BMO Global Asset Management (BMO GAM) European business has said 12 percent of its assets under management will be managed in line with net zero principles, representing 50 percent of active equity exposure.

The firm has constructed a net zero methodology, based on the Net Zero Investment Framework developed by the Paris Aligned Investment Initiative.

The announcement follows an update from the Net Zero Asset Managers Initiative, with signatories disclosing their net zero AUM targets and methodologies.

BMO GAM (EMEA) has established three key ‘principles of action’ to ensure effective governance of the net zero commitment approach including a reduction in emissions which may include excluding companies that are not aligned with the same net zero ambitions.

The firm also pointed to the risks of ‘net zero-washing’, which is due in part to the framework for companies reporting emissions still being ‘patchy’.

Vicki Bakhshi, climate strategist at BMO GAM, said: “As a founding signatory to the Net Zero Asset Managers Initiative, BMO GAM (EMEA) is committed to contributing towards the global goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius.

“We recognise that asset managers have a unique and critical role to play in the transition to global net zero emissions. Strong action by global leaders at this week’s COP26 conference is also essential to set the world on a trajectory to a more stable climate and a healthier planet.”

The funds managed in line with a net zero target include global equities and emerging market strategies as well as the firm’s F&C Investment Trust.