While there is no consensus among analysts on what our energy sector will look like in 2050, it is essential that we support the decarbonization of carbon-intensive industries through our investments
Graham Takata,
BMO Global Asset Management
Biodiversity destruction is happening as we speak and it’s compounding – pollination loss, soil erosion, freshwater availability, ocean acidification, and there’s so much more
Adelina Romanelli,
Sun Life Global Investments
Net zero promises investment opportunities
The 2023 Climate Change roundtable
Read on
Fernando Lemos
Bank Australia
Graham Takata
BMO Global Asset Management
Adelina Romanelli
Sun Life Global Investments
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Industry experts
IN THE BPM ROUND TABLE ON CLIMATE CHANGE we met with Adelina Romanelli, director of Responsible Investing at Sun Life Global Investments and Graham Takata, director of Climate Change for Responsible Investment at BMO GAM, to discuss net zero through a fund manager lens.
Assessing net zero through a fund manager lens boils down to understanding its ESG (environmental, social, and governance) or sustainability journey, while playing close attention to the actions that serve to empower its investment professionals, says Romanelli.
The ultimate objective is to help investors achieve long-term financial security. Achieving this is increasingly interchangeable with the ability to retire into a resilient and prosperous ecosystem.
An ambition to achieve net zero by 2050 also helps identify and capture emerging opportunities, says Takata. “Where a focus on emissions reductions alone can lead to carbon lock-in or investing in dead ends, ‘net zero’ elevates the dialogue from simply improving current emissions performance to aligning with future expectations.”
What does this mean for investors?
Takata: Achieving net zero by 2050 will require significant investment beyond conventional clean energy supply, and into the underlying resources, infrastructure, technologies, and innovative solutions that are needed to support the transition to a low-carbon economy.
That means we can’t simply look at current carbon pricing, or physical risks, which include increased frequency and severity of floods, for example. We need to also consider policy, technology, and market risks, which we collectively call transition risks. Ultimately, we are seeking to not only understand how well a company is performing today, but how prepared the company is for a low-carbon economy, what it can contribute, and how it plans to navigate the transition.
Romanelli: What we must not forget is that we cannot, in a general sense, continue as is with additional increases in global temperature. Business as usual will not make it. The impacts of climate change will have far reaching consequences. Climate change is non-linear and multi-dimensional.
We need to focus on the fact that future readiness is not comparable to where we are today. Things need to change. For instance, we’re running out of natural resources — resources that have supported our lifestyles and fostered tremendous growth since the industrial revolution.
There is so much more. There are the impacts coming from an increase in global temperature. There are the physical risks such as the magnitude and frequency of climate events such as floods. And then there are the transition risks — such as changes in government policies, litigation, and shifting demographics. These are impacting businesses and they’re impacting our landscape. Furthermore, we can’t disentangle climate from other environmental and social issues.
From an institutional investor perspective, we see climate change as material, pervasive, and non-diversifiable at the portfolio level. So collaborating on the global fight against climate change means preserving wealth over time, mitigating downside risk, and seizing investment opportunities that will continue to arise from a low-carbon transition over time.
What are the challenges of embedding net zero in a portfolio?
Takata: Net zero reenforces that transitioning to a low-carbon economy is about liberating productivity from carbon constraints, not constraining productivity in order to maintain our current emissions. Many of the long-term solutions we need for a low-carbon economy require a considerable increase in productivity that may result in a spike in emissions in the short term. For example, the International Energy Agency (IEA) projects that the mineral requirements for clean energy technologies will need to quadruple by 2040 to meet Paris goals. It is a considerable challenge. Not only do we need to address our current emissions, we need to concurrently address the emissions needed to enable the transition, all while working towards
Does a transition to a low-carbon economy mean lower returns?
Takata: In terms of ‘lower returns,’ I would reiterate that low carbon is not low productivity. It’s continuing to create value without the unintended consequences caused by our current methods of production. We’ve never been in a period where the economy was not evolving. While we understand that the cost of inaction far exceeds any costs of abatement, it is understanding those needed changes, the risks, and the opportunities that the transition brings, that helps inform sound investment decisions.
Romanelli: As we’ve already touched upon, the impact of climate change is already adverse. With economic growth, some of it is quantifiable, but most is not.
If you consider climate change, you quickly recognize that adverse impacts are already detrimental to economic growth. If we address it later as opposed to now, impacts will likely become even more disruptive (particularly due to nonlinear and compounding effects). Being proactive on climate action is key to preserving economic wealth over time.
There are many positives. The International Energy Agency has proven that many net zero actions remain viable via efficiency measures or preventative measures (i.e. methane gas leakages), all of which can enhance margins. As you move down the net zero path, there may be greater costs in the shorter term, but the rewards will be more apparent over the longer term.
Mandatory disclosure, is it coming?
Takata: While already in place in Europe, mandatory climate-related disclosure is being pursued by regulators in the U.S. and Canada. Requiring companies to disclose emissions data alongside their financial disclosures helps improve the assurance of this data and standardize its presentation, which facilitates better peer comparison amongst companies and combats greenwashing.
The International Sustainability Standards Board (ISSB) is now calling for Scope 3 emissions disclosure. While we’re often thinking about a company’s own footprint, represented by its Scope 1 and 2 emissions, Scope 3 helps investors contextualize a company within the broader economy, providing insights into its reliance on upstream and downstream emissions.
Achieving reliable Scope 3 disclosures will take time, but it will be instrumental to our ability to assess transition risks.
Romanelli: Scope 3 is so critical because that’s truly where the real economy changes take place, that’s the lever we collectively have to promote positive action.
However, mandatory data disclosures are critical. While they are insufficient on their own, they are critical in terms of shifting mindsets within a corporation.
So, it’s not only welcome, it is the only way to get to where we need to be.
How relevant are biodiversity and natural capital to investors?
Takata: According to the World Economic Forum, more than half of global GDP is reliant in some way on natural capital and ecosystem services. So understanding natural capital is absolutely critical to ongoing prosperity and wealth generation, and protecting natural capital is one of our key climate themes.
In our engagements, we are seeing companies looking more closely at natural capital-related risks to their supply chain. Companies need to better understand if their products or raw materials are coming from areas prone to, for example, illegal deforestation or water stress. And with the adoption of the Kunming-Montreal Global Biodiversity Framework this past year, they are looking deeper into protection and restoration of surrounding lands.
Romanelli: Biodiversity risks are already imminent and, at the end of the day, biodiversity is vital to Earth’s functionality.
Biodiversity destruction is happening as we speak and it’s compounding — pollination loss, soil erosion, freshwater availability, ocean acidification, and there’s so much more.
And there is a whole world of additional impacts on companies from natural capitals. For example, last year, low water levels in European rivers drove up shipping costs. France, when it was trying to ramp up its nuclear power systems to address the oil shortages due to the Ukraine/Russia problem, couldn’t actually turn up its nuclear power generation as it lacked sufficient water to maintain cooling of the reactors.
And that’s why it’s very important to look at biodiversity from a reliance perspective and a company’s contribution to broader supply chain issues.
net zero. Systemic changes, such as a shift towards a circular economy in which resources are retained in productive use, is essential to our success.
Obviously, those system level changes cannot be fully captured at the portfolio level, but are critical to the overall ambition. The goal of net zero is often perceived as synonymous with incremental emissions reductions, when in reality it is about transforming the real economy.
Romanelli: These are all important issues and they are connected. It is now widely accepted that further increases in the average global temperature will trigger even greater impacts, impacts which are not linear, but exponential.
But it’s not only climate events such as floods, it also impacts biodiversity, water supplies, sustainability, and food security, all of which are critical to our very essence.
The reality is, and sometimes we shy away from it, is that there’s no such thing as a perfect company or perfect business model. And if you look through the entire value chain, it becomes even more predominant. So it has to be an integrated approach. You can’t just isolate one aspect or theme over others.
Takata: Exactly, the value chain is so important as it describes the relationships and interdependencies. And while it has taken decades to bring carbon emissions to the forefront, there is still a need to consider other factors, like our natural capital, biodiversity, and protecting people through a focus on a just transition.
What sort of opportunities or challenges do you see with net zero in Canada?
Takata: One of the biggest challenges in Canada will be transforming our energy sector while maintaining energy security and affordability for consumers.
For our existing energy sector, carbon capture, as well as lower carbon alternatives such as blue hydrogen, are playing significant roles in their go-forward strategy. While there is no consensus among analysts on what our energy sector will look like in 2050, it is essential that we support the decarbonization of carbon-intensive industries through our investments. Canada’s Sustainable Finance Action Council (SFAC) recently released a transition taxonomy roadmap which provides conceptual guidance on what could constitute transition finance.
Romanelli: Fossil fuels have powered our economy and the global economy for over 150 years. Yet, the production, the distribution, and consumption of fossil fuels have contributed to global warming. And Canada is warming twice as fast as the global average according to Environment and Climate Change Canada. We’re starting to see some of the impacts — record high temperatures, flooding, and less snow and ice coverage.
These impacts are far reaching and touch infrastructure, forestry, farming, insurance, and the health and well-being of our people.
We are likely to become more dependent on less conventional sources of fossil fuels which makes it more costly or potentially environmentally degrading to produce them.
Those are the challenges, but we have so many opportunities. We have the expertise, the knowledge, and abundant mineral natural resources, including some which are critical. It’s a tremendous economic opportunity for Canada to continue to transform and lead.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Bank Australia
Fernando Lemos
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Beyond Bank
Darren McLeod
Adelina joined SLGI Asset Management in 2020, supporting ongoing implementation and evolution of the firm’s ESG integration efforts. She also helps build awareness of key market and competitive trends relating to ESG integration and sustainable investing. Adelina has 18 years of industry experience, with five years focused on ESG-related initiatives.
Director of Responsible Investing, Sun Life Global Investments
Adelina Romanelli
Graham leads BMO GAM’s Climate Action and Net Zero strategy through which BMO GAM has committed to achieve net zero emissions across all assets under management by 2050 or sooner. Prior to BMO, Graham worked in both technical and climate advisory roles, leading some of Canada’s first carbon-financed projects, North American green building strategies, and ESG benchmarking for institutional investors and asset managers. He led Ontario’s commercial cap and trade investments under the Green Ontario Fund, and has supported multiple sectors to integrate climate change risks and opportunities into their business strategy. Graham is a member of the Responsible Investment Association and the Association of Energy Engineers and holds a Bachelor of Environmental Science from the University of Guelph and a Master’s in Applied Science from Ryerson University.
Director of Climate Change, Responsible Investment,
BMO Global Asset Management
Graham Takata
While there is no consensus among analysts on what our energy sector will look like in 2050, it is essential that we support the decarbonization of carbon-intensive industries through our investments
GRAHAM TAKATA,
BMO GLOBAL ASSET MANAGEMENT
Biodiversity destruction is happening as we speak and it’s compounding – pollination loss, soil erosion, freshwater availability, ocean acidification, and there’s so much more
ADELINA ROMANELLI,
SUN LIFE GLOBAL INVESTMENTS
Net zero promises investment opportunities
The 2023 Climate Change roundtable
Read on
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Stewart Saunders
Heritage Bank
Adelina Romanelli
Sun Life Global Investments
Graham Takata
BMO Global Asset Management
Industry experts
IN THE BPM ROUND TABLE ON CLIMATE CHANGE
we met with Adelina Romanelli, director of Responsible Investing at Sun Life Global Investments and Graham Takata, director of Climate Change for Responsible Investment at BMO GAM, to discuss net zero through a fund manager lens.
Assessing net zero through a fund manager lens boils down to understanding its ESG (environmental, social, and governance) or sustainability journey, while playing close attention to the actions that serve to empower its investment professionals, says Romanelli.
The ultimate objective is to help investors achieve long-term financial security. Achieving this is increasingly interchangeable with the ability to retire into a resilient and prosperous ecosystem.
An ambition to achieve net zero by 2050 also helps identify and capture emerging opportunities, says Takata. “Where a focus on emissions reductions alone can lead to carbon lock-in or investing in dead ends, ‘net zero’ elevates the dialogue from simply improving current emissions performance to aligning with future expectations.”
Takata: Achieving net zero by 2050 will require significant investment beyond conventional clean energy supply, and into the underlying resources, infrastructure, technologies, and innovative solutions that are needed to support the transition to a low-carbon economy.
That means we can’t simply look at current carbon pricing, or physical risks, which include increased frequency and severity of floods, for example. We need to also consider policy, technology, and market risks, which we collectively call transition risks. Ultimately, we are seeking to not only understand how well a company is performing today, but how prepared the company is for a low-carbon economy, what it can contribute, and how it plans to navigate the transition.
Romanelli: What we must not forget is that we cannot, in a general sense, continue as is with additional increases in global temperature. Business as usual will not make it.
The impacts of climate change will have far reaching consequences. Climate change is non-linear and multi-dimensional.
We need to focus on the fact that future readiness is not comparable to where we are today. Things need to change. For instance, we’re running out of natural resources — resources that have supported our lifestyles and fostered tremendous growth since the industrial revolution.
There is so much more. There are the impacts coming from an increase in global temperature. There are the physical risks such as the magnitude and frequency of climate events such as floods. And then there are the transition risks — such as changes in government policies, litigation, and shifting demographics. These are impacting businesses and they’re impacting our landscape. Furthermore, we can’t disentangle climate from other environmental and social issues.
From an institutional investor perspective, we see climate change as material, pervasive, and non-diversifiable at the portfolio level. So collaborating on the global fight against climate change means preserving wealth over time, mitigating downside risk, and seizing investment opportunities that will continue to arise from a low-carbon transition over time.
Takata: Net zero reenforces that transitioning to a low-carbon economy is about liberating productivity from carbon constraints, not constraining productivity in order to maintain our current emissions. Many of the long-term solutions we need for a low-carbon economy require a considerable increase in productivity that may result in a spike in emissions in the short term. For example, the International Energy Agency (IEA) projects that the mineral requirements for clean energy technologies will need to quadruple by 2040 to meet Paris goals. It is a considerable challenge. Not only do we need to address our current emissions, we need to concurrently address the emissions needed to enable the transition, all while working towards net zero. Systemic changes, such as a shift towards a circular economy in which resources are retained in productive use, is essential to our success.
Obviously, those system level changes cannot be fully captured at the portfolio level, but are critical to the overall ambition. The goal of net zero is often perceived as synonymous with incremental emissions reductions,
when in reality it is about transforming the real economy.
Romanelli: These are all important issues and they are connected. It is now widely accepted that further increases in the average global temperature will trigger even greater impacts, impacts which are not linear, but exponential.
But it’s not only climate events such as floods, it also impacts biodiversity, water supplies, sustainability, and food security, all of which are critical to our very essence.
The reality is, and sometimes we shy away from it, is that there’s no such thing as a perfect company or perfect business model. And if you look through the entire value chain, it becomes even more predominant. So it has to be an integrated approach. You can’t just isolate one aspect or theme over others.
Takata: Exactly, the value chain is so important as it describes the relationships and interdependencies. And while it has taken decades to bring carbon emissions to the forefront, there is still a need to consider other factors, like our natural capital, biodiversity, and protecting people through a focus on a just transition.
At BMO, we invest with a purpose — to boldly grow the good. Our focus is simple: to help our clients meet their investment goals, while also building a more sustainable and secure future for us all. We understand that each of our clients has individual circumstances, together with specific needs and requirements. Our job is to consider these and deliver the desired outcomes. Doing this well, in a fast-moving and interconnected world, requires both a global perspective and an appreciation of local circumstances. These are the strengths that you can find at BMO Global Asset Management.
Find out more
Graham leads BMO GAM’s Climate Action and Net Zero strategy through which BMO GAM has committed to achieve net zero emissions across all assets under management by 2050 or sooner. Prior to BMO, Graham worked in both technical and climate advisory roles, leading some of Canada’s first carbon-financed projects, North American green building strategies, and ESG benchmarking for institutional investors and asset managers. He led Ontario’s commercial cap and trade investments under the Green Ontario Fund, and has supported multiple sectors to integrate climate change risks and opportunities into their business strategy. Graham is a member of the Responsible Investment Association and the Association of Energy Engineers and holds a Bachelor of Environmental Science from the University of Guelph and a Master’s in Applied Science from Ryerson University.
Director of Climate Change, Responsible Investment,
BMO Global Asset Management
Graham Takata
Adelina joined SLGI Asset Management in 2020, supporting ongoing implementation and evolution of the firm’s ESG integration efforts. She also helps build awareness of key market and competitive trends relating to ESG integration and sustainable investing. Adelina has 18 years of industry experience, with five years focused on ESG-related initiatives.
Director of Responsible Investing,
Sun Life Global Investments
Adelina Romanelli
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Heritage Bank
Stewart Saunders
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Christopher Lee
While there is no consensus among analysts on what our energy sector will look like in 2050, it is essential
that we support the decarbonization of carbon-intensive industries through our investments
GRAHAM TAKATA,
BMO GLOBAL ASSET MANAGEMENT
Biodiversity destruction is happening as we speak and it’s compounding – pollination loss, soil erosion, freshwater availability, ocean acidification, and there’s
so much more
ADELINA ROMANELLI,
SUN LIFE GLOBAL INVESTMENTS
Net zero promises investment opportunities
The 2023 Climate Change roundtable
Read on
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Stewart Saunders
Heritage Bank
Adelina Romanelli
Sun Life Global Investments
Graham Takata
BMO Global Asset Management
Industry experts
IN THE BPM ROUND TABLE ON CLIMATE CHANGE we met with Adelina Romanelli, director of Responsible Investing at Sun Life Global Investments and Graham Takata, director of Climate Change for Responsible Investment at BMO GAM, to discuss net zero through a fund manager lens.
Assessing net zero through a fund manager lens boils down to understanding its ESG (environmental, social, and governance) or sustainability journey, while playing close attention to the actions that serve to empower its investment professionals, says Romanelli.
The ultimate objective is to help investors achieve long-term financial security. Achieving this is increasingly interchangeable with the ability to retire into a resilient and prosperous ecosystem.
An ambition to achieve net zero by 2050 also helps identify and capture emerging opportunities, says Takata. “Where a focus on emissions reductions alone can lead to carbon lock-in or investing in dead ends, ‘net zero’ elevates the dialogue from simply improving current emissions performance to aligning with future expectations.”
In January, MPA held a roundtable discussion with four customer-owned banks: Heritage Bank, Beyond Bank, Teachers Mutual Bank Limited and Bank Australia. We were also joined by two brokers who use mutual banks for their clients’ business: Christopher Lee and David Merison.
As brokers such as these struggle with the greater scrutiny that has following the royal commission, customer-owned banks are stepping up to the plate, providing a service that highlights the value of human interaction. With questions around living expenses forcing a heavier workload on brokers, this personal touch can be vital.
During the roundtable, which took place at Otto restaurant in Sydney, the group discussed the unique value proposition that customer-owned banks offer, particularly with the lack of shareholders they have to cater for. While other
“The value proposition that mutual banks provide is getting some more attention,” he said. “We’ve known for a long time that the customer satisfaction that members get through mutual organisations is very high compared to the major banks. I think we’ve struggled to convert that into member growth, but more recently, with it being so front of mind with customers, it’s definitely starting to grow.”
Growth in the sector is giving the mutual banks their “time to shine”, said Beyond Bank head of third party Darren McLeod, adding that they had worked hard over the last two years on selling their proposition.
Referring to the previous year’s roundtable, when the catchphrase of the day was that the customer-owned banking sector was the industry’s “best-kept secret”, McLeod said, “I think that secret is finally getting out.”
“I don’t think we’re doing anything different,” he added. “We’re doing what we’ve always done, but there’s more customer uptake because the market’s in a place where people are now looking, and they’re willing to try it.”
Agreeing that the royal commission had had an effect on consumers heading to the mutual banks, Mark Middleton, head of third party at Teachers Mutual, said there was a growing groundswell. Not only were borrowers looking for alternative options but aggregators were adding more choice to their panels, he said.
Offering a different perspective, Middleton said consumers were becoming more aware of responsible lending and social responsibilities and asking about things like climate change. Teachers Mutual is not only carbon neutral but gives back around 6.8% of its net profits to community grants and other projects.
“It’s particularly topical right now, with the bushfires happening around the country, that people will start looking for who is doing things to make a difference, not just for this generation but future generations,” Middleton said.
“I think we’ve been actually ahead of the curve; no one’s been really aware of it, but the last 12 months it’s become more prevalent.”
Middleton also talked about the wider recognition the sector was receiving, as reflected in its high NPS scores.
“From all the mutuals around the table here, clearly when customers are being recommended by brokers to come to us, they’re voting with their feet,” he said.
McLeod agreed that a lot of the growth was coming out of the third party space.
“We’ve all been working hard in the broker space over the last couple of years as more brokers use customer-owned banks,” he said. “I think the growth is definitely in the broker channel and the work all of us have been doing in the business. The growth we’re talking about is definitely coming from brokers.”
Brokers have also been an important factor for Bank Australia. Senior relationship manager Fernando Lemos said the bank had been bolstering its support around the third party distribution space. He added that it was not only about diversification of products but also diversification of lenders, and this helped brokers cater for a wider client base.
“I think brokers are really starting to become aware of what we’re about and what we stand for,” Lemos said.
“There’s a marketing edge as well: they can go out there and promote themselves. They’re not just a line to a particular organisation; they can look after certain types of clients.”
Agreeing, McLeod added that the extra regulation, such as the caps on interest-only lending, had also had an effect on the sector.
“We all had to slow down for the caps,” he said. “But when it opened up, the brokers who used four lenders were now using a lot more, so it really gave us a chance because we’re in that larger group. So it’s really opened up the market, because it was so confusing in terms of who was doing what – who’s doing construction, who’s doing interest-only, who’s doing investment – so it’s opened up the market and it gives us a shot at getting the business."
One of two brokers joining the roundtable, David Merison from Vault Plus Mortgage and Finance Consultancy said the demographic of people looking to borrow money wanted choice, rather than relying on those who came straight out of the banks and were simply agents for those lender
“We’ve got to hold ourselves open and come up with some innovative solutions, and that means introducing some lenders they wouldn’t always think of,” he said.
Finsure Finance and Insurance broker Christopher Lee said his primary objective was to put the largest amount of money in his client’s pocket rather than the bank’s pocket, and the mutuals offered a cheaper alternative, as well as a more diverse product range.
Not just that but Lee simply enjoys dealing with the mutuals more.
At BMO, we invest with a purpose — to boldly grow the good. Our focus is simple: to help our clients meet their investment goals, while also building a more sustainable and secure future for us all. We understand that each of our clients has individual circumstances, together with specific needs and requirements. Our job is to consider these and deliver the desired outcomes. Doing this well, in a fast-moving and interconnected world, requires both a global perspective and an appreciation of local circumstances. These are the strengths that you can find at BMO Global Asset Management.
Find out more
ROUNDTABLE
Top
Insight Leaders
Overview
General Stats
Insights
Adelina joined SLGI Asset Management in 2020, supporting ongoing implementation and evolution of the firm’s ESG integration efforts. She also helps build awareness of key market and competitive trends relating to ESG integration and sustainable investing. Adelina has 18 years of industry experience, with five years focused on ESG-related initiatives.
Sun Life Global Investments
Adelina Romanelli
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Heritage Bank
Stewart Saunders
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Christopher Lee
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Graham leads BMO GAM’s Climate Action and Net Zero strategy through which BMO GAM has committed to achieve net zero emissions across all assets under management by 2050 or sooner. Prior to BMO, Graham worked in both technical and climate advisory roles, leading some of Canada’s first carbon-financed projects, North American green building strategies, and ESG benchmarking for institutional investors and asset managers. He led Ontario’s commercial cap and trade investments under the Green Ontario Fund, and has supported multiple sectors to integrate climate change risks and opportunities into their business strategy. Graham is a member of the Responsible Investment Association and the Association of Energy Engineers and holds a Bachelor of Environmental Science from the University of Guelph and a Master’s in Applied Science from Ryerson University.
BMO Global Asset Management
Graham Takata
Sample subhead here
Published 03 Jul 2023
In Partnership with
Is divestment still on the table?
Romanelli: Engagement is now widely accepted by institutional investors because addressing pressing systemic issues boils down to real economy change. We need to address systemic issues and stewardship is rising to the forefront because of net zero and other initiatives that recognize the imperative of real economy changes. You cannot do it without stewardship.
In terms of corporate engagement, to truly catalyze change is to understand where a corporation is at and to understand how net zero and climate action can influence revenue streams, costs, structures, etc. So we really have to talk about financial value and apply a win-win mindset — a collaborative approach — in order to truly drive change.
Takata: Divestment remains on the table, but it’s role has changed as ESG considerations have become more sophisticated for investors and the companies in which we invest. In the context of net zero, divestment is considered when engagement on climate fails. But if a company refuses to consider how climate-related events can disrupt their supply chain or how changing consumer demands will affect their future sales, it’s less about climate and more about how they manage risks to their business and likely is an indicator of other underlying issues.
So while divestment can be considered an interventional strategy triggered by a repeated failure to address climate risks, in practice, it is likely that an investor would have already reevaluated their investment strategy.
What sort of things are you looking for in a transition plan?
Takata: While typical climate-related disclosures, including the Task Force on Climate-Related Financial Disclosures (TCFD), have a strong focus on current emissions, a transition plan is an entity’s forward-looking strategy on how it will contribute to and prepare for a low-carbon economy. While transition plans are a more recent concept, it is important that a company uses this plan to acknowledge what is currently achievable and within the scope of its ability, what is not, and what their approach will be to reconcile the two. A credible transition plan would have greater certainty on short-term actions, such as projects with current capital expenditure support, and outlay actions to navigate uncertainty and achieve longer-term goals. Increasingly, we discuss research and development to better assess medium and longer-term strategy.
Romanelli: Ultimately, it is a strategic business issue, dealt with at the board and executive levels. It starts there so looking at things like board skill sets — especially around climate — and what they’re doing to build or at least leverage skill sets. Assessing their eagerness to engage with investors and other stakeholders and be responsive to votes or resolutions are all quite telling.
In 2010 Sun Life Global Investments was purpose built to combine the strength of Sun Life with some of the best asset managers in the world. Since then, we’ve become a trusted wealth management firm for so many Canadians—managing over $33 billion across a diverse selection of retail mutual funds, pension funds and other institutional funds, including $10 billion in our flagship Sun Life Granite Target Date Funds (as of March 31, 2023). And as part of the Sun Life group of companies we have access to a depth of resources, giving us (and ultimately our Clients) unique advantages. We are driven by our goal to help plan sponsors deliver the best possible retirement for their plan members.
Find out more
At BMO, we invest with a purpose — to boldly grow the good. Our focus is simple: to help our clients meet their investment goals, while also building a more sustainable and secure future for us all. We understand that each of our clients has individual circumstances, together with specific needs and requirements. Our job is to consider these and deliver the desired outcomes. Doing this well, in a fast-moving and interconnected world, requires both a global perspective and an appreciation of local circumstances. These are the strengths that you can find at BMO Global Asset Management.
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In Partnership with
In Partnership with
What does this mean for investors?
What are the challenges of embedding net zero in a portfolio?
Takata: One of the biggest challenges in Canada will be transforming our energy sector while maintaining energy security and affordability for consumers.
For our existing energy sector, carbon capture, as well as lower carbon alternatives such as blue hydrogen, are playing significant roles in their go-forward strategy. While there is no consensus among analysts on what our energy sector will look like in 2050, it is essential that we support the decarbonization of carbon-intensive industries through our investments. Canada’s Sustainable Finance Action Council (SFAC) recently released a transition taxonomy roadmap which provides conceptual guidance on what could constitute transition finance.
Romanelli: Fossil fuels have powered our economy and the global economy for over 150 years. Yet, the production, the distribution, and consumption of fossil fuels have contributed to global warming. And Canada is warming twice as fast as the global average according to Environment and Climate Change Canada. We’re starting to see some of the impacts — record high temperatures, flooding, and less snow and ice coverage.
These impacts are far reaching and touch infrastructure, forestry, farming, insurance, and the health and well-being of our people.
We are likely to become more dependent on less conventional sources of fossil fuels which makes it more costly or potentially environmentally degrading to
produce them.
Those are the challenges, but we have so many opportunities. We have the expertise, the knowledge, and abundant mineral natural resources, including some which are critical. It’s a tremendous economic opportunity for Canada to continue to transform and lead.
What sort of opportunities or challenges do you see with net zero in Canada?
Romanelli: Engagement is now widely accepted by institutional investors because addressing pressing systemic issues boils down to real economy change. We need to address systemic issues and stewardship is rising to the forefront because of net zero and other initiatives that recognize the imperative of real economy changes. You cannot do it without stewardship.
In terms of corporate engagement, to truly catalyze change is to understand where a corporation is at and to understand how net zero and climate action can influence revenue streams, costs, structures, etc. So we really have to talk about financial value and apply a win-win mindset — a collaborative approach — in order to truly drive change.
Takata: Divestment remains on the table, but it’s role has changed as ESG considerations have become more sophisticated for investors and the companies in which we invest. In the context of net zero, divestment is considered when engagement on climate fails. But if a company refuses to consider how climate-related events can disrupt their supply chain or how changing consumer demands will affect their future sales, it’s less about climate and more about how they manage risks to their business and likely is an indicator of other underlying issues.
So while divestment can be considered an interventional strategy triggered by a repeated failure to address climate risks, in practice, it is likely that an investor would have already reevaluated their investment strategy.
Takata: While typical climate-related disclosures, including the Task Force on Climate-Related Financial Disclosures (TCFD), have a strong focus on current emissions, a transition plan is an entity’s forward-looking strategy on how it will contribute to and prepare for a low-carbon economy. While transition plans are a more recent concept, it is important that a company uses this plan to acknowledge what is currently achievable and within the scope of its ability, what is not, and what their approach will be to reconcile the two. A credible transition plan would have greater certainty on short-term actions, such as projects with current capital expenditure support, and outlay actions to navigate uncertainty and achieve longer-term goals. Increasingly, we discuss research and development to better assess medium and longer-term strategy.
Romanelli: Ultimately, it is a strategic business issue, dealt with at the board and executive levels. It starts there so looking at things like board skill sets — especially around climate — and what they’re doing to build or at least leverage skill sets. Assessing their eagerness to engage with investors and other stakeholders and be responsive to votes or resolutions are all quite telling.
Is divestment still on the table?
What sort of things are you looking for in a transition plan?
Takata: In terms of ‘lower returns,’ I would reiterate that low carbon is not low productivity. It’s continuing to create value without the unintended consequences caused by our current methods of production. We’ve never been in a period where the economy was not evolving. While we understand that the cost of inaction far exceeds any costs of abatement, it is understanding those needed changes, the risks, and the opportunities that the transition brings, that helps inform sound investment decisions.
Romanelli: As we’ve already touched upon, the impact of climate change is already adverse. With economic growth, some of it is quantifiable, but most is not.
If you consider climate change, you quickly recognize that adverse impacts are already detrimental to economic growth. If we address it later as opposed to now, impacts will likely become even more disruptive (particularly due to nonlinear and compounding effects). Being proactive on climate action is key to preserving economic wealth over time.
There are many positives. The International Energy Agency has proven that many net zero actions remain viable via efficiency measures or preventative measures (i.e. methane gas leakages), all of which can enhance margins. As you move down the net zero path, there may be greater costs in the shorter term, but the rewards will be more apparent over the longer term.
Takata: While already in place in Europe, mandatory climate-related disclosure is being pursued by regulators in the U.S. and Canada. Requiring companies to disclose emissions data alongside their financial disclosures helps improve the assurance of this data and standardize its presentation, which facilitates better peer comparison amongst companies and combats greenwashing.
The International Sustainability Standards Board (ISSB) is now calling for Scope 3 emissions disclosure. While we’re often thinking about a company’s own footprint, represented by its Scope 1 and 2 emissions, Scope 3 helps investors contextualize a company within the broader economy, providing insights into its reliance on upstream and downstream emissions.
Achieving reliable Scope 3 disclosures will take time,
but it will be instrumental to our ability to assess transition risks.
Romanelli: Scope 3 is so critical because that’s truly where the real economy changes take place, that’s the lever we collectively have to promote positive action.
However, mandatory data disclosures are critical. While they are insufficient on their own, they are critical in terms of shifting mindsets within a corporation.
So, it’s not only welcome, it is the only way to get to where we need to be.
Takata: According to the World Economic Forum, more than half of global GDP is reliant in some way on natural capital and ecosystem services. So understanding natural capital is absolutely critical to ongoing prosperity and wealth generation, and protecting natural capital is one of our key climate themes.
In our engagements, we are seeing companies looking more closely at natural capital-related risks to their supply chain. Companies need to better understand if their products or raw materials are coming from areas prone to, for example, illegal deforestation or water stress. And with the adoption of the Kunming-Montreal Global Biodiversity Framework this past year, they are looking deeper into protection and restoration of surrounding lands.
Romanelli: Biodiversity risks are already imminent and, at the end of the day, biodiversity is vital to Earth’s functionality.
Biodiversity destruction is happening as we speak and it’s compounding — pollination loss, soil erosion, freshwater availability, ocean acidification, and there’s so much more.
And there is a whole world of additional impacts on companies from natural capitals. For example, last year, low water levels in European rivers drove up shipping costs. France, when it was trying to ramp up its nuclear power systems to address the oil shortages due to the Ukraine/Russia problem, couldn’t actually turn up its nuclear power generation as it lacked sufficient water to maintain cooling of the reactors.
And that’s why it’s very important to look at biodiversity from a reliance perspective and a company’s contribution to broader supply chain issues.
Does a transition to a low-carbon economy mean lower returns?
Mandatory disclosure, is it coming?
How relevant are biodiversity and natural capital
to investors?
In 2010 Sun Life Global Investments was purpose built to combine the strength of Sun Life with some of the best asset managers in the world. Since then, we’ve become a trusted wealth management firm for so many Canadians—managing over $33 billion across a diverse selection of retail mutual funds, pension funds and other institutional funds, including $10 billion in our flagship Sun Life Granite Target Date Funds (as of March 31, 2023). And as part of the Sun Life group of companies we have access to a depth of resources, giving us (and ultimately our Clients) unique advantages. We are driven by our goal to help plan sponsors deliver the best possible retirement for their plan members.
Find out more
What does this mean for investors?
What are the challenges of embedding net zero in a portfolio?
What sort of opportunities or challenges do you see with net zero in Canada?
Romanelli: Engagement is now widely accepted by institutional investors because addressing pressing systemic issues boils down to real economy change. We need to address systemic issues and stewardship is rising to the forefront because of net zero and other initiatives that recognize the imperative of real economy changes. You cannot do it without stewardship.
In terms of corporate engagement, to truly catalyze change is to understand where a corporation is at and to understand how net zero and climate action can influence revenue streams, costs, structures, etc. So we really have to talk about financial value and apply a win-win mindset — a collaborative approach — in order to truly drive change.
Takata: Divestment remains on the table, but it’s role has changed as ESG considerations have become more sophisticated for investors and the companies in which we invest. In the context of net zero, divestment is considered when engagement on climate fails. But if a company refuses to consider how climate-related events can disrupt their supply chain or how changing consumer demands will affect their future sales, it’s less about climate and more about how they manage risks to their business and likely is an indicator of other underlying issues.
So while divestment can be considered an interventional strategy triggered by a repeated failure to address climate risks, in practice, it is likely that an investor would have already reevaluated their investment strategy.
Is divestment still on the table?
Takata: While typical climate-related disclosures, including the Task Force on Climate-Related Financial Disclosures (TCFD), have a strong focus on current emissions, a transition plan is an entity’s forward-looking strategy on how it will contribute to and prepare for a low-carbon economy. While transition plans are a more recent concept, it is important that a company uses this plan to acknowledge what is currently achievable and within the scope of its ability, what is not, and what their approach will be to reconcile the two. A credible transition plan would have greater certainty on short-term actions, such as projects with current capital expenditure support, and outlay actions to navigate uncertainty and achieve longer-term goals. Increasingly, we discuss research and development to better assess medium and longer-term strategy.
Romanelli: Ultimately, it is a strategic business issue, dealt with at the board and executive levels. It starts there so looking at things like board skill sets — especially around climate — and what they’re doing to build or at least leverage skill sets. Assessing their eagerness to engage with investors and other stakeholders and be responsive to votes or resolutions are all quite telling.
Is divestment still on the table?
Takata: In terms of ‘lower returns,’ I would reiterate that low carbon is not low productivity. It’s continuing to create value without the unintended consequences caused by our current methods of production. We’ve never been in a period where the economy was not evolving. While we understand that the cost of inaction far exceeds any costs of abatement, it is understanding those needed changes, the risks, and the opportunities that the transition brings, that helps inform sound investment decisions.
Romanelli: As we’ve already touched upon, the impact of climate change is already adverse. With economic growth, some of it is quantifiable, but most is not.
If you consider climate change, you quickly recognize that adverse impacts are already detrimental to economic growth. If we address it later as opposed to now, impacts will likely become even more disruptive (particularly due to nonlinear and compounding effects). Being proactive on climate action is key to preserving economic wealth over time.
There are many positives. The International Energy Agency has proven that many net zero actions remain viable via efficiency measures or preventative measures (i.e. methane gas leakages), all of which can enhance margins. As you move down the net zero path, there may be greater costs in the shorter term, but the rewards will be more apparent over the longer term.
Does a transition to a low-carbon economy mean lower returns?
Takata: While already in place in Europe, mandatory climate-related disclosure is being pursued by regulators in the U.S. and Canada. Requiring companies to disclose emissions data alongside their financial disclosures helps improve the assurance of this data and standardize its presentation, which facilitates better peer comparison amongst companies and combats greenwashing.
The International Sustainability Standards Board (ISSB) is now calling for Scope 3 emissions disclosure. While we’re often thinking about a company’s own footprint, represented by its Scope 1 and 2 emissions, Scope 3 helps investors contextualize a company within the broader economy, providing insights into its reliance on upstream and downstream emissions.
Achieving reliable Scope 3 disclosures will take time, but it will be instrumental to our ability to assess transition risks.
Romanelli: Scope 3 is so critical because that’s truly where the real economy changes take place, that’s the lever we collectively have to promote positive action.
However, mandatory data disclosures are critical. While they are insufficient on their own, they are critical in terms of shifting mindsets within a corporation.
So, it’s not only welcome, it is the only way to get to where we need to be.
How relevant are biodiversity and natural capital to investors?
In 2010 Sun Life Global Investments was purpose built to combine the strength of Sun Life with some of the best asset managers in the world. Since then, we’ve become a trusted wealth management firm for so many Canadians—managing over $33 billion across a diverse selection of retail mutual funds, pension funds and other institutional funds, including $10 billion in our flagship Sun Life Granite Target Date Funds (as of March 31, 2023). And as part of the Sun Life group of companies we have access to a depth of resources, giving us (and ultimately our Clients) unique advantages. We are driven by our goal to help plan sponsors deliver the best possible retirement for their plan members.
Find out more
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Copyright © 1996-2023 KM Business Information Canada Ltd.
About
Directories
Resources
Investments
Pensions
Benefits
News
RSS
Sitemap
Privacy
Contact us
About us
External contributors
Authors
Terms & Conditions
Terms of Use
Subscribe
People
Companies
Copyright © 1996-2023 KM Business Information Canada Ltd.
About
Directories
Resources
Investments
Pensions
Benefits
News
RSS
Sitemap
Privacy
Contact us
About us
External contributors
Authors
Terms & Conditions
Terms of Use
Subscribe
People
Companies
Copyright © 1996-2023 KM Business Information Canada Ltd.