Banking on Transition: How BMO Is Helping to Shape Québec’s Path to a Low-Carbon Economy

When businesses in Québec talk about decarbonization, one factor consistently tips the scales in their favor: electricity. The province’s grid is nearly carbon-free, powered almost entirely by hydropower with growing contributions from wind and other renewables. For manufacturers, miners, and transport operators, this makes electrification a far more realistic pathway than in regions still reliant on fossil fuel generation.

But abundant clean power alone does not guarantee a smooth transition. Capital is needed to retrofit factories, scale battery production, and support supply chains that stretch well beyond provincial borders. It is here that banks step into a pivotal role, not only as financiers but also as conveners and risk managers.

In a recent conversation with Grégoire Baillargeon, President of BMO Québec, Vice Chair of BMO Capital Markets, and Vice Chair of the BMO Climate Institute, we explored how one of Canada’s largest banks is embedding climate considerations into its business. Baillargeon, who has spent more than two decades in investment banking, now carries a mandate that bridges traditional capital markets with the demands of a rapidly shifting energy and industrial landscape.

“Our role is to accompany our clients in their transition toward net zero,” Baillargeon explains. “We are connected to all parts of the economy, and we can help all sectors decarbonize. Shutting activity to look better on a metric is not the mission.”

Québec’s natural advantage and its obligations

The conversation began with Québec’s unique starting point. Because the province’s electricity system is already overwhelmingly renewable, companies here can plug into a clean grid with relative ease. That makes electrification of industry and transport not just possible, but competitive.

Baillargeon points to aluminum as a clear example: “Québec’s aluminum is already among the cleanest in the world. The last steps of decarbonization are underway, but the building blocks are here. When you think of efforts in the battery sector, from mining to refining to assembling packs, Québec can deliver some of the greenest batteries in North America.”

This matters not just locally, but globally. By offering a blueprint for low-carbon industrial clusters, Québec shows what is possible when clean power, supportive policy, and access to capital align. For BMO, that means a growing pipeline of clients looking to scale new facilities, electrify heavy equipment, or enter green value chains.

And while Québec may have a head start, Baillargeon emphasizes that the bank views it as a test case for other markets where decarbonization will have additional challenges. “What we see here can be an example for how the rest of North America can evolve.”

OSFI B-15: codifying climate risk

Canada’s banking regulator added new weight in 2025 with Guideline B-15, which requires institutions to integrate climate into governance, risk management, and disclosures. For BMO, Baillargeon says, it was less a shock than a codification.

“We were already very advanced in disclosure, risk, and product innovation,” he explains. “B-15 formalized what we had in place: transition action plans, board oversight, and embedding climate into enterprise risk management. These are not side projects. They are core to how the bank operates.”

BMO’s corporate purpose statement, to boldly grow the good in business and life, has sustainability as one of its three pillars. That filters down into strategy dashboards and product mandates across lines of business. In practice, it means each team is guided to develop solutions for BMO to be the lead partner for their clients in the transition from commercial real estate to capital markets.

The Climate Institute as connector and educator

Baillargeon’s vice chair role at the BMO Climate Institute adds another layer. The Institute acts as both a knowledge hub and a bridge to external stakeholders such as governments, universities, industry groups, and community organizations.

Its work includes the Business Leader Survey, which tracks how Canadian executives view climate risks and opportunities. The latest findings show rising pressure from customers and suppliers, with climate risk increasingly built into corporate risk frameworks.

That feedback loops directly into product design. “This is not philanthropy,” Baillargeon stresses. “We are developing financial products that fit the bank’s risk-return framework while enabling transition.”

The Institute also ensures training reaches all employees, not just sustainability specialists. “If a banker covers steel or agriculture, they need to understand both physical and transition risks. Climate knowledge must be embedded in every seat.”

Guarding against greenwashing

One theme Baillargeon returns to is integrity. Without it, sustainable finance markets will falter. BMO applies strict internal procedures and aligns with external standards before labeling products as green, sustainable, or transition-linked. Statements must be backed by data, tested, and auditable.

This is especially pressing under Canada’s new Bill C-59, which introduces specific prohibitions on greenwashing. “We have been recognized for two decades as one of the most ethical Canadian corporations. But we are careful not to make vague claims. There is always more work to do, so statements must be as precise as possible.”

The missing piece remains a Canadian taxonomy: a standardized definition of what counts as green or transition. Europe has made strides, but in Canada, the framework is delayed. Baillargeon argues that until it arrives, capital flows will be slower and products harder to market. “Markets need clear words,” he emphasizes.

From research to real products

How does an idea become a financial offering at BMO? The process is two-layered.

First, like any new product, it must solve a real client need. Whether in capital markets, commercial banking, or wealth management, there must be a clear business case.

Second, sustainability governance includes: taxonomy alignment, eligibility tests, and risk controls across our footprints. Only then does a product reach the client, whether that is a green bond, a sustainability-linked loan, or a new type of deposit.

Baillargeon points to recent partnerships where government guarantees reduce the cost of capital for decarbonization projects. In agriculture and commercial building retrofits, for example, independent engineering certificates can unlock ultra-low interest rates by de-risking the lending.

These structures show how public-private collaboration can mobilize capital at scale.

Montréal partnerships: assembling solutions

Beyond financing, Baillargeon sees banks as conveners. Through the Montréal Climate Partnership and Convergence forums with the Chamber of Commerce, BMO brings together business leaders, solution providers, and policymakers multiple times per year.

“The greatest impact we can sometimes have is assembling people,” he says. “Creating connections accelerates solutions.” These platforms are designed to move beyond talk, linking entrepreneurs with corporates that need to decarbonize, and catalyzing projects that might otherwise stall.

Who is moving fastest?

Asked which clients are showing the most initiative, Baillargeon distinguishes between two groups.

• Large corporates, with dedicated sustainability teams, are often quickest to pilot new products and respond to stakeholder pressure.

• Family-owned businesses, meanwhile, can sometimes act even faster, freed from short-term shareholder demands. “They can decide it is the right thing to do and accept lower profits in the near term,” Baillargeon observes. “That freedom can make them strong actors in the transition.”

The two big signals to watch

Looking ahead to 2026, Baillargeon highlights two developments that will determine whether sustainable finance in Québec and Canada scales from intent to impact:

1. A clear Canadian taxonomy. Without common definitions, markets remain fragmented. With them, green bonds and transition loans can grow quickly, including financing for heavy industry decarbonization.

2. Carbon markets. “Our economic system has done miracles, but it forgot to price certain externalities,” Baillargeon says.

BMO has positioned itself as a leader here, acquiring Radicle to advise both project developers and credit buyers in regulatory and voluntary markets. The principle is clear: prioritize direct emissions reductions, then use high-integrity credits for residuals. Done right, carbon markets can channel capital to solutions that need it.

A message to Québec business leaders

For Baillargeon, the final takeaway is practical. “Our philosophy is to get our clients ready for an uncertain future, changing, and under pressure. We want them to be winners in the world ahead.”

His advice to executives deciding where to allocate transition budgets:

• Engage your banker early. Solutions may exist that blend public programs with private capital to lower costs.

• Think beyond optics. Focus on real decarbonization impact, even if it looks worse on financed emissions metrics.

• Prepare your governance. Have transition action plans and risk assessments ready; banks will ask for them.

• Be taxonomy-ready. Align your projects with emerging standards to secure financing faster.

• Do not neglect wealth. Sustainable investing options are expanding, allowing companies and families to align their portfolios with the transition if they choose to do so.

Conclusion: From intent to scaled impact

Québec’s clean grid provides a rare head start, but electricity alone will not secure leadership in the net-zero economy. To translate this advantage into lasting competitiveness, banks, governments, and businesses must align around credible pathways. Financing must be structured to reward real decarbonization, policy must deliver clarity and taxonomies that accelerate markets, and companies must build the governance capacity to prove progress.

Baillargeon emphasizes that this is not a short-term experiment but a structural transformation. “We have been around for 200 years through wars, pandemics, and crises. To remain strong, we must be fully conscious of climate risk and act on it. That is what we are doing, building the financial solutions that will power a sustainable economy.”

For Québec business leaders, the takeaway is that transition is no longer a niche or voluntary activity. Supply chains, customers, regulators, and capital providers are all converging on the same expectation: prove that your business model is viable in a low-carbon world. Companies that treat climate alignment as a compliance burden risk falling behind, while those that integrate it into strategy, product design, and investment decisions will capture opportunities in the emerging economy.

The urgency is real. As Baillargeon notes, the next two years will bring defining signals on taxonomy and carbon markets. Once these frameworks are in place, capital will flow faster and on a larger scale. Firms that have already aligned financing structures, risk management, and transition plans will be ready to seize it. Those who delay may find themselves shut out of the lowest-cost capital or left behind by shifting customer preferences.

The future is arriving quickly. For executives in Québec and across Canada, the task is clear: align financing, governance, and strategy now, so that when the window for scaled impact opens, your business is not just prepared to participate, but positioned to lead.