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BMO drops anti-coal policy amid Wall Street rebuke of ESG

9th April 2024

By: Bloomberg

  

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BMO Bank quietly dropped its policy restricting lending to the coal industry in late 2023, helping it avoid being labeled an energy “boycotter” in West Virginia.

The change came to light Monday after West Virginia Treasurer Riley Moore took a victory lap in an announcement of the financial firms it was adding to its boycott list, which doesn’t include BMO. In late February, the bank received a warning that it could be put on a state list of companies that Moore’s office considers to boycott the fossil fuels industry. BMO is the US subsidiary of Toronto-based Bank of Montreal.

In response to that February letter, Timothy Cox, US general counsel for BMO, said in a March 25 letter to the state treasurer’s office that it removed a statement detailing its restrictions on lending to the coal industry as a result of policy changes in November 2023. Cox’s letter was obtained by Bloomberg News via a public records request.

“As a result of policy changes made in November 2023, we removed a Coal Statement from BMO’s websites as it did not fully reflect our current policies,” Cox’s letter to Moore’s office said. “After receipt of your letter, we realized that a cached version of the statement remained on our websites and took it down. We have no plans to republish the Coal Statement.”

Banks and investment firms have been less vocal about their climate efforts after Republicans have spent more than two years attacking the environmental, social and governance strategy that the finance industry embraced. UBS Group CEO Sergio Ermotti last month said policymakers shouldn’t rely on banks as a de facto “climate police.”

BMO’s fundamental approach to the coal industry hasn’t changed despite taking down the public-facing statement, according to a person familiar with the matter who asked not to be identified. Its approach to coal is still based on individual risk-based assessments of companies and taking down the statement doesn’t signal an intention to boost exposure, the person said.

Bank of Montreal in 2021 announced a coal lending policy that said the bank will not provide financing as a lender where the proceeds are known to be primarily used to develop a new greenfield coal-fired power plant, thermal coal mine or significant expansion of such plants or mines, according to its 2022 sustainability report. It also said it wouldn’t lend to new clients that operate significant thermal coal mining or coal power generation assets.

On Monday, Moore said that BMO worked with his office and “removed an offending policy” on its website. That helped BMO avoid being placed on West Virginia’s list that now comprises nine different financial services firms.

“BMO Bank removed an offending policy published on their website after receiving our letter and subsequently demonstrated other existing policies had been revoked,” Moore said in the statement.

Jared Hunt, a spokesperson for the West Virginia treasurer’s office, said that company representatives met with their office to commit that the company’s previous statement on coal lending was no longer part of their lending policies.

BMO spokesperson Scott Doll said in an emailed statement that the bank’s policies “represent a comprehensive, risk-based approach that underscores our commitment to sound and prudent business practices while complying with the laws and regulations of the markets we serve.”

Edited by Bloomberg

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