BMO aims to cut emissions from energy loans in net-zero push

Bank of Montreal laid out a plan to sharply reduce emissions connected to loans to the energy and power-generation sectors by 2030 as its aims for a longer-term goal of being net zero.

Bank of Montreal laid out a plan to sharply reduce emissions connected to loans to the energy and power-generation sectors by 2030 as its aims for a longer-term goal of being net zero.

Canada’s fourth-largest bank said its new target is a 33 per cent cut in scope 1 and 2 emissions from oil and gas borrowers, which refers to the emissions produced by the companies themselves and their suppliers. The reduction is compared to 2019 levels. 

The Toronto-based bank is also aiming for 24 per cent cut by 2030 in scope 3 emissions -- those produced from the burning of the fuels that oil and gas companies produce. That implies consumers will reduce their use of fossil fuels over time, Dan Barclay, head of BMO Capital Markets, said in an interview. 

Banks are responding to increased pressure from shareholders and activists to take stronger measures toward helping the global effort to slow climate change. Shareholders of Royal Bank of Canada, the country’s largest lender, will vote next month on whether the bank should tighten rules and standards for sustainable finance, an action driven partly by a controversial backing of an Enbridge Inc. pipeline that was criticized for greenwashing.

Bank of Montreal said it plans cut the carbon intensity of financed emissions from power generators by 45 per cent. By 2035, new loans on new personal vehicles in Canada will be restricted to zero-emission cars and trucks.