How Energy Companies Can Access Capital, Navigate Partnerships and Sustainable Finance in a Low Carbon Economy

Sustainable investments are becoming increasingly important for energy businesses to meet their environmental, social, and governance (ESG) goals and plan for a low-carbon future.

Financial institutions like The Bank of Montreal (BMO) have recently developed a sustainable finance strategy to help Canadian energy companies transition to a net-zero world while focusing on environmental and social factors.

In our latest 5x5 series interview, Jonathan Hackett, Co-Head of the Energy Transition Group and Head of Sustainable Finance at BMO, sat down with Rachel Gregory, Digital Host at The Global Energy Show, to discuss how BMO helps businesses reach their ESG goals through sustainable financing. 

BMO: Accessing Capital, Navigating Partnerships and Sustainable Finance in a Low Carbon Economy

How BMO is Promoting Sustainable Economic Growth

Rachel: Jonathan, can you tell us a little bit about yourself and your work?

Jonathan: Within BMO, our goal really is to be our clients' lead partner in the transition to a net-zero world. We work with our clients, whether they are existing large clients and thinking about the way they're going to navigate the transition to a low-carbon economy or pure-play companies that are operating in the energy transition space. We help them across a range of situations. One is just accessing capital; the second is working with partnerships, to find ways in which they can grow their business. 

We also provide ESG advisory. So, helping companies understand how ESG impacts their access to capital and the way in which they're perceived by their stakeholders and then sustainable financing structures. So what's green? What's a sustainable bond? What's transition financing? What does a sustainability linkage really look like in practice?

How the Financial Sector Contributes to the Global Climate Transition 

Rachel: What do you believe is a bank's role in the global climate transition? 

Jonathan: I really think about banks as enabling structures within the economy or the way we can help grow businesses by helping them access capital by connecting them to solutions and advice. When I think about that, we're exposed, and we're connected to every region, every company. When BMO works with companies, we benefit as somebody that is taking a risk with our clients, and we also benefit because we're then helping those clients grow and achieve large transactions.

What Financial System Should Banks Use to Support Company Decarbonization Goals?

Rachel: What portfolios and approaches should banks be thinking of to support finance and decarbonization? 

Jonathan: I think it's really important for banks to think about what they do both in terms of helping existing companies decarbonize and helping catalyze the set of solutions that we need in the future. 

At BMO, we partnered with breakthrough energy catalysts on the ladder, thinking about how we can help those early-stage projects, whether they be in green hydrogen, sustainable aviation fuels, and long-duration and energy storage, or in direct air capture to really attract the capital they need to accelerate and catalyze investments in those particular areas. 

More broadly, we have to work with companies across the entire sustainable economy to access the capital they need and the structures they need in order to decarbonize their businesses. There's often a mismatch between how you might run your business on an everyday basis and the investments and choices that you need to make in order to drive that decarbonization. It's important for us as a bank to be thinking about both and how we can essentially get the two sides of that bridge to meet in the middle.

How Sustainable Finance Helps Businesses Meet Climate Targets

Rachel: Outside of carbon offsets and technological solutions, how can sustainable finance help banks meet their climate targets? 

Jonathan: I really think about our climate targets as being our clients' climate targets. You know, we don't have a goal of changing our portfolio in the absence of our clients driving that change. It really is about what we can do to catalyze their access to solutions in the way that they change their business. 

Sustainable finance is a great tool to make sure that we're having the right conversation with our clients. So we're not just showing up and saying, I really hope you've achieved those carbon reductions, but to say, how do we give you the tools? How do we help you access differentiated capital? How do we help integrate the targets that you're setting into your financing structure so that we know that we're gonna achieve that together rather than just waiting at the other end and saying, well, if you don't figure it out, we won't know how we're gonna get there. 

How Sustainable Finance Contributes to Net-Zero Strategies

Rachel: How important is sustainable finance in terms of a bank's general climate change or net-zero strategy?

Jonathan: So I'm obviously biased and think it's very important. I do think it's challenging to do things outside of portfolio choices outside of saying, well, maybe I like some clients better than others. 

Sustainable finance is really the tool to instead work with our clients to say, how do we make sure we're at the rock face with them as they figure out this hard problem, whether it be decarbonizing existing clients, or working with new companies that are creating those solutions that are really driving it forward. 

I think hydrogen is a great example where accessing green finance or transition finance to really build projects, is a tool that'll allow us to have an impact and be involved in driving the change that we need to achieve to hit our net-zero goals. 

Learn More About Sustainable Financing 

Financial sustainable development plays an important role for companies throughout their entire energy transition journey. With BMO sustainable financing, it’s now much easier for companies to make investment decisions that support long-term sustainable growth and goals.

If you're interested in learning more about topics like sustainable finance and how it’s shaping the North American energy industry, register for the next Global Energy Show today.