Bank of Montreal

RATING

SECTOR

Banking

WEBSITE

CONTACT

100 King Street West, Toronto, ON M5X 1A3, Canada

Tel: +1 416-867-5050
Fax: +416-867-6793
Email: feedback@bmo.com

STOCK EXCHANGE

LISTING

 

EMPLOYEES

43, 360

CHIEF SUSTAINABILITY OFFICER

Michael Torrance 

AWARDS

CONTENT SOURCE

FURTHER READING

Report created by Madeleine Bruce 

Bank of Montreal

SECTIONS :  Sustainability •  Targets    Evaluation  •  Key Points  •  Overview

Company Activity

Established in 1817, the Bank of Montreal (BMO) provides banking/financial services to individual persons and institutions. It operates through the five following segments: Canadian Personal and Commercial Banking (Canadian P&C), United States Personal and Commercial Banking (U.S. P&C), BMO Capital Markets, Corporate Services, and Wealth Management. 

The company was founded by Robert Armour, Austin Cuvillier, George Garden, Horatio Gates, James Leslie, George Moffatt, John Richardson, Thomas A. Turner and John C. Bush in Montreal, Canada in 1817.

The company’s motto is to invest with purpose and “to boldly grow the good” in business and life BMO has historically held its ethos of building a more secure and sustainable future very closely, as its first responsible fund launched over 35 years ago, decades before sustainability discourse was even on the map. Ever since, BMO executives and their teams have been actively engaging with companies/organisations to improve their environmental, social and governance (ESG) practices and environmental impacts. 

Company Sustainability Activity

BMO has been continually releasing annual reports for decades showcasing their ESG and CSR protocols and practices. The report, as lined out by General Counsel and Chair of BMO’s Sustainability Council, Simon Fish, focuses on key areas like sustainable finance, climate change, human rights, diversity, equity and inclusion. 

BMO has led by example for sustainability in the financial sector with the initiation of their Responsible Investment team which is “one of the largest and most experienced in the industry.” Specialist experts lead the research team in directing investment activities to help BMO make the most environmentally conscious decisions possible. 

BMO is also a founding signatory for United Nations Principles for Responsible Investment (Strategy and Governance) and was rated A+ according to the UNPRI methodology/guidelines

The bank’s current CSR goals as outlined by the company site include mobilising $400 billion for sustainable finance by 2025, doubling support for small businesses and for women entrepreneurs, and reducing barriers to achieve an inclusive society for employees, customers, and all other stakeholders for BMO. 

Highlights

  • Introduction of Bold Commitments and Zero Barriers to Inclusion 2025 strategy and goals 
  • Surpassed goal to align $250 billion in client investments with sustainable objectives 
  • Enhancement of disclosure approach to environmental and social risk management including responsible lending and sustainable procurement 
  • Climate Report 2020 outlines managed climate-related risks and opportunities in line with the Taskforce on Climate-related Financial Disclosures (TCFD), including details of the climate-related scenario analysis work completed in 2020
  • 2020 lending to carbon-related assets amounted to 3.0% of BMO’s total lending portfolio 
  • BMO set and achieved goals to match 100% of global electricity use with electricity procured from renewable sources
  • Released their first Sustainability Bond Impact Report with information on the allocation of proceeds and quantitative and qualitative descriptions of positive impacts resulting from the sustainability bond originally issued in 2019
  • Effective and efficient response to the COVID-19 pandemic by provision of a forum to support their employees, customers and communities through the crisis 
  • Publication of 17 episodes of its sustainability podcast series on topics including climate change, biodiversity, human rights, and the impacts of and recovery from COVID-19
 

Targets

Sustainable Investment

  • Mobilize $250 billion in client investments to align with sustainable objectives by 2025
  • Create an impact investment fund and seed with $250 million in capital by 2025
  • Double small business lending in Canada to $10 billion by 2025

Climate Mitigation and Energy Use/Consumption

  • Manage their environmental footprint and work with their clients to navigate the transition to a resource-efficient, lower-carbon and circular economy
  • Build capacity and strengthen climate change risk management governance
  • Maintain carbon neutrality in their operations 
  • Maintain 100% renewable electricity purchases
  • Establish new operational emissions reduction targets beyond 2021
  • Reduce absolute enterprise carbon emissions by 15% versus fiscal 2016 baseline levels by the end of fiscal 2021
  • Committed to reducing the environmental impact of operational activities by managing use of energy, transportation and water, as well as their material consumption, waste and emissions

Inclusivity and Diversity

  • Double the number of women-owned businesses that they support across their footprint (Canada only) by 2025
  • Support inclusive local economic activity, racial justice, innovation and social progress through their community giving activities
  • Champion diversity and inclusion across their organization and preparing their colleagues for the jobs of the future
  • Deal fairly and ethically with their suppliers and working with them to improve their practices and respect human rights
  • Double the size of the bank’s indigenous banking business by 2025
  • Foster an inclusive workplace where 100% of employees complete “Learn from Difference for All” training
  • Increase the representation of People of Colour in U.S. senior roles by the end of 2020
 

Progress

Sustainable Investment

Climate Mitigation/ Consumption and Energy

  • Joined Mastercard’s Priceless Planet Coalition (PPC), bringing together sustainability-minded organizations in a global effort to combat climate change by planting trees
  • Acted as lead manager on the European Investment Bank’s (EIB) $500 million Climate Awareness Bond
  • Acted as joint bookrunner on a $700 million green bond offering for Pattern Energy to finance investments in renewable energy projects
  • Sustainability Office works with the lines of business, risk management, and others, to develop, coordinate and maintain an enterprise-wide strategy that addresses  environmental and social responsibilities
  • Diverting waste from landfill and working toward a sustainable economy by partnering with the Recycling Council of Ontario to develop an enterprise-wide strategy to eliminate plastic waste in operations

Inclusivity, Diversity, and Community Involvement

  • Acted as overall lead manager on the City of Toronto’s inaugural $100 million social bonds, the first such bond issued by Toronto, or by any government issuer in Canada, proceeds of which were used to fund the George Street revitalization project and 1,000 new homeless shelter beds
  • $6.4 billion in business with Indigenous customers
  • $9.5 billion in loans to women-owned businesses
  • $5.4 billion in small business lending in Canada
  • Partnered with Avanath Capital Management to help create wealth in black communities in the US
  • Increase of specialised support that helps Indigenous communities and individuals take their place in the national economy, and provide for themselves, their families and coming generations
  • 41.7% gender equity in senior leadership roles in Canada and the United States
  • 83% of employees believe BMO is a great place to work
  • 20.3% increase of the representation of People of Colour in U.S. senior roles 
  • Installment of “Learn from Difference (LFD for all)”, a signature D&I learning program and a multi-year initiative focused on building leadership capabilities and equipping leaders with strategies to create a more inclusive environment for colleagues, customers and communities
 

Certificates

UN Sustainable Development Goals

UN SDGs Compliance

SDG 5: Gender Equality

  • Consistently support women-owned businesses by providing them access to financial services, while also actively supporting initiatives aimed at empowering women
  • Signed on industry commitments such as the UN Women’s Empowerment Principles
  • Perform ongoing assessments to make sure the gender wage gap is closing rapidly as a 2020 review found that women earned more than 98 cents for every dollar earned by men in base salary and total compensation at BMO

SDG 8: Decent Work and Economic Growth

  • As a financial company, BMO is healthfully profitable 
  • More than 80% of employees are happy to work there as the workplace environment is safe, trustworthy, accountable, and harassment-free 
  • Fair employment opportunities are ensured in operations and in the broader economy through BMO’s support of small businesses and entrepreneurs
  • Responsible investments aim to address topics such as forced labour, modern slavery and human trafficking through BMO’s approach to human rights

SDG 10: Reduced Inequalities

  • The adoption of policies and practices that aim to remove barriers to social and economic inclusion among their employees is one-way BMO hopes to reduce socially constructed inequalities 
  • For customers, BMO has designed products and services tailored to underrepresented segments and additionally has partnered with charitable organizations on initiatives focused on inclusive local economic opportunity
  • BMO strives to create racial equality with their targets to increase the ratio of people of color and indigenous groups in their offices 
  • Investments for indigenous organisations and initiatives also help BMO to bring a louder voice to misrepresented groups 
  • To date, BMO has pledged  $66 million in donations to registered charities and non-profit organizations in Canada and the United States
  • BMO has strived to increase its community impact even in the COVID-19 pandemic by lending funds to several relief agencies across North America 

SDG 13: Climate Action

  • BMO continues to raise awareness, build capacity to manage climate change risks and opportunities, and mobilizes capital in support of a lower-carbon economy
  • The company actively partners with industry experts to advance climate-related analytical methodologies
  • BMO’s Climate Report shares specific details of their climate involvement, including their goals to reach 100% renewable operations by at least 2025 
  • Since 2019, BMO has pledged $45.7 billion to green finance 
  • 3% of BMO’s total loan portfolio is tied to carbon-related assets ($13.7 billion)
  • BMO is a founding member of Climate Action 100+, a US$40 trillion global investor engagement collaboration working to ensure that the world’s largest corporate greenhouse gas emitters take necessary action on climate change
 

Evaluation

The Bank of Montreal (BMO) very clearly embeds a deep-rooted priority for CSR and sustainability into all parts of their corporate ethos. It’s mission to “boldly grow the good” exemplifies this, as they strive to create positive impacts for all its stakeholders in work and in life. 

Perhaps most impressive of BMO’s sustainability protocols is its commitment to inclusion, diversity, and community involvement. The targets laid out in their 2020 Sustainability Report show the company is actively increasing their representation of female leaders, people of colour, and indigenous individuals in their scenario positions. They also aim to foster an inclusive workplace by having 100% of employees complete “Learn from Difference for All” training. As of this year they are at about 84%. 

BMO’s climate mitigation strategies and involvements are also worth recognising. They have released a detailed Climate Report that specifically outlines where BMO has contributed to fighting climate change. Such contributions to climate-related issues and other sustainability topics are done through the investment/lending of funds to organisations that combat environmental concerns. 

That being said, criticism may be that BMO relies on its investments rather than its own direct action for sustainability. They are also not 100% renewable in all their operations, although they have been carbon neutral since 2010. The company does hold LEED certifications, but only in 9 of their 900 branches.

Lastly, BMO lacks direct involvement/alignment with biodiversity-related SDGs (14 and 15), other than their pledged commitments to external organisations. 

Despite the bank’s clear initiatives towards sustainability, the Bank of Montreal has invested $97.207 B in the fossil fuel industry since the Paris Agreement was adopted in 2016. However, its investments decreased from 2019 to 2020.

For these reasons, the Bank of Montreal has been rated a C.

Analyst Outlook: Positive

BMO has exemplified very efficient progress in the realm of sustainability. However, they could improve the amount of direct action rather than indirect action through their investment in sustainable companies. 

The bank has ambitious goals for the future however and very well could be close to a higher rating if their goals are followed through and they continue to divest from the fossil fuel industry in the next few years.

Key Points

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