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BMO Bank Adapts Coal Lending Policy Under West Virginia Watch


Michael Chen

April 8, 2024 - 23:19 pm


BMO Bank Reassesses Coal Lending Policies Amid West Virginia Scrutiny

In a discreet yet significant move, BMO Bank culled its prevailing policy constraining lending to the coal sector in the latter part of 2023, an action aimed at evading designation as an energy "boycotter" in the state of West Virginia. This development surfaced on the heels of a triumphal declaration by West Virginia Treasurer Riley Moore, acknowledging the financial institutions added to the state's boycott catalog, which notably excluded BMO. As the US arm of the Toronto-headquartered Bank of Montreal, BMO faced a potential listing among companies perceived by Moore's office to shun the fossil fuel industry. This outcome was circumvented by the bank's timely policy amendment.

A Sudden Shift in Environmental Stance

The shift was made public on a Monday, following an official announcement from Treasurer Moore, detailing the different firms added to West Virginia's list of boycotts for their stance on the fossil fuel industry. This list, however, did not include BMO. The bank initially received a notice in late February, signaling that its policies might place it on the state's list of companies thought to be boycotting fossil fuel sectors. This notice served as a precursor to the bank's reconsideration of its policies toward coal financing.

Bank of Montreal's US Subsidiary Responds to Warning

Caught in a potential reputational snarl, BMO, as the US subsidiary of the Bank of Montreal, sprang into action. Timothy Cox, the US general counsel for BMO, addressed the situation in a correspondence to the state treasurer’s office on March 25. In his letter, he indicated that BMO had withdrawn a statement from its websites which professed the bank's restrictions on coal industry financing, citing shifts in policy from November the previous year. Cox's missive, acquired through a public records request by Bloomberg News, revealed that "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 further explained the action taken in response to the earlier communication from the state, saying, "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." This course of action highlights BMO's responsiveness to the concerns raised by West Virginia, showing a willingness to adapt publicly stated policies on environmental issues.

Read more: West Virginia Bars Citi, HSBC From Banking Contracts Over Oil

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The Finance Industry's Changing Rhetoric on Climate Initiatives

The finance sector has increasingly toned down its public rhetoric on climate initiatives. BMO's decision to revise its coal financing policy comes amid a broader trend, where banks and investment firms have moderated their declarations on climate efforts. This change in tenor arrives after Republican leaders have fiercely criticized the Environmental, Social, and Governance (ESG) strategy that had previously gained traction within the finance community. Last month, UBS Group AG's CEO Sergio Ermotti expressed the sentiment that it is not the role of banks to serve as a default "climate police" for policy enforcement.

BMO's Internal Approach to Coal Industry Remains Consistent

Despite retracting its public statement delineating its restrictions on coal industry financing, BMO's fundamental strategy towards the sector remains unaltered. According to an informed source who chose to remain anonymous, the bank's dealings with the coal industry are still grounded in rigorous, risk-based evaluations of individual enterprises. The removal of the formal statement from the public domain does not suggest an inclination toward increased investment in coal, but rather a continuation of prior cautious engagement with the industry.

Bank of Montreal's Stance in 2021 and Continued Commitments

As per the bank's 2022 sustainability report, the Bank of Montreal, in the year 2021, articulated a coal lending policy that pledged to abstain from financing roles where the capital would primarily be funneled into the development of new coal-powered facilities or significant expansions of existing plants and mines. The bank also committed to withholding financial engagement with new clients primarily involved in large-scale thermal coal mining or coal power generation.

West Virginia Treasurer Acknowledges BMO’s Policy Revisions

The underlying friction between BMO Bank and the state of West Virginia eased when Treasurer Moore noted on Monday that the bank had collaborated with his office and purged an objectionable policy from their website. This proactive maneuver enabled BMO to elude the inclusion in West Virginia's list, which now features nine disparate financial service firms. Treasurer Moore lauded BMO’s actions stating, “BMO Bank removed an offending policy published on their website after receiving our letter and subsequently demonstrated other existing policies had been revoked.”

BMO's Dialogue with West Virginia's Treasurer Office

The interaction between BMO and West Virginia officials was confirmed by Jared Hunt, spokesperson for the West Virginia treasurer’s office, who outlined that representatives from the company convened with state officials to confirm the company’s prior statements on coal lending were no longer reflective of their current lending policies. These engagements underscore the commitment of both parties to address and resolve the concerns that arose due to BMO's earlier public statements.

BMO’s Comprehensive Risk-Based Approach

In reaction to the adjustments and in light of the recent developments, BMO spokesperson Scott Doll provided an emailed statement emphasizing the integrity of the bank’s policies. According to Doll, these policies signify "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". This remark from the bank’s representative underlines BMO's dedication to principled banking practices respecting regulatory frameworks, despite the changes in its explicit environmental policies.

As the matter evolved with the assistance of experts, including Christine Dobby and Saijel Kishan, it is indicative of the nuanced relationship between financial sectors and the evolving energy policies at both governmental and international levels.

BMO’s Continued Environmental Responsibility

Beyond the immediate interplay with West Virginia's policies, BMO’s actions reflect a broader industry-wide observation that advancing environmental accountability can, at times, lead to financial institutions navigating complex and, occasionally, politically charged terrain. The dialogue surrounding coal financing and broader environmental credit decisions remain a nuanced subject, one where financial entities like BMO must balance the economics of coal dependency with forward-looking energy strategies and societal expectations.

While BMO removed its public-facing Coal Statement, this should not suggest a regression in the bank’s commitments to environmentally responsible financing criteria. On the contrary, ongoing internal evaluations of credit risks and environmental impacts are likely to continue guiding BMO's business decisions and interactions with energy sectors.

The Coal Industry: A Vital but Controversial Energy Source

Coal remains a substantial source of energy, particularly in regions where alternative renewable solutions have not yet been fully implemented or are not cost-effective. The power dynamic associated with the coal industry thus embodies a complexity which banks like BMO need to consider within their lending frameworks. It poses a test of reconciling energy supply and reliability against sustainability and the transition to greener energy sources. This landscape remains at the heart of ongoing policy and financial discussions, as companies and legislators alike grapple to align economic and ecological goals.

Forward-Looking: The Evolving Landscape of Environmental Finance

Looking to the future, the action undertaken by BMO is indicative of an ever-evolving financial environment, one which increasingly requires adaptability and responsiveness to political, regulatory, and societal shifts. As global consciousness regarding climate change continues to surge, financial institutions will remain pivotal players, challenged to integrate responsible environmental stewardship into viable business strategies without alienating vital constituencies, such as governmental bodies and industries that are currently dependent on fossil fuels.

In conclusion, BMO Bank's nuanced approach to coal industry lending policies, culminating in its avoidance of a potentially contentious label in West Virginia, exemplifies the delicate balancing act facing financial institutions in today's climate-conscious world. By engaging with concerned parties and adjusting policies as required, BMO emerges not only compliant but responsive to the multifaceted demands of finance in the context of environmental responsibility.


This news article is based on information sourced from Bloomberg L.P. You can find further insights and details regarding this topic by visiting the original publication at:

Bloomberg – BMO Bank Revision of Coal Policy amid West Virgina Scrutiny