Mr. Sean Brown reports
A NORTH AMERICAN FIRST: BMO HELPS GIBSON ENERGY FULLY TRANSITION CREDIT FACILITY TO A SUSTAINABILITY-LINKED LOAN
Bank of Montreal, acting as a sustainability structuring lead, has agreed to a financing deal with Gibson Energy Inc. An amendment to an existing credit facility, the deal introduces a margin adjustment incentive mechanism tied to Gibson's commitment to reduce carbon emissions and increase women as well as racial and ethnic representation in its work force and on its board. In this financing, a part of Gibson's borrowing costs will depend on whether it achieves ambitious predetermined sustainability targets.
"As part of our efforts to embed the principles of sustainability and ESG into all aspects of our business, we are very pleased to be first amongst not only our Canadian midstream energy infrastructure peers, but also all public energy companies in North America, to fully transition our principal credit facility to a sustainability-linked credit facility," said Sean Brown, senior vice-president and chief financial officer. "This is further evidence of our commitment to reaching our sustainability and ESG targets, as key targets from each of the three pillars of ESG will now also directly impact our financing costs."
"Deals like this one with Gibson Energy are aligned to the way BMO works with clients across industries, including the energy sector, to help them further their transition to a greener economy -- proving we can both serve the needs of our clients and work toward a more sustainable future," said Jonathan Hackett, head, sustainable finance, BMO Capital Markets. "Our experience in the energy sector combined with our expertise in sustainable finance positions us as the ideal lead partner in helping Gibson Energy reach its environmental and social sustainability goals."
Sustainability-linked revolving credit facility
The new sustainability-linked five-year, $750-million revolving credit facility includes terms that reduce or increase the borrowing costs as sustainability and ESG targets are met or missed. The performance determinants, as previously announced by Gibson Energy, comprises:
- Environmental: the reduction of scope 1 and scope 2 greenhouse gas emissions intensity by 15 per cent by 2025;
- Social: increasing the representation of women in the work force to 40 per cent to 42 per cent as well as racial and ethnic minority representation in the work force to 21 per cent to 23 per cent by 2025;
- Governance: increasing the representation of women on the board to at least 40 per cent as well as at least one member of the board identifying as racial or ethnic minority and/or indigenous by 2025.
BMO continues to work closely with clients in their transition to a more sustainable future. In December, 2019, BMO provided Maple Leaf Foods Inc. with the first sustainability-linked loan in Canada, allowing Maple Leaf Foods to reduce the interest rate on the lending facility if it met targets in line with its achievement of net carbon neutrality. In another first, last February, BMO provided the first labelled green loan in Canadian history to Atlantic Packaging to finance a new 100-per-cent-recycled container-board facility and worked with Atlantic Packaging to publish a green financing framework.
In March, 2021, the bank announced its climate ambition, including plans to build unique climate analytics capabilities to be its clients' lead partner in the transition to a net-zero world. In the announcement, the bank introduced the BMO Climate Institute, a multidisciplinary organization harnessing science, analytics powered by innovative technology and industry-leading expertise. As part of its commitment to sustainable finance, BMO has committed to deploying $300-billion in sustainable lending and underwriting by 2025.
BMO's leadership on sustainability has been recognized on numerous rankings:
- Ranked 15th on The Wall Street Journal's 2020 list of the 100 Most Sustainably Managed Companies in the World, third overall on social capital -- BMO was the only North American bank included;
- Top North American bank on Corporate Knights' 2021 Global 100 Most Sustainable Corporations in the World for the second year in a row;
- Ranked in the top 10 per cent of banks globally on the 2020 Dow Jones Sustainability Index, and the top North American bank;
- Scored an A- on the 2020 CDP Climate Change disclosure;
- Ethisphere Institute's 2020 list of the World's Most Ethical Companies;
- Corporate Knights 2020 Best 50 Corporate Citizens in Canada;
Joint winner of Environmental Finance's 2021 Lead Manager of the Year, Social Bonds -- local authority/municipality category.
For more information on BMO's commitment to a sustainable future, please visit the bank's sustainability report.
About Bank of Montreal
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider -- the eighth-largest bank, by assets, in North America. With total assets of $973-billion as of Jan. 31, 2021, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers, and conducts business through three operating groups: personal and commercial banking, BMO Wealth Management, and BMO Capital Markets.
© 2021 Canjex Publishing Ltd. All rights reserved.