The Glasgow Financial Alliance for Net Zero, of which BMO is a
member, recommends that financial institutions have a transition
plan that contains “a set of goals, actions, and accountability
mechanisms to align an organization’s business activities with a
pathway to net-zero.”1
In March 2022, BMO released its 2021 Climate Report in response
to its 2050 net zero financed emissions commitment. While the
Report offers investors some clarity on the measurement of
emissions and sectoral 2030 targets, it lacks disclosure and
specificity on how BMO will achieve progress. For example:
‰ BMO updated its Enterprise-wide Risk Management Framework
with tolerance thresholds informed by modelling, but fails to
disclose what those thresholds are or whether they are actually
used to meet 2030 targets;
‰ BMO does not disclose details about how it will evaluate client
transition plans or report to investors on the progress of its
portfolio;
‰ BMO’s lending and underwriting to companies on the Global Coal
Exit List amounted to US$6.76 billion in 2021.2 BMO’s coal policy
focuses mainly on “new” coal projects or clients, with no
commitment to phase down existing coal financing in line with
climate science;
‰ BMO indicates it is making progress towards its $300 billion
commitment to “sustainable financing,” but does not quantify or
disclose the impact of this activity on emissions;
‰ Previously, BMO announced3 a “financial decision” to wind down
its energy business outside Canada, but without a timeline.
Meeting this commitment by 2030 would enable BMO to halve
its oil and gas emissions, in line with climate science.
Investors believe that this lack of specificity and disclosure
represents a material business risk. The Office of the
Superintendent of Financial Institutions is developing climate risk
management guidance that will require BMO to have a Climate
Transition Plan to manage “increasing physical risks from climate
change, and the transition towards a low-GHG economy.
BMO’s need for a credible transition plan is acute considering the
bank’s exposure to transition risk. According to a recent study, BMO
has 298 million tonnes CO2 equivalent of financed emissions.5 In
addition, BMO is still involved in fossil fuel expansion projects
including the Trans Mountain pipeline and the Coastal Gaslink project.
BMO’s peers disclose greater specificity regarding how they will
reach net zero, including fossil fuel phase down or financing
reduction targets (Lloyds, BNP Paribas, ING, Société Générale) and
public disclosure regarding client net zero evaluation and progress
(Credit Suisse, ANZ Group). This proposal is consistent with one
filed and withdrawn by MEDAC last year.