BMO drops anti-coal coverage amid Wall Avenue rebuke of ESG

A Financial institution of Montreal (BMO) financial institution department in Montreal, Quebec, Canada, on Thursday, April 28, 2022. 5 Canadian banks had their worth targets minimize a median of 6% at RBC Capital Markets on prospects that escalating macro dangers may weigh on income. Photographer: Christinne Muschi/Bloomberg

Christinne Muschi/Bloomberg

(Bloomberg) –BMO Financial institution quietly dropped its coverage limiting lending to the coal trade in late 2023, serving to it keep away from being labeled an vitality “boycotter” in West Virginia.

The change got here to gentle Monday after West Virginia Treasurer Riley Moore took a victory lap in an announcement of the monetary corporations it was including to its boycott checklist, which does not embody BMO. In late February, the financial institution obtained a warning that it might be placed on a state checklist of firms that Moore’s workplace considers to boycott the fossil fuels trade. BMO is the U.S. subsidiary of Toronto-based Financial institution of Montreal. 

In response to that February discover, Timothy Cox, U.S. basic counsel for BMO, mentioned in a March 25 letter to the state treasurer’s workplace that it eliminated an announcement detailing its restrictions on lending to the coal trade because of coverage modifications in November 2023. Cox’s letter was obtained by Bloomberg Information by way of a public data request. 

“On account of coverage modifications made in November 2023, we eliminated a Coal Assertion from BMO’s web sites because it didn’t totally replicate our present insurance policies,” Cox’s letter to Moore’s workplace mentioned. “After receipt of your letter, we realized {that a} cached model of the assertion remained on our web sites and took it down. We now have no plans to republish the Coal Assertion.”

Banks and funding corporations have been much less vocal about their local weather efforts after Republicans have spent greater than two years attacking the environmental, social and governance technique that the finance trade embraced. UBS Group AG Chief Govt Officer Sergio Ermotti final month mentioned policymakers should not depend on banks as a de facto “local weather police.”

BMO’s basic method to the coal trade hasn’t modified regardless of taking down the public-facing assertion, in line with an individual accustomed to the matter who requested to not be recognized. Its method to coal remains to be primarily based on particular person risk-based assessments of firms and taking down the assertion would not sign an intention to spice up publicity, the particular person mentioned.

Financial institution of Montreal in 2021 introduced a coal lending coverage that mentioned the agency won’t present financing as a lender the place the proceeds are identified to be primarily used to develop a brand new greenfield coal-fired energy plant, thermal coal mine or vital enlargement of such crops or mines, in line with its 2022 sustainability report. It additionally mentioned it would not lend to new purchasers that function vital thermal coal mining or coal energy era property. 

The assertion on coal lending was once included on a web site that particulars the financial institution’s insurance policies on human rights, political contributions and anti-money laundering measures.

On Monday, West Virginia’s Moore mentioned that BMO labored together with his workplace and “eliminated an offending coverage” on its web site. That helped BMO keep away from being positioned on West Virginia’s checklist that now includes 9 totally different monetary providers corporations.

“BMO Financial institution eliminated an offending coverage revealed on their web site after receiving our letter and subsequently demonstrated different current insurance policies had been revoked,” Moore mentioned within the assertion. 

Jared Hunt, a spokesperson for the West Virginia treasurer’s workplace, mentioned that firm representatives met with their workplace to commit that the corporate’s earlier assertion on coal lending was not a part of their lending insurance policies.

BMO spokesperson Scott Doll mentioned in an emailed assertion that the financial institution’s insurance policies “signify a complete, risk-based method that underscores our dedication to sound and prudent enterprise practices whereas complying with the legal guidelines and rules of the markets we serve.” 

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