The financing will enable Canadian firms transition to sustainable business models
Canada’s net zero carbon targets rely on businesses that are currently high emitters transitioning to the greener economy.
One of the issues that has been identified with institutional investors and financial institutions (FIs) pulling back from carbon intensive industries is that it risks leaving financing gaps and make it harder for transition.
For lenders, refusing to work with polluting companies also means a lost opportunity to drive change while continuing to lend.
However, one of Canada’s big six banks has announced a partnership to provide the financing required for medium- and large-sized Canadian businesses in carbon-intensive sectors to adopt more sustainable business models.
BMO will become the first FI to offer the new Sustainable Financing Guarantee from Export Development Canada (EDC).
This risk-sharing program will provide an initial $1 billion in financing over three years with up to half of BMO’s term loan guaranteed by EDC, up to US$60 million for each borrower for up to 7 years.
Expanding capacity
The program will expand BMO’s capacity for lending on sustainable initiatives, including hydrogen, renewable infrastructure, and grid modernization, across nine carbon-intensive sectors.
"We understand the urgent need to address climate change, and as Canada's export credit agency, we have a role to play," said Justine Hendricks, Senior Vice President and Chief Corporate Sustainability Officer at EDC. "Working with Canada's financial institutions like BMO, we can support Canadian businesses' access to the financing they need to be a part of this important transition in Canada and globally.”
