BMO leads $3trn investor coalition to engage Amazon on ESG

Investors will discuss ESG record with Amazon today

BMO Global Asset Management is leading an engagement drive with Amazon to encourage the online retailer to deal with concerns around its environmental and social behaviour.

Speaking on a webinar about its responsible investment approach, BMO’s Head of Responsible Global Equities, Jamie Jenkins, said the London-based asset manager was “heavily engaging” with Amazon – in which it invests – to address “a wide waterfront of issues under all three pillars of environmental, social and governance”.

With a particular focus on what Jenkins described as “major labour risks” – centred on employment conditions at the company’s distribution centres – BMO initially discussed the issue with Amazon’s Chief Sustainability Officer, which resulted in it teaming up with “four or five other large UK and European asset managers” with combined assets under management of some $3trn, to write a letter to Amazon’s board. The other investors were not disclosed.

“We said we need to have a deep discussion around this issue – it’s very, very serious,” said Jenkins.

Amazon agreed to have a phone call with the investor group, which is taking place today (Friday), to discuss their concerns.

Jenkins said that Amazon was a company that fitted into the “improve area” of BMO’s responsible investment strategy.

“Because of our commitment to engagement we find it acceptable to invest in companies that may be a bit borderline in certain people’s eyes but where we feel the fundamentals are very strong, and the growth trajectory is also strong and where we as an investor can help the company improve.”Alongside labour conditions, he highlighted issues around Amazon’s board governance standards and “the lack of carbon footprint data that Amazon was coming to the market with”. He added that he would discuss carbon footprinting alongside working conditions on the call, and understood that Amazon was “working on coming to market with a sensible, integrated ESG report”.

“They didn’t give us a specific time line for when they are going to be producing this report…. But we’re pretty confident that they are going to come to market with some kind of ESG report when they are good and ready,” he explained. “But we’re not going to give them too much time on this front.”

Amazon has a market cap of over $418bn, with nearly 64% of the company now in institutionally-held shares. It’s share price is up 46% over the past 12 months and 4.7% over the past five days.

Jenkins also said he had “very major governance concerns… as well as disclosure concerns” around electric vehicle giant Tesla, in which BMO does not invest via its responsible strategies.

BMO will extend its fossil-fuel free policy to all its responsible investment funds, he said. In February, the asset manager excluded fossil fuels from its Responsible Global Equities strategy, but said “this is the direction of travel for the entire range of [responsible] funds”.

The firm is also reviewing its responsible investment policy around oil, gas and extractives with a view to “tightening the criteria,” he added.