Bank of Montreal's global asset management business has added a sustainability requirement to one of its emerging markets equity funds.

BMO Global Asset Management has added environmental, social and governance screening to the newly branded BMO Responsible Global Emerging Markets Equity Fund.

The fund, available to European investors, was previously known as the F&C Global Emerging Markets Portfolio. It will now mirror the existing F&C Responsible Emerging Markets Equity ESG strategy, which launched in 2010.

F&C was acquired in 2014 by BMO Financial Group's asset management business in Europe, the Middle East and Africa, which later rebranded to BMO Global Asset Management.

Managed by emerging markets specialist LGM Investments, the fund will target companies in emerging markets that stand to benefit from, or substantially contribute to, trends in sustainable development. Companies included in the portfolio will have a clear link to one of the following six ESG themes: infrastructure for development, financing the future, rise of the low-income consumer, human capital, access to new technologies, and energy for growth.

The fund will only invest in companies that follow governance and sustainability standards, such as board balance, independence, transparency, disclosure and the protection of shareholder rights. Companies will also be evaluated for concerns about environmental pollution, human rights and labour standards abuses, corruption and abuse of minority shareholders.

Portfolio managers Jeff Chowdhry and Sam Mahtani, who also run the F&C Responsible Emerging Markets Equity ESG Fund, will select stocks from the pool of approved companies. 

“There is growing evidence that environmental, social and governance issues have an impact on risk and performance. In turn, investors are showing increasing interest in meeting their long-term investment goals in a responsible way, and we have received significant demand from investors for a GEM portfolio with an ethical and sustainable investment focus,” said Mahtani.

“By evolving the strategy of an existing fund, we are very pleased to make our three decades of experience in responsible investment available to European clients seeking access to sustainable growth opportunities from the emerging markets.”

BMO Global Asset Management, which operates from 27 offices in 17 countries, had €217 billion ($245 billion) in assets under management as of the end of January 2016.