BMO | Staying in black gold to advocate decarbonization

Advocate for decarbonization, but continue to fund fossil fuels. This discourse may seem contradictory, but the president of the Quebec operations of the Bank of Montreal, Grégoire Baillargeon, believes that it is by remaining in this sector that we can make a difference. Turning your back on him would be a mistake, believes the banker.

“I would tell you that the worst move of greenwashing what a bank could do would be to abandon carbon-intensive sectors to show the world that it has solved the problem, says Mr. Baillargeon in an interview with The Press. The problem would still be there, but we would show good numbers. »

This finding does not relieve financial institutions of their responsibilities, he adds. Their role is to be a “transition agent” and to support projects – such as carbon capture initiatives in the production of hydrocarbons – which allow more polluting sectors to decarbonise, says the manager.

Head of BMO’s Quebec operations since 1^er last November, Mr. Baillargeon gave his first speech to the Board of Trade of Metropolitan Montreal (CCMM) on Tuesday. In front of an audience of business people, where he was interrupted by Greenpeace activists, the banker chose to address a topic that he himself described as “polarizing”: climate change and the role of the sector finance in the transition. He wanted to appeal to the business community to mobilize it on the issue.

“We are making it a polarizing subject, but we don’t have time for it to be a polarizing subject,” says Mr. Baillargeon. Everyone has to row in the same direction. Maybe there won’t be a consensus on all aspects, but we have to help each other. »

Poor ranking

Canada’s five largest banks do poorly in latest report Banking on Climate Chaos, released annually. Last year they provided US$136.2 billion to finance fossil fuel projects. For BMO, we are talking about 19 billion US in financing. It ranks behind TD Bank, Scotiabank and Royal Bank.

These financial institutions are also among the top 15 lenders worldwide, according to the ranking prepared by a consortium of environmental groups. The names of the National Bank and the Mouvement Desjardins do not appear in the report, even if the two institutions are exposed to the hydrocarbon sector.

“These reports are correct,” replies Mr. Baillargeon, when asked about the report. It’s not a balance sheet for the banks, it’s a balance sheet for the Canadian economy. We have an economy rooted in it [l’énergie]. Part of the money we invest with these companies is to help find decarbonization solutions. We are the only Canadian bank with an absolute target for oil and gas emissions. »

According to the report Banking on Climate Chaossince 2016, the year the Paris Climate Agreement was signed, these five Canadian banks have financed fossil fuels to the tune of approximately US$855 billion.

Shared responsibility

The leader at BMO adds that we can point the finger at the fossil fuel sector, but that it is not he who is responsible for production. Holder of the HEC Montréal energy chair, Pierre-Olivier Pineau agrees.

“If there are investors, it’s because there is a market,” says the expert. Ideally, it would be to have a sector in decline and that investors no longer have the desire to invest. Unfortunately, that is not what is happening. »

For example, the most recent report State of energy in Quebec does not foresee a “sustainable” reduction in sales of petroleum products before 2030.

Mr. Pineau also said he agreed with some of the arguments raised by the head of BMO’s Quebec operations. According to the expert, divestment does not “constitute an axis in the fight against climate change”.

“I do not encourage people to invest [dans les hydrocarbures], says the expert. But I’d rather have Canadian banks [comme investisseurs] that are being pressured to bring about change in companies. It’s hypocritical to say: let it go and let other investors come. »

Despite its presence in the hydrocarbon sector, BMO drew praise last year when it came to energy transition. Last November, the bank was recognized “as the best ranked financial institution” by the World Benchmarking Alliance index. This index assesses governance and strategy, respect for planetary boundaries and societal conventions.

The Caisse de depot et placement du Québec, for its part, ranked first in terms of pension plans.