BMO Global Asset Management: Respect and protect human and Indigenous Peoples’ rights: A focus on Canada

PRI Awards 2024

Organisation: BMO Global Asset Management

Signatory type: Investment manager 

HQ country: Canada

The approach, initiative or process

BMO Global Asset Management (BMO GAM) prioritises social equality – which includes human rights and Indigenous Peoples’ rights – as one of two core themes guiding our responsible-investment activities. This work is an intrinsic part of our responsibility to respect human rights.

We have taken actions to advance corporate operationalisation of the UN Guiding Principles on Business and Human Rights (UNGPs), human rights due diligence (HRDD) and the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) in Canada. Our work includes:

1. Research
   We conducted and published extensive research on the state of HRDD in Canada, using third-party human rights benchmark methodologies to assess issuers not covered by these benchmarks.
2. Action through corporate engagement
   Using our research insights, we have conducted 85 engagements with 24 issuers since January 2023, resulting in 12 instances of positive change in policies or practices.
3. Learning from rightsholders
   We took iterative steps to integrate rightsholder perspectives into our stewardship strategy and market education.

Respect and protect: The state of corporate human rights due diligence in Canada

As Canada does not mandate HRDD and reporting based on the UNGPs, Canadian corporate human rights related disclosure has been primarily voluntary and is not consistently aligned with the UNGPs. Also, human rights-related third-party benchmarks don’t cover many Canadian companies given their lower market capitalisation.

Objective

Close the data gap on corporate alignment with the UNGPs in Canada to:

1. Better understand our investment exposure to salient human rights risks;
2. Help investee companies and their investors prepare to meet responsibilities under the UNGPs;
3. Provide market education on HRDD and the UNGPs.

Execution

• We assessed 29 of Canada’s largest companies across six key sectors using two human rights benchmark methodologies grounded in UNGPs pillars: the Corporate Human Rights Benchmark (CHRB) and KnowTheChain (KTC).
• We structured research findings across UNGPs pillars, specifically: governance and policy commitments; embedding respect through implementing HRDD; and grievance mechanisms and remedy.
• We researched the most salient human rights risks for each sector to ground our understanding of the most severe impacts.
• We analysed sector-level performance and best practices, general lagging areas and company-level performance.
• In February 2023, we published Respect and Protect: The State of Corporate Human Rights Due Diligence in Canada.

Impact

• The report generated insights on UNGPs-aligned best practices and gaps, included next steps for each sector and made recommendations for Canadian companies and their investors.
• While Canadian companies generally make good policy commitments, areas for improvement include operationalisation of HRDD and remedy. We used our research findings into Canadian companies’ policy commitments to inform our stewardship strategy and internal/external education, which included activities such as:
  • a dedicated HRDD corporate engagement campaign;
  • co-leading PRI Advance engagements;
  • policy advocacy, including giving feedback to the UN Working Group on Business and Human Rights – Investors, ESG and Human Rights consultation;
  • publishing subsequent and related educational pieces;
  • insight-sharing with relevant investment teams.

We plan to update our findings in 2025 using inaugural disclosures by Canadian companies under the Fighting Against Forced Labour and Child Labour in Supply Chains Act.

The HRDD engagement campaign

After publishing our research in 2023, we launched a multi-year HRDD engagement campaign.

Objectives

1. Educate investees on the UNGPs, UNDRIP and evolving regulatory and investor expectations.
2. Share research findings on sector-specific salient human rights risks and company performance against benchmark indicators.
3. Encourage broad adoption of HRDD and UNGPs-aligned practices.

Execution

• Since 2023 we have conducted 85 engagements with 24 issuers across five sectors. This included face-to-face meetings (up to five per company) as well as written communication.
• We prioritised the Canadian mining, consumer discretionary and consumer staples sectors given their greater exposure to potential adverse human rights impacts in operations and supply chains.

Impact

To date, we have recorded 12 distinct instances of positive change in company practices or policies related to our engagement. For instance, in the consumer staples sector:

• one major grocer undertook a third-party led human rights risk assessment and disclosed the most salient human rights risks within its supply chain to support its understanding of where to focus;
• we advised a second grocer on strategising and preparing for more rigorous HRDD. At the end of 2023, the grocer in question published a clear human rights policy commitment with details about operationalising its strategy enterprise wide.

Learning from rightsholder perspectives

Our research highlighted the need for us to seek out and integrate rightsholder perspectives into our stewardship strategy and internal/external education.

Objectives

Fulfil investor responsibilities under the UNGPs and support “prevent, cease and mitigate” actions under step two of the Organisation of Economic Co-operation and Development (OECD) guidelines by:

• Collaborating with rightsholders to raise awareness of salient human rights risks and provide market education;
• Supporting due diligence efforts through the integration of rightsholder perspectives on specific issues and adverse impacts to understand local context;
• Hearing from affected rightsholders to strengthen our engagement on effective remedy.

Execution

We engaged with rightsholders proactively and contributed to investor education sessions alongside rightsholders. We include some examples below.

• We collaborated with the First Nations Major Projects Coalition and the Responsible Investing Association (RIA) in Canada to produce a webinar series on respecting Indigenous Peoples’ rights. (September 2023 to May 2024)
• We collaborated with a Latin American Indigenous Peoples’ rights specialist to co-author an article on investor responsibility to conduct due diligence. The article aimed to ensure respect for Indigenous rights in Latin America and highlighted the need to understand local context. (Published June 2024)
• We attended the 23rd UN Permanent Forum on Indigenous Issues. (April 2024)
• Since January 2023, we have engaged with 30 different rightsholder entities (non-governmental organisations, human rights lawyers, workers and experts on Indigenous People and relevant issues) to inform stewardship strategy and understanding of best practices, adverse impacts and effective remedy.

Impacts

• Through our corporate engagements we have encouraged the adoption of impact monitoring and grievance mechanisms that are co-designed by communities, stakeholders and rightsholders. Since 2023, we have conducted 11 engagement activities on co-designing mechanisms with rightsholders.
• We recorded one instance of positive change related to remedy provision and continue engaging rightsholders to understand whether this remediation is satisfactory.

The measures to ensure transparency and generate outcomes

Below we share links describing process, practices and outcomes related to the action areas noted above:

• Respect and Protect: The State of Corporate Human Rights Due Diligence in Canada includes a detailed methodology and recommendations.
• As New Laws Approach, Canadian Issuers Can Boost Human Rights Due Diligence Practices is an article providing some key insights.
• Presentation of our research and actions on the Investor Alliance for Human Rights webinar: The Corporate Responsibility to Respect (CR2R): Integrating, Tracking, and Monitoring Human Rights Risk Management.
• BMO Statement on Human Rights
• BMO GAM’s Policies and Approaches

The HRDD engagement campaign

• Our 2023 Responsible Investment Annual Report includes five relevant case studies.
• Our quarterly Stewardship Reports provide updates on our HRDD engagement campaign.

Seeking rightsholder perspectives

• RIA webinar series September 2023–May 2024:
  • The Origins of Indigenous Rights in Canada: What Investors Need to Know Today
  • Responsible Investment from an Indigenous Perspective
  • Road to Shared Prosperity – Indigenous Communities and Responsible Investors
• Investor Human Rights Due Diligence: An Eye on Indigenous Peoples’ Rights in Latin America – RIA Magazine article (June 2024)
• Our 2023 Responsible Investment Annual Report (social equality section) provides a spotlight on integrating rightsholder perspectives into monitoring and grievance mechanisms.

PRI disclaimer: This case study aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. It is written by a guest contributor. Authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories.

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