In a discreet move towards the end of 2023, BMO Bank lifted its previous restrictions on financing coal industry projects, sidestepping potential backlash and the tag of being an energy sector 'boycotter' in West Virginia.
West Virginia Treasurer Riley Moore publicly acknowledged the shift in BMO's stance after revealing the updated list of financial firms boycotted by the state, a list from which BMO was notably absent. This development followed a warning issued to the bank in late February about the possibility of being added to the state's boycott list due to its stance on fossil fuel financing. BMO, the American arm of the Toronto-based Bank of Montreal, responded by dropping a policy statement from its website that limited coal industry lending, a move confirmed in a communication from Timothy Cox, BMO's US general counsel, to West Virginia's treasury office in March.
Despite the removal of the public statement, insiders suggest that BMO's fundamental approach to coal sector financing remains unchanged, focusing on individual assessments of risk rather than a blanket policy against the coal industry. This nuanced stance comes amidst broader industry trends where financial institutions have toned down their public environmental commitments following criticism from Republican circles over the past two years. UBS Group AG's CEO, Sergio Ermotti, has notably commented on the pressure on banks to act as "climate police."
Originally, BMO had introduced a coal lending policy in 2021, as detailed in its 2022 sustainability report, which restricted financing for new coal-fired power plants, thermal coal mines, or significant expansions thereof. It also avoided new clients heavily involved in thermal coal mining or coal power generation. However, the bank's decision to retract its Coal Statement from its website, which also covers its stance on human rights and anti-money laundering policies, was a strategic move to align with current policies and regulatory expectations.
West Virginia's Moore commended BMO for its cooperation and for taking steps to remove what he termed an "offending policy," thus avoiding inclusion on the state's financial services boycott list. BMO representatives have assured West Virginia officials that the bank's previous public statement on coal lending no longer reflects its current lending practices, emphasizing a risk-based approach to business that complies with legal and regulatory standards.
