Case study: How BMO takes action on its PRB targets: climate change and housing

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

BMO maintains regular, open, and meaningful communication with its stakeholders. For an overview of its engagement on issues related to climate change and financial inclusion, please refer to page 21 of the 2023 Sustainability Report. BMO also collaborates with industry leaders, government officials, academic institutions, and investors to understand and tackle the challenges that impact both its business and society. Details about these groups can be found on page 17 of the 2023 Sustainability Report, as well as pages 28-30 of the 2023 Climate Report.

A key aspect of BMO’s Climate Ambition is convening stakeholders to promote climate action. In 2023, for instance, BMO chaired the Canadian Bankers Association’s Environmental Specialists Group and Climate Scenario Analysis Working Group to engage in advocacy regarding privacy regulations, environmental and social risk management, climate change, sustainable finance, and disclosure regulations. BMO Global Asset Management (GAM) actively engages with policymakers to advocate for climate change initiatives. In 2023, BMO GAM submitted comment letters relating to various environmental disclosure standards, including the TNFD draft guidance, the U.S. Environmental Protection Agency’s methane standards for the oil and gas sector, and the International Sustainability Standards Board Consultation on Agenda Priorities.

BMO U.S. also established a partnership with the National Association of Real Estate Brokers, the leading network of Black professionals which includes a down payment assistance program for graduates from historically Black colleges and universities as well as predominantly Black institutions. This initiative aligns with the bank’s commitment to invest US$7.5 billion to enhance access to homeownership, including the expansion of BMO’s Welcome Home Grants. Over half of this funding is anticipated to benefit individuals and communities of colour.

Additionally, BMO is a member of the PRB Core Group, which is dedicated to advancing the Principles for Responsible Banking (PRB). The Core Group, representing the PRB signatory community, is tasked with leading the development of the 2030 Vision for PRB, further refining the PRB framework to reflect the evolving landscape and expectations, and guiding members in fulfilling their commitments and targets during the 5-10 years of their PRB journey.

What actions were taken by BMO on its PRB targets, climate change and housing?

In its 2024 PRB Reporting and Self-Assessment Template BMO reports that it took the following actions on its PRB targets, climate change and housing:

• SMART Target 1: Climate change
• For each sector for which BMO has set decarbonization targets, the organization continues to disclose financed emissions in accordance with the PCAF Standard and other widely recognized metrics, such as emissions intensity, to effectively monitor progress. In 2023, BMO established the Climate Commercialization Working Group, a sub-committee of the ESG Executive Committee, to coordinate climate finance efforts related to its Climate Ambition. BMO’s Capital Markets group has created a foundation of energy transition and climate-related products and services, which are delivered through the Energy Transition Group, the Sustainable Finance team, and BMO Radicle to support the achievement of the set targets. Details regarding BMO’s climate-related product offerings and services, as well as their impact on priority topics, sectors, and targets, are outlined on pages 22-27 of the Climate Report.
• BMO also addresses its implementation strategy for products, services, policies, activities, and decision-making that contribute to achieving each of its financed emissions targets individually, along with its engagement strategy with stakeholders, in Appendix A of the Climate Report. Some of the notable actions discussed include:
• Developing sustainable finance products, such as transition bonds, where financing is contingent on decarbonization key performance indicators (KPIs)
  • Tracking energy transition financing
  • Pursuing opportunities for financing clean power generation
  • Collaborating with clients to provide advisory services and financing for both current and new clean energy generation and related technologies
• As part of its target monitoring initiatives, BMO has advanced its climate-related data and analytics program, focusing on creating technology solutions to enhance the acquisition, identification, and utilization of climate and sustainability data across the organization. This project included the formulation of a multi-year roadmap aimed at strengthening BMO’s data and analytics capabilities to facilitate risk reporting, inform decision-making, and track progress on internal climate commercialization goals and other climate-related metrics.

• SMART Target 2: Housing
• In the U.S., federally insured depository institutions are obligated to support the credit needs of the communities they serve, including low-to-moderate income communities. BMO has held listening sessions with community partners who have indicated a need for affordable housing in their areas. The process for setting targets was based on the combined legacy of BMO and Bank of the West’s residential home purchase and home improvement mortgage units to low-to-moderate income (LMI) and minority borrowers, as well as in LMI and majority-minority census tracts. This approach represents a 25% increase over baseline performance from 2019 to 2021.
• Goals and key performance indicators (KPIs) are tracked and monitored through monthly dashboard reports and a quarterly oversight committee that includes members from all contributing lines of business to review results and evaluate strategy. Measures contributing to this progress are detailed in BMO’s 2023 Sustainability Report.
• BMO has also implemented an internal data collection process to measure and monitor progress toward its $12 billion commitment to finance affordable housing in Canada, supporting the Canada Mortgage and Housing Corporation (CMHC) aspiration that all Canadians have access to homes that are affordable and meet their needs by 2030. As of the end of the 2023 fiscal year, BMO had allocated $7.2 billion in capital to affordable and accessible housing through authorized lending to clients with commercial real estate developments that met the CMHC’s definition of “affordable housing,” authorized lending for BMO’s On-Reserve Housing Loan Program which provides financing for eligible individuals wishing to build or purchase a personal residence located on reserve, and securitizing affordable mortgage pools under the Canada Mortgage Bond program.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by BMO, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://our-impact.bmo.com/wp-content/uploads/2024/07/2024-PRB_EN.pdf

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