In 2023, BMO’s asset management arm talked about a victory it had at Volkswagen, one of its investees. BMO GAM noted that the German car company lagged its peers in disclosing climate positions taken directly and via industry associations, but then improved, in part due to BMO’s efforts.
This is consistent with expectations established in the benchmark of Climate Engagement Canada, of which BMO GAM is a member. Relevant sub indicators include:
- Adopting a commitment to lobby in line with the Paris Agreement,
- Disclosure of positions taken on climate, and
- A commitment to align its industry association memberships.
BMO’s capital markets division also has a process for evaluating its clients’ policy engagement, including a summary of their engagement activities, including consultations and partnerships, and disclosure of trade association memberships. This is part of a broader process for evaluating the transition readiness of its clients.
The punchline here is that while we are happy to see BMO taking these actions, BMO does not itself meet these expectations, even as it clearly explains the logic in doing so.
After it made its net zero commitment in 2021, BMO started to conduct analyses of the sectors it is financing to see what it would take to meet its targets. Time and again it identified supportive public policy as key, and pledged to push for such policy, stating:
“We will continue to engage with governments and encourage clear climate policy to achieve ambitious decarbonization goals.”
In 2023, BMO updated its Statement on Political Contributions and Lobbying to say that it will lobby “in a manner consistent with our support for the aims and objectives of the Paris Agreement.”
Unfortunately, there is no evidence that BMO has ever followed through on its climate lobbying commitments. Last year, InfluenceMap released a report on the large Canadian banks, including BMO, and found:
“…none of them have publicly advocated for ambitious climate-related policy in Canada. In fact, the banks belong to industry associations that are working to block or dilute climate-related policies in Canada and globally.”
In the case of BMO, InfluenceMap notes that the bank maintains memberships in the Business Council of Canada and the Canadian Chamber of Commerce, two organizations that promote the expansion of fossil fuel infrastructure. BMO does not disclose how these associations it supports are influencing or obstructing climate policy.
Moreover, BMO is the exclusive sponsor of the annual conference of the Canadian Association of Petroleum Producers (CAPP). InfluenceMap has ranked CAPP as the 5th most negative and influential industry associations on climate in the world. This sponsorship implies to the average investor and to the general public an alignment between BMO and CAPP.
We co-filed a shareholder proposal with BMO about climate lobbying this year with Friends Fiduciary and Vancity Investment Management to ask that it improve its disclosure on the issue. In discussions with the bank, it refused to improve, giving no reasons. It recently responded in its proxy circular, only to say that it complies with the law and lists its industry association memberships. This falls well short of what BMO itself is asking its investees and clients to do. We are hopeful that BMO will live up to its commitments and agree to improve its climate lobbying disclosure, and shareholders can encourage this with a positive vote on the proposal. If BMO wants to live up to its tagline to “Boldly Grow the Good,” there needs to be some evidence of “bold,” even if that simply means following through.
Read our investor brief here.
