Sharon Haward-Laird, General Counsel and Executive Committee Lead for Sustainability at BMO Financial Group, shares how BMO is leveraging their commitment to sustainability with its new platform, the BMO Climate Institute.
By Shelley White
As the world races to transition to net zero emissions, every one of us has a role to play, says Sharon Haward-Laird, General Counsel of BMO Financial Group.
Financial institutions will be a crucial part of the solution, she adds, particularly when it comes to the significant task of financing the development of clean and renewable energy sources.
“There will be a significant amount of financing required for the scale of the transition that needs to happen,” says Sharon, who championed BMO’s recent statement of its climate ambition: to be their clients’ lead partner in the transition to a net zero world. “It’s trillions of dollars a year, from a global perspective. Government alone is not going to be able to do that.”
Aligned with BMO’s long-standing commitment to sustainability and support of the Paris Agreement, the bank recently launched an industry-leading platform for change, the BMO Climate Institute. This virtual hub will bring together science, analytics, expertise and partners to understand the financial risks and opportunities related to climate change and transition, for the bank’s clients and the bank itself.
BMO promotes sustainability through lending, investing, underwriting and advising companies on sustainability strategies, Sharon explained, and the BMO Climate Institute will be a key resource and source of expert advice for BMO’s clients.
The inspiration for the BMO Climate Institute is the concept of convening stakeholders, leading information and best practices at the intersection of climate adaptation and finance, driving thought leadership and providing best practices for clients.
“The mission of the BMO Climate Institute makes it clear that our climate ambition isn’t about BMO, it’s about our clients,” Sharon says. “It’s about creating a space where all stakeholders — BMO, clients, experts in the field, academics, government regulators — can come together and help solve the complex problems presented by the transition to a net zero world, and the opportunities that it creates for our clients to play leading roles in it.”
Sharon notes that BMO’s purpose is to “boldly grow the good in business and life.” It’s a philosophy the company takes seriously, she says.
“When we have experience actively participating in the transition to a net zero world in our own operations, it’s easier for us to act as our client’s advisor in making their own transition — because you learn as you go.”
BMO was one of the first major banks to sign the UN Principles for Responsible Banking, and the bank is committed to aligning its business strategy with the UN Sustainable Development Goals and the Paris Agreement. BMO is a pioneer in sustainable finance, recently announcing its goal to more than double its sustainable finance commitment, deploying $300-billion in green, social and sustainable lending, underwriting, advisory services, and investment by 2025.
BMO also is dedicated to finding innovative ways to minimize the environmental impact of its own operations. Proudly carbon neutral since 2010, in 2020 BMO reached its goal to match 100 per cent of its global electricity use with electricity produced from renewable sources. Now, through operational efficiency improvements and building upgrades, BMO has set a new science-based target to reduce operational greenhouse gas emissions by 30 percent by 2030.
These actions aren’t just important because every company needs to do its part, Sharon says. They also position the bank to share expertise and best practices with clients.
“When we have experience actively participating in the transition to a net zero world in our own operations, it’s easier for us to act as our client’s advisor in making their own transition — because you learn as you go,” she says. “What worked well? What could you have done differently? We can connect with clients that may be at an earlier stage in their transition and support them with the benefit of our experience.”
While the conversation around the transition to a net zero world and the development of clean energy sources often revolves around the costs and challenges of this process, Sharon points out that it’s important to remember the vast opportunities that exist as well.
Sharon notes there are two major categories of how climate will affect the economy and the business world. On the one hand, there are the costs associated with a transition to a net zero world and development of clean energy. On the other, there are the physical risks of climate change, and that’s another major priority for the BMO Climate Institute.
A new climate analytics lab, built by BMO’s Sustainability team and BMO Enterprise Artificial Intelligence (AI) Labs with external partners, will enable the bank to analyze climate-related risks and opportunities facing the financial sector and key client industries. The platform leverages geospatial data and scientific modelling to generate actionable insights — all in service to clients, Sharon says.
“It allows us to analyze all kinds of different physical hazards, both today and in the future, based on different climate scenarios,” she explains. “Things like wildfires, extreme weather events, coastal flooding — we’re able to model these with geospatial data and satellites. We built this platform for analysis of our own assets, and we want to use it to have value-added conversations with clients about the types of challenges they’re facing too.”
“I don’t want to leave a world for my kids and grandkids that’s a mess for them to clean up. I think we have a responsibility not to push the problem out into the future to be resolved by somebody else.”
One tangible example is around the effects of climate change on real estate. Sharon says that the analytics lab is also working on capabilities to model the transition to clean energy, in order to understand the economic impacts for different sectors.
“What will the decarbonization pathways look like? Where are we now and where are we going to end up?” she says. “And for individual clients, how much will that cost and what are optimal investment structures?”
BMO’s sustainability team is developing capabilities to do this kind of modelling, and are exploring a variety of different tools and methodologies. As data availability becomes more widespread and data quality continues to increase, the opportunities will increase exponentially, she adds.
“This isn’t a two-year thing. The transition to a net zero world is going to take a considerable amount of time,” she says. “There’s a huge opportunity here for us to grow with our clients, and we want to make sure that we’re experimenting with different analytical tools in the meantime.”
As the mother of young adults, Sharon says her children’s passion about climate change is one of the things that has inspired her in her role in BMO’s sustainability work.
“I have three kids and I’m not a grandmother yet. But when you think of the urgency of the transition that must happen by 2050, and the concrete steps that need to be taken now, I don’t want to leave a world for my kids and grandkids that’s a mess for them to clean up,” she says. “I think we have a responsibility not to push the problem out into the future to be resolved by somebody else.”
Transforming the world into a place where clean energy is the norm will take the work of many generations, she says.
“But I think we have the chance now to really get the work started.”