BMO creates energy transition group in capital markets division

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Bank of Montreal is forming an investment-banking group to advise companies looking to shift to alternative sources of energy.

The energy transition group (ETG), as part of BMO’s capital markets division, plans to help companies identify opportunities to adopt green technologies and programs at a time when banks and large companies are grappling with the challenge of adopting alternatives to fossil fuels.

Aaron Engen, BMO’s investment and corporate banking vice chair, said that many of BMO’s clients have already formed their own energy transition groups and have been ramping up their efforts on sustainability.

“Our clients have been increasingly, and with more momentum, thinking about the energy transition broadly in terms of how the economy consumes and produces energy, and what role our clients play in that,” Engen said in an interview.

The group, which will be co-led by Engen and sustainable finance managing director Jonathan Hackett, will loop in BMO Capital Markets’ industry teams in energy, power utilities and infrastructure, metals and mining, industrials, and food and retail.

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The group aims to advise companies across sectors on opportunities to adopt green technology — including hydrogen, renewable power and electric vehicles — and introduce them to businesses that could help them meet their climate goals and determine ways to finance those projects.

“If you look at renewable power, the financial sophistication of the way we finance solar and wind has progressed,” Hackett said in an interview. “The question is how do we bring those sorts of tools into other industries. It’s easy enough to say to just do a carbon purchase agreement and you’ll be able to finance it, but instead to take the real work underpinning those tools and building the way that we can leverage them in new spaces — it’s one place that we see a real opportunity to help catalyze areas that don’t have the maturity.”

The group will also oversee the division’s existing $250 million impact investing fund, which targets companies working on developing and scaling sustainability solutions. In March, BMO also committed to providing $300 billion in sustainable lending and underwriting by 2025.

BMO is one of the first large Canadian banks to launch a dedicated energy transition team in its capital markets division. In April, Canadian Imperial Bank of Commerce’s investment banking team created a global energy, infrastructure and transition group to focus on sustainable energy.

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As some of the biggest global financiers of oil and gas producers, Canada’s largest lenders have come under fire to reduce their roles in financing oil and gas.

While BMO is not changing its stance on financing the fossil fuel industry, Engen said that the purpose of the ETG is to help clients identify ways to engage in energy transition initiatives.

“We’re working with clients across all industries — whether it’s manufacturing, biotech, energy or midstream — as those clients think about how they want to move forward in energy transition,” Engen said. “Whether in producing or consuming energy, we want to work with them in achieving that. It does not change our view on the financing or financeability of the oil and gas industry, energy or midstream.”