FinanceMap scores this financial institution in the following areas. Please navigate to the relevant tab for in-depth analysis
FinanceMap assesses these portfolios for this financial institution. Please navigate to the relevant tab for in-depth analysis.
The Bank of Montreal’s (BMO) board consider climate-related issues in guiding corporate strategy, business planning, etc. It has assigned climate-related responsibilities to management-level positions and committees, with some processes in place to ensure they monitor the progress of climate-related issues and initiatives.
The organization considers climate-related risks and opportunities across its different business units; and has defined what it considers to be short, medium, and long term time horizons but has not disclosed the climate-related risks and opportunities it considers relevant to its business in relation to these time horizons.
BMO has provided various examples of how it has considered the impact of climate-related risks and opportunities on its corporate strategy planning, including an enterprise-wide sustainable finance commitment that includes mobilizing capital in underwriting, advisory services, lending, and investments, as well as efforts to improve operational efficiency and sustainable procurement.
It appears to have tested the resilience of its business strategy using various scenarios. In its 2022 Climate Report it disclosed analyses for various portfolios including its London metals and mining wholesale loans, residential mortgages, commercial real estate for U.S. and Canada, and a market risk scenario for trading and underwriting. However, it only discloses the results for one scenario analysis and does not describe how it plans to respond to the impacts identified by its analyses.
BMO considers climate-related risks in assessments of credit risk, market risk, liquidity risk, and operational risk. It describes some processes for identifying and assessing climate-related risks, including a heatmap analysis to determine relative sensitivity of different sectors to physical and transition risks.
The organization outlines some processes in place to manage various climate-related risk types and has an Enterprise-Wide Risk Management Framework that sets out the organization’s approach to risk management. Its Environmental and Social Risk Financing Guideline provides the overall direction for managing E&S risks in the context of credit risk decision-making processes.
BMO appears to have integrated climate-related risks into its overall risk management. In 2022, the organization put in place an E&S Risk Corporate Policy that details how it embeds climate risks into its enterprise-wide risk management framework.
The organization discloses some key metrics used to measure and manage climate-related risks and opportunities, such as the proportion of assets materially exposed to physical and transition risks, sustainable financing metrics, and percent of ESG considerations in remuneration policies.
BMO is transparent regarding Scope 1 and Scope 2 emissions, as well as some relevant Scope 3 emissions. It also discloses financed emissions for the portfolios of several sectors, including iron and steel, aluminum, cement, agriculture, oil and gas, power generation, personal motor vehicles, and residential real estate, and plans to also measure and disclose ‘facilitated emissions’ in the future using the upcoming PCAF methodology.
In March 2021, BMO announced a Net Zero lending by 2050 target and in October 2021, it joined the Net Zero Banking Alliance. It released its initial 2030 interim targets in its 2021 Climate Report for three sectors: upstream oil and gas, power generation, and motor vehicles. BMO has begun to assess decarbonization pathways for iron and steel, aluminum, cement, and agriculture but has not yet set targets for these sectors.
BMO is not aligned with IPCC guidance on the role of coal in the energy mix up to 2050. Its policies include major exemptions, stating it will not lend to clients that operate significant thermal coal mining (>60% revenue) or coal power generation assets (>60% output, Megawatt hour (MWh)) but will otherwise lend to clients given satisfactory evidence they are reducing or have plans to reduce their use of thermal coal and/or GHG emissions and/or converting to high efficiency, low emissions (HELE) or other technologies. Additionally, it has not outlined a coal phase out in line with IPCC guidance.
With regard to natural gas and oil, the organization states it will avoid direct financing for any project or transaction that involves exploration or development in the Arctic Wildlife Refuge. BMO does not otherwise appear to have a specific oil and gas policy. It appears to otherwise be actively financing new or expansionary projects, and appears to be supportive of natural gas in the energy mix as well as the role of oil in the energy mix.
BMO appears to be supportive of a future role of nuclear in the energy mix and has issued $500 million in green bonds under the world’s first nuclear financing framework. Additionally, it has communicated its support for the transition to a low-carbon economy and is increasing its financing of renewables, but it is unclear how it determines the eligibility of transactions towards the financing goal.
FinanceMap’s Climate Governance and Policies analysis assesses statements financial institutions (FIs) are making on how they are incorporating climate issues into their decision-making and operations using FinanceMap’s matrix methodology. This methodology is adapted from the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and guidelines, Net-Zero Banking Alliance (NZBA) or equivalent Glasgow Financial Alliance for Net-Zero (GFANZ) initiative reporting, and IPCC and IEA technology statements. The TCFD provide guidance on 11 recommendations across four areas which are reflected in our matrix: Governance, Strategy, Risk Management, and Metrics and Targets. Additional benchmarks have been introduced to strengthen the ambition of scoring criteria in the assessment of targets, which are supplemented by guidance from the NZBA or equivalent GFANZ initiatives.
Additionally, Science-Based Policy (SBP) benchmarks are used to measure alignment of an FIs technology positions with the science of climate change. These benchmarks are applied to an FIs internal policies on technologies including coal, oil, gas, nuclear, and renewables and also assesses its engagement with broader climate and energy policy issues such as advocacy on the role and importance of different strategy types in the future energy mix.
For each TCFD recommendation and technology, FIs statements are applied to a five point scoring scale ranging from +2 to -2, measuring alignment with the relevant benchmarks. The detailed scores for this FI are displayed below within each matrix cell.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions climate governance, targets and policies. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
Fossil fuel companies are those whose primary sector falls within coal mining and services, or up-, mid-, and downstream oil and gas sectors. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portfolio Paris Alignment analysis of this institution's activities in this portfolio area assesses deals in 2020–2022.
Value Assessed: $260B
Sector Paris Alignment scores for the sectors to which this portfolio has exposure. FinanceMap Paris Alignment analysis is limited to the automotive, upstream fossil fuel, and power sectors.
Fossil fuel companies are those whose primary sector falls within coal mining and services, or up-, mid-, and downstream oil and gas sectors. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portfolio Paris Alignment analysis of this institution's activities in this portfolio area assesses deals in 2020–2022.
Value Assessed: $64.7B
Sector Paris Alignment scores for the sectors to which this portfolio has exposure. FinanceMap Paris Alignment analysis is limited to the automotive, upstream fossil fuel, and power sectors.
Fossil fuel companies are those whose primary sector falls within coal mining and services, or up-, mid-, and downstream oil and gas sectors. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portion of AUM Assessed: $43.9B
Holding Name | Contribution to Sector Production |
---|---|
Emera Inc | 14.1% |
TransAlta Corp | 13.8% |
Exelon Corp | 6.6% |
Duke Energy Corp | 5.9% |
Algonquin Power & Utilities Corp | 4.7% |
Southern Co | 4.5% |
Enel SpA | 4.5% |
Fortis Inc | 4.1% |
Nextera Energy Inc | 3.7% |
Capital Power Corp | 3.3% |
Holding Name | Contribution to Sector Production |
---|---|
Volkswagen AG | 20.1% |
Toyota Motor Corp | 14.7% |
Stellantis NV | 12.2% |
Honda Motor Co Ltd | 8.4% |
General Motors Co | 7.4% |
Ford Motor Co | 6.4% |
Suzuki Motor Corp | 4.3% |
Nissan Motor Co Ltd | 3.6% |
Mercedes Benz Group AG | 2.9% |
Renault SA | 2.9% |
Holding Name | Contribution to Sector Production |
---|---|
China Shenhua Energy Co Ltd | 42.5% |
Glencore PLC | 21.0% |
Coal India Ltd | 19.7% |
Yankuang Energy Group Co Ltd | 7.3% |
Exxaro Resources Ltd | 3.5% |
Adaro Energy Indonesia TBK PT | 2.5% |
United Tractors Tbk PT | 1.4% |
CONSOL Energy Inc | 1.0% |
Washington H Soul Pattinson and Company Ltd | 0.5% |
Warrior Met Coal Inc | 0.4% |
Holding Name | Contribution to Sector Production |
---|---|
Canadian Natural Resources Ltd | 20.6% |
Suncor Energy Inc | 14.3% |
Exxon Mobil Corp | 5.4% |
Tourmaline Oil Corp | 5.0% |
ARC Resources Ltd | 4.9% |
Chevron Corp | 4.2% |
BP PLC | 4.1% |
TotalEnergies SE | 3.8% |
Imperial Oil Ltd | 3.8% |
Shell PLC | 3.5% |
Bank of Montreal Global Asset Management (BMO GAM) appears to place a strong focus on climate change and ESG issues in its stewardship approach. It has outlined climate expectations for companies in line with CA100+ as well as sector specific recommendations for key industries. In 2021, it started developing an approach guided by PAII’s Net Zero Investment Framework. The asset manager has set engagement objectives to track progress against, and has outlined an escalation response which includes filing shareholder resolutions, voting against management, attending AGMs, and divestment.
BMO GAM is actively engaging with companies on climate change, including Shell and ExxonMobil and Suncor on various climate priorities such as decarbonization and net-zero strategies, energy transition impact, etc. Additionally, it has co-filed a climate lobbying resolution at ExxonMobil. BMO GAM is an active participant in climate-related investor initiatives and is a founding signatory to NZAMI, as well as a co-lead on engagements with CA100+.
BMO GAM has outlined the role of its Responsible Investment team and third party service provider in its stewardship activities. It is partially transparent about its engagements, providing some case studies in its quarterly stewardship reports and annual Responsible Investment Report. The asset manager discloses all proxy voting data along with voting rationale. It has demonstrated willingness to use shareholder authority on climate, including co-filing shareholder proposals and voting against 34 director nominees on climate grounds.
Insightia data suggests that BMO has mixed support of AGM resolutions InfluenceMap categorizes as in line with the Paris Agreement, supporting 43.9% in 2019, 56.7% in 2020, 80.5% in 2021 and showing a decrease of support in 2022 with 46%.
FinanceMap's methodology to measure the engagement process on climate was developed in consultation with several of the world's leading asset managers and uses key aspects of the UK Financial Reporting Council's 2020 Stewardship Code . The Stewardship Code was chosen to benchmark engagement quality as it provides an ambitious framework and detailed definitions of what constitutes effective engagement. FinanceMap defines the term ‘engagement’ as referring to all investor actions undertaken to influence the management strategy of the companies they own including private communications with corporate management and appointed advisors; questions at AGMs/other company meetings; comments on the company in the media; escalation and the shareholder resolution process (filing, voting behavior). FinanceMap’s methodology breaks the engagement process down into a set of sub-activities and looks for evidence associated with these across publicly available data sources.
Climate-relevance categorization of shareholder resolutions is based on the IPCC’s Special Report on 1.5°C and its concluded need for “rapid and far-reaching transitions in land, energy, industry, buildings, transport, and cities.” FinanceMap scored voting on any resolution where the intent and likely outcome is consistent with this IPCC stated need. The voting data is drawn from asset managers' disclosures to the US Security Exchange Commission (SEC), asset manager websites (including third-party websites they link to), directly from the asset managers, and through specialist voting data provider Insightia. The full list of resolutions assessed is available here.
The following table outlines the key queries and data sources, which FinanceMap uses to assess asset managers' corporate engagement programs. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
Bank of Montreal (BMO) appears to mostly have engaged on sustainability-related corporate disclosures, with limited but very positive engagement. Most engagement activities appear to be carried out by subsidiary asset management arm: BMO Global Asset Management (BMO GAM).
Both BMO and BMO Global Asset Management have advocated for action to achieve zero-carbon economies by 2050 and to keep temperature rise to 1.5C. BMO GAM has further advocated for this ambition in joint investor statements to governments in 2022 and 2021. In its 2022 Climate Report BMO stated that it is co-chairing Canada’s Sustainable Finance Action Council during 2022 and that it has supported the development of recommendations for mobilizing capital flows to support the transition to net-zero. In BMO GAM’s 2022 Responsible Investment Report, it stated that it is engaging with policymakers to “promote a high bar” for sustainability in the asset management industry.
BMO appears supportive of regulated corporate ESG disclosure. BMO GAM advocated for policymakers to mandate 1.5C pathway-aligned transition plans and TCFD-aligned disclosures in joint investor statements in 2021 and 2022. In response to the Canadian Securities Administrators in 2022, BMO GAM supported proposals for climate change-related disclosures and advocated for increased ambition, such as including material Scope 3 emissions. BMO GAM has also supported increasing the ambition of the International Sustainability Standards Board (ISSB)’s proposed Sustainability Disclosure Standards, suggesting double materiality in place of the enterprise value approach, and to require disclosures on governance processes and procedures, strategy and related metrics and targets.
BMO GAM strongly opposed a number of rules proposed under the Trump administration that would limit ESG investing. In 2020, in response to the SEC, BMO GAM opposed the SEC’s proposal that would limit shareholder rights, including rules for proxy advisers and the increase of the threshold for filing shareholder proposals. Also in 2020, it opposed the Department of Labor (DOL)’s proposals limiting the integration of ESG characteristics and the use of proxy voting by fiduciaries in ERISA pension plans. In 2021, BMO GAM jointly submitted a comment with the Canadian Coalition for Good Governance to the DOL, supporting regulation that would permit the use of ESG factors in fiduciaries' decision-making, including rule language that includes explicit ESG examples.
BMO has disclosed a partial account of its engagement with sustainable finance policy. It has also listed membership of trade associations and details of involvement on sustainable finance relevant committees but has not given details on the specific sustainable finance policy positions of these organizations.
InfluenceMap’s methodology for assessing lobbying on sustainable finance policy closely follows InfluenceMap’s established methodology on climate policy engagement, which is used extensively by investors, including via the Climate Action 100+ investor engagement process. Our full methodology can be found here.
Under our assessment of sustainable finance lobbying, InfluenceMap considers engagement on all financial policies which intersect with climate and/or other sustainability issues. The analysis takes into account both the engagement of the financial institution and the activities of industry associations they hold membership of.
InfluenceMap’s methodology covers seven publicly available data sources, searching for evidence of engagement and corporate positioning since 2017. To determine the policy issues within the scope of the analysis, InfluenceMap breaks down sustainable finance policy engagement into a series of subcategories, or 'queries'. These are designed to cover high-level issues relating to the importance of sustainable finance, as well as more specific areas of sustainable finance policymaking. InfluenceMap’s research process searches for evidence of an organization's engagement with each sustainable finance policy issue, across each of the data sources.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions’ sustainable finance policy engagement. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
In this section, we depict graphically the relationships the corporation has with trade associations, federations, advocacy groups and other third parties who may be acting on their behalf to influence climate change policy. Each of the columns above represents one relationship the corporation appears to have with such a third party.
In these columns, the top, dark section represents the strength of the relationship the corporation has with the influencer. For example if a corporation's senior executive also held a key role in the trade association, we would deem this to be a strong relationship and it would be on the far left of the chart above, with the weaker ones to the right. Click on these grey shaded upper sections for details of these relationships. The middle section contains a link to the organization score details of the influencer concerned, so you can see the details of its climate change policy influence. Click on the middle sections for for details of the trade associations. The lower section contains the organization score of that influencer, the lower the more negatively it is influencing climate policy.
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
David Jacobson is on the board of the US Chamber.
David Jacobson (Vice Chairman, BMO Financial Group)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
BMO was a member of the US Chamber in 2021. This does no longer appear to be the case in 2022.
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
David Jacobson is on the board of the US Chamber.
David Jacobson (Vice Chairman, BMO Financial Group)
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
BMO was a member of the US Chamber in 2021. This does no longer appear to be the case in 2022.
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
BMO Global Asset Management is a member of the Investment Association (last checked September 2023)
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
BMO Global Asset Management is a member of the Investment Association (last checked September 2023)
not specified
--no extract--
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
BMO Global Asset Management is a member of The Investment Association, which is a national association member of EFAMA (last checked September 2023).
InfluenceMap Data Point on Corporate - Influencer Relationship
(1 = weak, 10 = strong)
BMO Global Asset Management is a member of The Investment Association, which is a national association member of EFAMA (last checked September 2023).