INDUSTRY FOCUS: FINANCE

Continued from page 43 of the conversations we have with our clients, and I can confidently say that it’s part of the agenda for every CEO and clients that I know.

“To reach net zero by 2050, to get sufficient capital to the table, how we get there needs to be targeted, policy driven, accelerated and above all practical.”

He adds that the transition activity must be exactly that – activity. There cannot be an immediate halt of all long-established motion but an appealing and valuable path forward. “The reality is that the global economy will only reach net zero by 2050 if investment themes that have the highest impact on GHG reductions promote economic growth and allow private capital to flow are prioritised. We need to focus our efforts on generating more clean energy and reducing emissions for carbon intensive sectors with the biggest near-term impact.”

He is also clear on the fact that oil and gas companies cannot drive the transition alone and there must be multi-industry, multi-sector, and multinational approach. “Partnering together, the financial sector and government can show people and businesses why it’s worth taking the risk of changing how their produce or consumer energy, or both. The shape of the energy transition is not binary. It’s an ‘and’ rather than an ‘either/or’ conversation.”

Just Transition

Thankfully, with support from important global organisations including the U.N., World Economic Forum, the International Renewable Energy Agency, and more, the realisation that the transition is a long-term project is hitting home. Of course, more action must be taken, but the mindset of ‘stop one, start another, immediately’ is being adjusted.

“The narrative pendulum has swung back to talk of a sensible and just transition and away from calls for the world to just turn off fossil fuel,” says Barclay. “We need to focus on what it takes to achieve an orderly transition, meeting the needs of today while achieving a sustainable future. We’re aligned on the goal, let’s chart the course and get on with it.”

To do this, BMO has two essential initiatives amongst a raft of clean energy offerings. Firstly, the clean energy index ETF – designed to replicate, to the extent possible, the performance of the S&P Global Clean Energy Index, net of expenses. The Fund has a high exposure to the theme of clean energy by investing in companies that are involved in clean energy related businesses.

“Most investors think that energy companies must be excluded rom responsible investment products given the impact the environment, however there are energy companies that are working to transition their businesses and lessen their carbon footprint which are worthy of consideration,” says Erin Allen, Senior Product Manager, BMO Global Asset Management.

“The transition has created an opportunity for investors to invest in energy companies that are leading the green energy revolution. BMO’s clean energy index ETF (ZCLN) gives you exposure to clean energy companies globally that are at the forefront on innovation.”

The company is also a big backer of clean Canadian energy, and efficient fossil fuel production as part of the transition, positioning the country as a global leader as governments seek new relationships with Russia out of the equation. After announcing a winddown on US oil and gas lending in 2020, BMO promised to reduce scope 1 and 2 emissions from its oil and gas borrowers by 33%. But the technological and innovative approach in place across many Canadian operations make it a fantastic choice for those seeking sustainable O&G partnerships.

“As the world reassesses reliance on Russian energy and looks for alternatives, nations risk repeating the same mistakes: Sourcing energy from countries with troubled human-rights records, potentially reversing course on their energy-transition goals or risking the instability that would come from blanket divestment,” says Darryl White - Chief Executive Officer, BMO Financial Group. “The future of global energy security will be won by nations that can provide ethical and sustainable sources of energy production. That makes Canada – a major oil and gas producer with significant investment in emissions-reducing technology, while also being a pluralistic democracy and a defender of human rights –exceptionally well-positioned to lead.”

He highlights a recent report from the bank which confirms the country’s strong standing.

“A 2019 study of major oilproducing nations by BMO Capital Markets examining the full spectrum of important environmental, social and governance concerns identified Canada as the clear overall leader. Given significant R&D investment since the study, the case for Canada is even clearer today.

“Canadian energy companies have led global investment in technology since 2010, totalling more than $13.1-billion. This leading R&D position has meant that the average reported emissions intensity of Canada’s large cap oil producers fell about 25% since 2013,” he adds.

Canada’s wider environmental strategy involved protecting at least 25% of land and water by 2025. Today, almost 2.2 million km2 is under official protection order, and boasts a quarter of the earth’s wetlands, temperate rainforests and boreal forests, alongside 20% of its fresh water and the longest coastline in the world. plainly, the country is reliant on its natural resources and realises the importance of sustainable development.

Brad Wells, Head of Energy at BMO Capital Markets, highlights the company’s understanding of the unique position of Canada, and agrees with White that the country must aim to become an example for all.

“Today, we’re at a pivotal moment… we have the opportunity to position Canada as a global leader in secure, affordable and responsiblyproduced energy. This ambition will require investment, innovation and collaboration. Energy is a sector that we have long partnered with, served and remain committed to today.

“We have to be focused on meeting the energy and economic needs of today and doing what it takes to create a low-carbon economy now and into the future.”

BMO is perfectly positioned to assist clients and compatriots in their energy transition journey. Whether that is buying or selling oil plays, or attracting investment for renewable projects, the organisation is a fullservice financial services provider with a portfolio that rivals the world’s best.