(Bloomberg) -- Bank of Montreal is pitching energy companies to issue sustainable bonds as the lender seeks to expand its ESG capital markets business amid pressure for the oil industry to move into greener technologies.
“We feel there's an opportunity in this space,” Dan Barclay, chief executive officer and group head of BMO Capital Markets, said in an interview at the firm's Toronto headquarters. “We're in discussions with lots of clients.”
The Canadian bank published last month a sustainable finance framework, which doesn't exclude the oil industry as a sector where the bank can allocate proceeds from its own sustainable debt issues. Canada's financial industry is pushing carbon-footprint reduction projects from crude producers as among the potential recipients of proceeds from sustainable bonds, while global discussions continue to set a world-wide standard for finance driven by environmental, social and governance principles.
Read more: In Drive for Sustainable Finance, Canada Wants to Include Oil
“You think about a company that does a green bond: that green bond is going to push a carbon transition or different environmental outcome for them,” Barclay said. “It then forces your agenda, re-prioritizes and extends that as you go forward. So that's the real driver of it.”
KLP, Norway's largest pension manager, said this week it will divest from companies making more than 5% of their revenue from oilsands. The fund will as a consequnece exit stakes in Canadian companies Cenovus Energy Inc., Suncor Energy Inc., Imperial Oil Ltd., Husky Energy Inc., it said.
Bank of Montreal CEO Darryl White set new targets for sustainability and inclusivity in June that included doubling the Toronto-based lender's mobilization for sustainable finance to C$400 billion ($300 billion) by 2025. Of that, the bank aims to provide C$150 billion in capital to companies pursuing sustainable outcomes.
To contact the reporters on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net;Esteban Duarte in Toronto at eduarterubia@bloomberg.net
To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Adam Cataldo
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