating what proportion of these people were ‘affected’, nor what the resulting overall economic damage would equate to. Source: The United Nations World Water Development Report 2019. People affected are defined as those requiring immediate assistance during a period of emergency; this may include displaced or evacuated people..

People

affected*

People

killed

Economic

damage

Water related

No data

Drought FloodingInadequate water and

sanitation

Earthquakes

& epidemicsConflict

65million6 million106 million55 million

1100 6000 56 000 75000

(war deaths)78000

(deaths from

diarrhoea & cholera)

No data US$5.4bn US$31.4bn US$30bn No data


10

Source: BMO Global Asset Management, Xylem as at 31-Mar-18. 1Raymond James Xylem Initiation report 03-Sep-18. For illustrative purposed only. This does not constitute a recommendation to buy or sell any particular security.

• A leading global water technology company,

committed to “solving water”, with clear

alignment to SDG 6, particularly target 6.4.

• Water issues are local, yet global too:

– From Flint, Michigan to Gujarat, India

and to Cape Town, South Africa. Critical

need for investment and modernisation

across the water value chain

– There is less cyclicality to the water

cycle

– Water has no substitutes

• Xylem “only” has an estimated 10% share

of a ~$56bn addressable global market, so

a long runway of growth ahead of it1

Classification: only to be shown if not publicLightening the load

11

1Obesity costs US healthcare system $150-$200bn annually - Cawley J and Meyerhoefer C. The Medical Care Costs of Obesity: An Instrumental Variables Approach. Journal of Health Economics, 31(1): 219-230, 2012. 2Obese adults spend 42% more on direct healthcare costs than health adults (in the US) - Finkelstein EA, Trogdon JG, Cohen JW, Dietz W. Annual Medical Spending Attributable to Obesity: Payer-and Service-Specific Estimates. Health Affairs, 28(5): w822-831, 2009. 3Trust for America's Health. Prevention for a Healthier America: Investments in Disease Prevention Yield Significant Savings, Stronger Communities. Washington, D.C., 2008. 4Overcoming obesity: An initial economic analysis - McKinsey & Co, November 2014, citing WHO. Chart source: Overcoming obesity: An initial economic analysis - McKinsey & Co, November 2014.

Obesity costs

$150-200bn annually in

USA alone1

42% increase in

personal

health

costs2

$10/person investment in physical

activity, improving

nutrition and

preventing smoking,

could save $16bn

annually in 5yrs3

Obesity is

responsible for

around 5% of

all global

deaths4


12

Source: BMO Global Asset Management, Kerry Group 31-Dec-18. For illustrative purposes only. This does not constitute a recommendation to buy or sell any particular security.

• Ireland-based world leader in food ingredients

and formulations, enabling the global trends in

nutrition, health and wellness, and the shift to

“clean labelling”

• Working with major FMCGs, Kerry are enabling

food producers produce food products with:

– Lower: sugar, fat & salt content

– Same or better: taste, shelf life, price

• We engaged the company five times in 2018,

including addressing SDGs 8 and 12,

regarding:

– raw materials and supply chain policies on

deforestation, palm oil

– Kerry’s modern slavery statement

Classification: only to be shown if not publicFinancing the future, responsibly

13

Source: BMO Global Asset Management, Bloomberg. 20-Sept-19. For illustrative purposes only. This does not constitute a recommendation to buy or sell any particular security.

Recent Initial Public Offerings with Corporate Governance Concerns

Past performance should not be seen as an indication of future performance.

20

40

60

80

100

120

140

160

180

Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19

Share

prices,

rebased t

o M

SC

I W

orld B

enchm

ark

at

date

of

IPO

MSCI World Index Spotify Technology SA Lyft Inc A Uber Technology Inc Snap Inc A


14

Source: BMO Global Asset Management, SVB. For illustrative purposes only. This does not constitute a recommendation to buy or sell any particular security.

• Founded in 1983, SVB Financial Group have

made it their mission to be at the centre of

venture backed start-ups, and increase their

clients’ odds of success

• 90% of seed round funded start-ups fail

• SVB now has a 50% market share of US

venture backed start-ups

• Expanding their footprint into

international markets

• Recent IPOs have been beset by investor

concerns around culture and corporate

governance

• SVB have the influence to address this,

and this forms the basis of our

engagement activity

Classification: only to be shown if not publicActive engagement

15

• We focus on encouraging companies to address strategic issues including environmental, social and governance factors, with a

view to reducing risk and supporting long-term performance

• We use constructive confidential dialogue, typically working one-to-one with companies, but taking a collaborative approach where

this has more impact

• Effective engagement requires:

– A deep understanding of how ESG issues impact mainstream business strategy

– The building of long-term relationships with companies

– Local knowledge and context

– Access to senior management and Board

Our aim

To reduce risk, enhance long-term performance and encourage a positive contribution to broader social and

environmental issues


16

Source: BMO Global Asset Management as of end Dec-18.

Portfolio-weighted carbon intensity

If you can measure it, you can manage it

107118

190 191

0

50

100

150

200

End Dec 2017 End Dec 2018

Tons C

O2 /

sale

s $

m

Total water use

114,985

359,936

0

50000

100000

150000

200000

250000

300000

350000

400000

22.6%

15.0%

22.0%

13.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Percentage ofwomen on boards

(average)

Percentage offemale excecutives

(average)

Gender representation R&D as % of turnover

6.2%5.8%

0

1

2

3

4

5

6

7

8

(weighted average , ‘000 cubic meters)

Responsible Global Equity Benchmark


SDG alignment and underlying targets

17

Source: United Nations, BMO Global Asset Management. As at 31-Dec-18. The above breakdown of value within the strategy is based on a company’s “Primary” link to the SDGs through its core business mandate. Our strategy’s companies do not address all 17 SDGs on a Primary basis. We have determined that eight companies (representing ~14% of the strategy) do not have strong connections to a particular SDG within their core businesses and, as such, have not been assigned a Primary link. SDG = Sustainable development goals.

BMO Responsible Global Equity Fund

2.1 End hunger and ensure access to safe and nutritious food

2.4 Implement climate-resilient and sustainable food production

3.3 End AIDS, TB, malaria and other water-borne and communicable diseases

3.4 Reduce mortality from non-communicable diseases and promote mental health

3.6 Halve deaths and injuries from road traffic accidents

3.8 Access to medicines and health-care

3.9 Reduce deaths and illnesses from pollution and contamination

6.1 Achieve universal access to safe & affordable drinking water

6.3 Improve water quality by reducing pollution

6.4 Increase water-use efficiency to address water scarcity

8.2 Achieve greater productivity through innovation

8.10 Increase access to finance

9.1 Develop resilient and sustainable infrastructure

9.3 Increase access to finance for SMEs

9.4 Upgrade and retrofit industries to increase sustainability

9.c Ensure universal and affordable access to technology

12.4 Manage chemical usage and waste throughout their life cycle

12.5 Reduce waste through prevention, reduction, recycling and reuse

12.6 Encourage companies to adopt sustainable practices and enhance ESG reporting

Other includes smaller-weighted SDGs

No Link

12.6

Other

2.4

2.1

3.9

3.3

3.4

3.6

3.8

6.16.3

6.4

8.2

8.109.3

9.4

9.c12.4

12.5

2% 3%

15%

5%

28%

14%

4%

29%

9.1

Classification: only to be shown if not publicMaking a positive impact

18

Source: BMO Global Asset Management as at 30-Sep-19. ESG = Environmental, Social & Governance.

• We focus on quality, growth companies that are

demonstrating a clear commitment to sustainability

• We are long-term, stock-picking investors with a high active

share

• Engagement is an integral part of our investment

philosophy

• We believe our responsible approach can enhance returns

and reduce risks for our clients

• Our ambition is to deliver top-quartile returns and to be a

leader in specialist, global ESG investing

“We exist to convene,

catalyse, and empower

change that sustains

growth for good.”

Darryl White, Chief Executive Officer, BMO

Financial Group

World Economic Forum, 2019

“”“”


19

We believe that quality, responsible investing should be considered mainstream, not just for those

with specific “ethical” investment requirements.

1. What does sustainability mean to the team and how

does this link to our search for high quality

companies?

2. Which key themes are driving the challenges and

opportunities the team seek to embrace?

3. Engagement matters! How does BMO seek to lead

on transparency and disclosure to investors?

Key learning

outcomes:


Q&A

20


Appendix

21

Classification: only to be shown if not publicSpecialist Global ESG Equity capability

22

Active ownership – engagement and voting

ESG integration

Exclusions

“Avoid”

Sustainability-focused

“Invest”

Driving change

“Improve”

Excludes companies from the

portfolio on the basis of their

products (e.g. cluster

munitions, tobacco) or

behaviour (global

norms such as UN Global

Compact)

Invests in companies providing

sustainability solutions and/or

companies making a positive

contribution to society and/or

the environment

Engagement to encourage

companies to improve both their

product and conduct, including

supporting the ambitious UN

Sustainable Development Goals

BMO Responsible Global Equity

BMO Sustainable Opportunities Global Equity

BMO SDG Engagement

Global Equity

Impact reporting

Classification: only to be shown if not publicInvestment process

23

ESG considerations embedded throughout investment process

Source: BMO Global Asset Management. ESG = Environmental, Social & Governance; RI = Responsible Investment, RIAC = Responsible Investment Advisory Council.

>>>>

Watch list (80-100 stocks)

Global

universe

• Ethical &

sustainability

criteria applied to

ideas

• Stocks that pass

enter investable

universe

• RI team

• RIAC

Screening

• High quality

• ESG opportunity

& risk

• Strong

management

• Valuation upside

• Analysts/PMs

• RI team

Company

analysis

• Investment

decision

• Fund risk

considered

• Weights

determined

• PMs

Portfolio

construction

40-60 stocks~5,000 stocks

Portfolio

&

active

engagement

• Company

meetings

• Industry

conferences

• ESG research

• Sector/theme

research

• Analysts/Portfolio

Managers (PMs)

Idea

generation

~1,000 stocks

• PMs

• RI team

• Risk team

> > > >

>

Classification: only to be shown if not publicIdea generation

24

The strategy seeks to actively invest in companies that stand to benefit from or substantially

contribute to trends in sustainable development

Source: BMO Global Asset Management as at 30-Aug-19. Figures subject to rounding.>

40%

Technological innovation

21%

Health and well-being

16%

Access to finance

10%

Resource efficiency

6%

Sustainable mobility

4%

Energy transition

Classification: only to be shown if not publicScreening – ethical and sustainability criteria

25

• Alcohol

• Gambling

• Nuclear power generation

• Oil, gas and coal reserves

• Pornography

• Tobacco

• Weapons

Note that this is not an exhaustive list of screens. Full details of Responsible Investment criteria and thresholds used are available at www.bmogam.com.

• Environment– Arctic and ecologically-sensitive operations

– Environmental management

• Social– Animal welfare

– Health and safety

– Human rights and oppressive regimes

– Labour standards

• Governance– Business ethics

Product-based

Conduct-based

Classification: only to be shown if not publicCompany analysis

26

• ESG considerations

• Stakeholder sustainability

analysis and ESG score

Additional inputs by:

• RI Team ESG tearsheets

• ESG analytics reports

• ESG risk tool

• RI viewpoints

ESG = Environmental, Social & Governance; RI = Responsible Investment.

Fundamental analysis

ESG analysis

Investment thesis and

note creation

• Investment notes (initiations)

• Update notes

• Review notes

Overview Rating

Excellent Good Fair Bad

Quality

Valuation

ManagementMe

tric

s

Fundamental Matrix• Company background, strategy,

financials, industry dynamics

• Competitive advantages

• Management team assessment

• Detailed valuation work (DCF and

relative valuation)

ESG and Sustainability Analysis

Positive Sustainabillity: Stakeholders

Customers ✓ Sophos helps SMEs defend themselves from cyber-attacks

Suppliers ↔ Skilled workers, mostly in the UK. Employees' satisfaction reported at 87%

in 2018 Accounts

Shareholders ↔ BMO voted against the remuneration report as it was seen as too

insufficiently aligned with shareholders' interests.

Employees ✓ Employee-friendly culture. SAYE and ESPP schemes for 'most' employees.

2/7 (22%) female at board level, 23% overall.

Industry ✓ Founding member of 'Tech She Can'. Slightly better than industry on the

gender pay gap at 23%.

ESG Score 2

Applicable UN Sustainable Development Goals

9. Industry, Innovation and Infrastructure

-

-

Votes Against management last 2 years? Yes

Number of BMO Engagements YTD 0

Classification: only to be shown if not publicPortfolio construction and monitoring

27

*May be considered for Watch list. For illustrative purposes only. **Discounted cash flow model.

Valuation guide:

Undervalued Significant upside to blended price target (DCF** & relative valuation), typically more than 20%

Fairly valued Modest upside to blended price target

Overvalued Downside to blended price target

Undervalued

Fairly valued

OvervaluedNo investment

(Watch list)*

High weighting

2.5-5.0%

Low-medium

weighting 1.0-2.5%High quality

Medium/

Low quality

Portfolio

No investment (Watch list)*

Portfolio monitor

Risk monitor

>

>

>

>

>

>

>


Key Fund characteristics

28

The BMO Responsible Global Equity (OEIC) aims to provide capital growth by investing in an ethically screened and diversified

fund of global equities. The fund seeks to invest in companies making a positive contribution to society and the environment,

while avoiding investment in companies with damaging or unsustainable business practices.


Source: BMO Global Asset Management as at 31-Aug-19.

Detail Fund specifics

Fund BMO Responsible Global Equity (OEIC)

Universe Global Equities

AUM £587 million

Number of stocks range: 40–60

Tracking error range No explicit limit

Turnover: 20–30%

Benchmark: MSCI World TR

Internal stock limits Max 5% per stock in large cap

Max 3% per stock in small cap

Management fee: Share Class 1: 1.5% Share Class 2: 0.75%

ISIN: 1: GB0030833650 2: GB0033145045


29

Regional allocation (absolute holding) Regional allocation (relative holding)

Source: BMO Global Asset Management as at 30-Aug-19. Benchmark: MSCI World TR. Figures subject to rounding.

Profile


North America

61%

Europe16%

Japan11%

United Kingdom

6%

Other4%

Pacific3%

-6.1

-1.4

0.4

0.6

2.9

3.6

-10% -5% 0% 5% 10%

North America

Pacific

United Kingdom

Europe

Japan

Other


30

Sector allocation (absolute holding) Sector allocation (relative holding)

Source: BMO Global Asset Management as at 30-Aug-19. Benchmark: MSCI World TR. Figures subject to rounding.

Profile


Information technology

26%

Industrials17%

Health care17%

Financials16%

Consumer discretionary

10%

Materials6%

Real estate3%

Consumer staples2%

Utilities1%

Cash1%

-8.6

-6.6

-5.1

-2.4

-0.7

-0.3

0.9

1.0

1.6

4.2

6.3

9.8

-10% 0% 10%

Communication services

Consumer staples

Energy

Utilities

Real estate

Consumer discretionary

Financials

Cash

Materials

Health care

Industrials

Information technology


Profile

31

Source: BMO Global Asset Management as at 30-Aug-19. Benchmark: MSCI World TR. *Portfolio turnover calculated with SEC methodology. Figures subject to rounding.


Portfolio turnover %*

78

5158 56

3225

34

1914

1911

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD

Jamie Jenkins appointed lead PM in August 2012

Market capitalisation ($) Fund weight % Benchmark weight % Difference %

Mega cap (> 100 billion) 32.5 40.3 -7.9

Large cap (10 to 100 billion) 52.4 51.7 0.8

Mid cap (2 to 10 billion) 15.1 8.0 7.1

Small cap (<2 Billion 0.0 0.0 0.0

Total 100 100 --



Profile

32

Source: BMO Global Asset Management as at 30-Aug-19. Benchmark: MSCI World. Figures subject to rounding. This does not constitute a recommendation to buy or sell any particular security.

Top 10 – absolute holdingsPortfolio

weight %

Microsoft 4.9

Mastercard 4.5

Apple 4.3

Linde 3.3

Accenture 3.1

Thermo Fisher Scientific 2.9

Xylem 2.8

Crown Castle International 2.8

Intercontinental Exchange Group 2.6

Roper Technologies 2.4

Total 33.6

Bottom 5 – relative

holdings

Portfolio

weight %

Benchmark

weight %

Difference

%

Amazon.com 0.0 1.8 -1.8

Alphabet 0.0 1.8 -1.8

Facebook 0.0 1.1 -1.1

JPMorgan Chase &

Company0.0 0.9 -0.9

Nestle 0.0 0.9 -0.9

Top 5 – relative

holdings

Portfolio

weight %

Benchmark

weight %

Difference

%

Mastercard 4.5 0.6 3.9

Linde 3.3 0.3 3.1

Xylem 2.8 0.0 2.8

Accenture 3.1 0.3 2.8

Crown Castle

International2.8 0.1 2.6



Performance

33

Annualised performance vs. benchmark (GBP, net of fees)

Source: StatPro and BMO Global Asset Management as at 30-Aug-19. Relative returns are geometric. Returns over 1 year are annualised. Share class is 2 Acc. Benchmark: MSCI World. *Peer group – Lipper. Inception date 15-Aug-03.Since Inception from Lipper priced at noon, the rest is at global close. Figures subject to rounding.


23.6

7.5

14.5 15.1

10.2

20.9

7.6

12.9 13.6

10.1

0%

5%

10%

15%

20%

25%

YTD 1 year 3 years 5 years Since Inception

Fund Benchmark

Relative performance 2.2% -0.1% 1.4% 1.3% 0.0%

Quartile ranking* 1st 2nd 1st 1st 2nd

Percentile ranking* 16th 28th 9th 7th 27th



Performance

34

Discrete performance vs. benchmark, 12 month rolling (GBP, net of fees)

Source: BMO Global Asset Management as at 30-Aug-19. The discrete annual performance table refers to 12 month periods, ending at the date shown. Share class is 2 Acc. Relative returns are geometric. Figures subject to rounding.


25.9

-2.5

17.8

22.6

9.97.4

22.7

-2.5

12.4

29.0

5.512.1

-10%

0%

10%

20%

30%

40%

YTD - 2019 2018 2017 2016 2015 2014

Fund Benchmark

Discrete performance vs. benchmark – calendar year (GBP, net of fees)

Percentage growth, %Aug-18/

Aug-19

Aug-17/

Aug-18

Aug-16/

Aug-17

Aug-15/

Aug-16

Aug-14/

Aug-15

Responsible Global Equity Fund 7.5 15.7 20.7 22.7 9.7

MSCI World 7.6 12.7 18.8 26.0 4.1


Profile

35

Source: Factset. BMO Global Asset Management as at 30-Aug-19. Benchmark: MSCI World Index.* EV/EBITDA: Enterprise Value / Earnings before Interest. taxes. Depreciation and Amortization. **Active Share is a measure of the percentage of stock holdings that differ from the benchmark index. EPS = Earnings per share. NTM = Next

twelve months. Figures subject to rounding.



Metrics Fund Benchmark

Dividend Yield 1.7% 2.5%

Price/Earnings Ratio NTM 17.8x 15.4x

Price/Cash Flow Ratio NTM 12.1x 10.2x

Price/Book Ratio 3.4x 2.5x

EV/EBITDA Forward* 13.6x 9.9x

Return on Invested Capital 15.0% 12.4%

Return on Equity 15.9% 12.3%

Net Debt/Total Equity 40.0% 59.0%

Active Share** 89.9%

Beta 1.0

# Holdings 50 1,650


12 month attribution

36

Source: BMO Global Asset Management, Factset as at 30-Aug-19. This does not constitute a recommendation to buy or sell any particular security.


Top level

attribution

Allocation

%

Stock selection

%

FX

%

Total

%

Country -1.4 2.6 -0.1 1.1

Sector -0.5 1.6 -0.1 1.1

Region Active weight % Contribution

North America -6.3 1.9

Japan 2.9 1.0

Other 3.3 0.1

Pacific -2.1 0.1

Cash 1.0 -0.1

United Kingdom -0.4 -0.6

Europe 1.5 -1.2

Top 5 sectors Active weight % Contribution

Information Technology 7.4 1.2

Energy -6.0 1.2

Consumer Discretionary 2.6 0.6

Industrials 7.4 0.4

Real Estate -0.9 0.3

Bottom 5 sectors Active weight % Contribution

Communication Services -8.3 -0.2

Health Care 3.2 -0.2

Utilities -2.3 -0.4

Financials 1.1 -0.6

Consumer Staples -6.3 -0.8

Top 10 stocks Active weight % Contribution

Mastercard 3.3 0.9

Hoya Corp 1.8 0.6

Crown Castle International 2.2 0.6

Roper Technologies 2.5 0.5

Intercontinental Exchange Group 2.2 0.5

Linde 2.7 0.5

Accenture 2.5 0.4

Thermo Fisher Scientific 2.3 0.4

Tractor Supply Company 2.1 0.3

Amer Sports 0.7 0.3

Bottom 10 stocks Active weight % Contribution

Acuity Brands 1.2 -0.3

DNB 1.5 -0.3

ING Groep 1.3 -0.4

Smurfit Kappa Group 1.5 -0.4

CVS Health 1.4 -0.4

A.O. Smith 2.0 -0.4

Umicore 1.0 -0.6

SVB Financial Group 1.3 -0.7

Fresenius SE & Co 1.6 -0.7

Prudential 2.8 -0.7

Classification: only to be shown if not publicKey trades – past 12 months

37

Source: BMO Global Asset Management as at 30-Aug-19. This does not constitute a recommendation to buy or sell any particular security.

SELL

BUY

Classification: only to be shown if not publicEngagement examples: 2018

38

ESG = Environmental, Social and Governance. For illustrative purposes only. This does not constitute a recommendation to buy or sell any particular security.


39

All team members involved in idea generation and stock research

Lead portfolio manager responsible for Portfolio construction

Source: BMO Global Asset Management as at 28-Jun-19.

Investment team

Name Responsibilities Thematic coverage

Years

in industry

Years

at company

Jamie Jenkins Lead Manager Health & well-being

Industrial automation


22 19

Nick Henderson Portfolio Manager Digital access & inclusion

Responsible consumption & production


11 11

Andy Penman Analyst Access to finance

Energy transition

Resource efficiency

26 8

Laura Wood Analyst Health & well-being

Renewable energy

Sustainable development

7 4

Harry Waight Analyst Resource efficiency



6 6

Classification: only to be shown if not publicResponsible Investment team

40

Source: BMO Global Asset Management as at June 2019. 1Returned from maternity leave 1 April 2019. SDGs = United Nations Sustainable Development Goals; TMT = Technology, Media, Telecommunications.

Responsible Investment team

member Sector covered Themes and regions covered

Years of

professional

experience

Years at BMO

Global Asset

Management

Claudia Wearmouth, Co-head Cross-sector Responsible Funds 17 12

Alice Evans, Co-head Cross-sector ESG research and integration 18 7

Vicki Bakhshi, Director Utilities Climate change 19 13

Pieter van Stijn, Director Oil & Gas; Transport Climate change; the Netherlands 19 1

Juan Salazar, Director Cross-sector Emerging and frontier markets 20 9

Kalina Lazarova, Director Financials Diversity; Governance – Europe; Global oversight 15 5

Nina Roth, Director Chemicals; Paper &

packaging

Gender equality; Labour standards and

biodiversity12 <1

Daniel Jarman, Vice President Real estate; Industrials Governance – UK, Asia, and Australasia; Tax 15 3

David Sneyd, Vice President TMT Governance – North America; Cybersecurity 12 2

Alan Fitzpatrick, Vice President Product Specialist reo® service 12 <1

Thomas Hassl, Senior Associate Autos; Construction Climate change; Green bonds specialist 5 3

Emma Lupton, Senior Associate Consumer staples Water; Oceans; Nutrition; SDGs 8 3

Tenisha Elliott, Senior Associate Consumer retail; Services Governance; Circular economy; Labour standards 9 6

Derek Ip, Senior Associate Utilities; Oil & Gas; Mining Climate change 10 <1

Olivia Baker, Associate1 n/a Reporting; Cluster munitions and landmines 8 6

Catherine Hoyle, Associate Healthcare; Pharmaceuticals Green bonds; Responsible Funds screening 4 4

Classification: only to be shown if not publicResponsible Investment Advisory Council members

41

The Responsible Investment Advisory Council is comprised of external experts in ethics and

sustainability:President: The Most Reverend Justin Welby, Archbishop of Canterbury, Chair of the previous Committee of Reference, which advised the BMO Responsible

Funds range until the end of 2014. Justin became the Archbishop of Canterbury in March 2013, and has had a long standing interest in business ethics, which was

a focus of his theology degree. Prior to the Church, Justin spent 11 years in the oil industry, and in 2012 was asked to join the UK Parliamentary Commission on

Banking Standards.

Chair: Howard Pearce is responsible for leading the day to day business of the council and chairing quarterly meetings. Mr. Pearce is a leading figure in the

responsible investment world. Between 2003 and 2013 he was the Head of Pension Fund Management for the award winning Environment Agency Pension Fund

(EAPF) and an advisor to its Pensions and Investment Committees. He now runs his own consultancy, HowESG Ltd.

Member: Rosey Hurst is a labour standards expert, and was one of the founders of Sedex, the responsible supply chain initiative which now counts more than

36,000 members. She is also the Founding Director of Impactt, a supply chain consultancy. She has conducted extensive international fieldwork in Bangladesh,

China and India.

Member: Ylva Lindberg has more than fifteen years of business experience and is the founding partner of SIGLA, providing sustainability consulting services to

Nordic corporations. Ms. Lindberg was a member of the Council on Ethics for the Norwegian Pension Fund for five years and brings a deep understanding of the

complexities in assessing companies’ performance against ethical standards.

Member: Elizabeth McGeveran is a Director of Investments at the McKnight Foundation. She is responsible for the long-term health and growth in the

Foundation’s $2.2 billion endowment and growth in their impact investing programme. Prior to McKnight, Elizabeth was a senior vice president for the Governance

& Sustainable Investment team at F&C Asset Management where she helped build market-leading socially responsible business.

Member: Phil Doel is a Director and Business Unit Manager within the global investment function, working directly alongside the Global CIO since 2016. Prior to

this, Phil was a portfolio manager in the BMO GAM Global Equity team. Phil contributes by bringing both a deep understanding of financial markets and a broad

investment perspective from over 20 years portfolio management experience, both at BMO GAM and elsewhere in the investment industry, to provide context to

the council’s deliberations.

Classification: only to be shown if not publicDisclaimer

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 products that may be mentioned.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data

contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products.

This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice

or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

The European SRI Transparency logo signifies that BMO Global Asset Management commits to provide accurate,

adequate and timely information to enable stakeholders, in particular consumers, to understand the Sustainable

Responsible Investment (SRI) policies and practices relating to the fund. Detailed information about the European SRI

Transparency Code can be found on www.eurosif.org, and information of the SRI policies and practices of the F&C

Responsible Global Equity Fund can be found at: www.bmo.com/gam. The Transparency Code are managed by Eurosif,

an independent organisation. The European SRI Transparency Logo reflects the fund manager’s commitment as detailed

above and should not be taken as an endorsement of any particular company, organisation or individual.

Classification: only to be shown if not publicContact us

© 2019 BMO Global Asset Management. Financial promotions are issued for marketing and information purposes; in the United Kingdom by BMO Asset Management Limited, which is authorised and regulated by the Financial Conduct

Authority; in the EU by BMO Asset Management Netherlands B.V., which is regulated by the Dutch Authority for the Financial Markets (AFM); and in Switzerland by BMO Global Asset Management (Swiss) GmbH, which is authorised and

regulated by the Swiss Financial Market Supervisory Authority (FINMA).

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