Today the Bank of Montreal (BMO) released the next steps of its climate commitments, a week after RBC. Here is our reaction, with some high-level highlights:
“BMO moved to the head of the pack of big Canadian banks with their commitment to reduce financed emissions in the oil and gas sector in absolute and not just intensity terms, including Scope 3 emissions. We look forward to seeing their concrete plans to get there,” said Matt Price, Director of Corporate Engagement, Investors for Paris Compliance.
Highlights:
- BMO has set at 2030 target for the oil and gas sector, and absolute reduction of 24% in Scope 3 emissions. This is significant since other banks are either setting only “intensity” targets for oil and gas and/or excluding Scope 3 emissions (see RBC).
- BMO is yet to measure and disclose its facilitated emissions from underwriting (done by banks like Barclays), which is a significant driver of fossil fuel emissions.
- In terms of decarbonization strategy, there is some disconnect in BMO’s language regarding “working with” clients and rejecting divestment vs. comments about not shying away from “tough decisions” regarding clients who are not “climate sensitive.” More clarity is needed regarding how BMO will assess its clients’ transition pathways and disclose results.
- In decarbonization strategies for oil and gas and power, BMO assumes high penetration and technological success of carbon capture and storage, which runs counter to history and is therefore a major risk factor.
- BMO measured baseline emissions and set a target for the Canadian power sector but engages in significant loans and underwriting to US utilities, many of whom still use coal – this needs to be incorporated into its baseline and target.
- BMO is yet to commit to stopping financing of fossil fuel expansion projects, as per the IEA net zero findings, or to exit coal financing by 2030 in the OECD and by 2040 everywhere.
