Skip to main content
BMO Harris Bank Close Icon

Select Region / Language

  • Canada
    • English
    • Français
  • US
    • English
BMO Bank
Commercial Close icon
search icon

Insights

No match found

Industries

No match found

Solutions

No match found

Experts

No match found

Get On Our Email List


Select the business and financial topics of interest to you and sign up to stay current on the latest news
Sign Up Now>
  • Industry Expertise
  • We Can Help
Who We Are
Industry Expertise
We Can Help
Our Bankers
Contact us Get on our email list
BMO Commercial Banking

Find

Sign In
Bookmarks 0

Reading List

Email icon
  • Online banking

    Register for online banking with a
    BMO Debit Card or Credit Card


  • BMO InvestorLine
  • BMO Nesbitt Burns
  • BMO SmartFolio
  • BMO Mutual Funds
  • BMO Private Banking
  • BMO Credit Card
  • Online Banking for Business
  • Personal
  • Wealth
  • Business
  • Commercial
  • Capital Markets
CA-English Contact Us Sign-in
  • Online banking

    Register for online banking with a
    BMO Debit Card or Credit Card


  • BMO InvestorLine
  • BMO Nesbitt Burns
  • BMO SmartFolio
  • BMO Mutual Funds
  • BMO Private Banking
  • BMO Credit Card
  • Online Banking for Business

Select Region / Language

  • Canada
  • English
  • Français
  • US
  • English

Resources

BMO - Canada logo
search icon
  • Who We Are
  • Industry Expertise
    View all of Industry Expertise
    • Agriculture
    • Auto Dealerships
    • Business Properties
    • Cannabis & Emerging Industries
    • Commercial Real Estate
    • Engineering & Construction
    • Franchise Finance
    • Healthcare
    • Manufacturing
    • Media
    • Oil & Gas Services
    • Private Equity Sponsors
    • Professional Services
    • Public Sector
    • Retail & Wholesale Distribution
    • Technology & Innovation
    • Trucking
    • Agriculture
    • Auto Dealerships
    • Business Properties
    • Cannabis & Emerging Industries
    • Commercial Real Estate
    • Engineering & Construction
    • Franchise Finance
    • Healthcare
    • Manufacturing
    • Media
    • Oil & Gas Services
    • Private Equity Sponsors
    • Professional Services
    • Public Sector
    • Retail & Wholesale Distribution
    • Technology & Innovation
    • Trucking
  • We Can Help
    View all of We Can Help
    • Addressing COVID-19
    • Asset Based Lending
    • Business Strategy
    • COVID-19 Financial Relief Programs
    • Doing Business Internationally
    • Doing Business in the U.S.
    • Economic Insights
    • Equipment Financing & Leasing
    • Finance Growth
    • Loan Syndication & Agency Services
    • Manage Cash Flow
    • Manage Deposits
    • Manage Risk
    • Mergers & Acquisitions
    • Road to Recovery: Expert Conversations
    • Subordinated Debt/Equity
    • Wealth Management
    • Addressing COVID-19
    • Asset Based Lending
    • Business Strategy
    • COVID-19 Financial Relief Programs
    • Doing Business Internationally
    • Doing Business in the U.S.
    • Economic Insights
    • Equipment Financing & Leasing
    • Finance Growth
    • Loan Syndication & Agency Services
    • Manage Cash Flow
    • Manage Deposits
    • Manage Risk
    • Mergers & Acquisitions
    • Road to Recovery: Expert Conversations
    • Subordinated Debt/Equity
    • Wealth Management
  • Our Bankers
  • List of bookmarks
    0
    Bookmarks

    Reading List

    Close icon
    Email icon
Navigation Skipped
Navigation Skipped
search icon

Insights

No match found

Industries

No match found

Solutions

No match found

Experts

No match found

Get On Our Email List


Select the business and financial topics of interest to you and sign up to stay current on the latest news
Sign Up Now>
BMO Commercial Banking

Mitigating the Physical Impacts of Climate Change with Spatial Finance

  • Share this page
    Share this page
    Share page link via email
    Share page link via Facebook
    Share page link via Twitter
    Share page link via Google Plus
    Share page link via Linkedin
  • bookmark

  • print

forest.
Michael Torrance | January 14, 2022 | Business Strategy, Finance Growth
forest
Michael Torrance | January 14, 2022 | Business Strategy, Finance Growth
  • Keywords:

Imagine a world where farmers use satellite data and AI modeling to determine how climate resilient their lands are, how much carbon their soil and crops are sequestering, or how susceptible the farm might be to extreme weather events like drought, flooding, frost or forest fires, over the short-, medium- and long term. Or where a company uses this technology to monitor, in real time, fugitive emissions from its facilities, or management of water resources?

 

What if a shipping or logistics company could plan transport routes and manage supply chains based on geospatial mapping against the likelihood of disastrous climate events like storms or high seas that could endanger the lives of its employees and their cargo? Or if fishing companies could ensure that their vessels are not fishing illegally?

 

Now imagine this technology integrated into finance, so that performance can be measured and monitored and, if meeting an agreed upon standard, can result in a financial benefit that is supported by the company’s bank or investors. Clearly this would create a virtuous circle, incentivizing sustainability.

 

In fact, technology today is making this happen, allowing us to analyze more data about our planet than ever before, globally and down to the resolution of a square meter, presenting us with new tools to protect our businesses from the impact of climate change and reach a net zero world.

 

We call this spatial finance, and it has the potential to revolutionize the integration of sustainability into finance and banking.

 

As the world embarks on the transition to net zero, it is clearer than ever that understanding decarbonization pathways will be critical to reaching the destination, and that technologies like these will be key enablers of solutions.

 

Finance will also be at the core of climate solutions – a theme underscored repeatedly in COP26 meetings in Glasgow. Technology provides the means for linking sustainability performance to capital allocation, and to incentivize strong performance aligned with global goals. Known as spatial finance because it combines geospatial climate data and financial theory, it is technologies like these that will become critical AI tools to synthesize data and help businesses assess the short and long-term risks that climate change could have on their operations.  

 

 

Core Strategy
Integrating climate into business strategy and risk management is a key focus of the BMO Climate Institute, just as using technology to predict future climate trends and identify risks and opportunities for the bank and its clients is core to BMO’s sustainability strategy.

 

The Institute launched In March 2021 as part of our Net-Zero Ambition, and is a centre of excellence within our company with a mandate to harness the combined scientific and analytics expertise of the bank and its partners to better understand and manage the financial risks and opportunities of the transition, for ourselves and for our clients.

 

As part of that process, we partnered with  innovative technology partners, like Climate Engine, which leverages big data through Earth observation platforms, such as satellite imagery, in combination with rigorous scientific models to understand and even model what climate impacts might look like in the next few weeks, months, or even years and decades from now, across regions, countries, cities, and agricultural lands. The technology can help us understand the impacts of a changing climate on business today and into the future.

 

All that data – which is synthesized using advanced analytical capabilities including artificial intelligence – can help businesses assess the short and long-term risks that climate change will have on their operations.

 

 

Myth Busting
“I think we’ve been living in a world that (believes that) somehow the economy lives outside of the environment, and that’s a myth. And the impacts of living within that myth are starting to be seen across different variables: water usage, climate change, greenhouse gas emissions. I think the time is now to really act in a way where we’re connecting the economy to the environment,” Jamie Herring, CEO of Climate Engine, told me in a recent interview with BMO Sustainability Leaders.

 

That was abundantly clear at the COP26 gathering in Glasgow, where the delegate from Fiji described how a cyclone in 2016 erased 1/3 of the country’s GDP over the space of 36 hours. Closer to home, just this past summer, we saw a province-wide heatwave in British Columbia help spark a tragic fire that burned much of the town of Lytton to the ground. And then, more recently, we saw Vancouver, home to one of Canada’s largest ports, lose transport links to the rest of the country after intense rains and heavy winds led to devastating flooding and landslides.

 

Technologies used by Climate Engine are helping companies and governments to understand and operationalize data to help make decisions about what they are doing to either reduce risk in the face of extreme climate events that will inevitably continue to happen, or reduce the negative impacts of economic activities and behaviors.

 

Committed to be our clients lead strategic partner in the transition, we started talking to Climate Engine over a year ago to look at potential applications of its technology for banking and finance. We turned to our own Data and Analytics AI Labs at BMO and asked them to help build a platform that would take the analytical capabilities provided by Climate Engine and allow us to combine it with our own data on physical locations for all of our clients, from home mortgages to businesses large and small, local and international.

 

Using Climate Engine’s technology, the Climate Institute can use this scientific modelling to help make sense of all the data, and spot risks and opportunities to advance climate action.

 

 

Massive Potential
While still in the early stages, spatial finance holds enormous promise across a wide range of applications. With petabytes of satellite data, we can now start to see information about the planet and the impact of economic activities, with the ability to map this information to financial instruments.

 

It is also a critical tool in helping to get the bank, and our clients, to navigate the transition to net-zero emissions by 2050 and building resilience to physical climate change risks. Through the BMO Climate Institute, looking at how climate science can help in both risk management and in motivating activities to address climate change through finance.

 

Managing climate change and a sustainable transition will be as much about opportunity as it is about risk. For instance, cities will need to rethink infrastructure needs in order to mitigate vulnerability to a changing environment. With climate analytics, a municipality can adapt to likely climate events by incorporating different scenarios into its planning to ensure that it evolves along with the planet.

 

Having a clearer understanding of the financial industry’s role in addressing climate change opens the path to change, allowing the sector to provide solutions ranging from new kinds of insurance products, to novel fixed income offerings, investments in game-changing startups and risk assessments that are more nuanced and company-specific.

 

While we may not be able to stop climate change in the near-term, we must be able to evaluate, map, and mitigate the impacts. It’s hard work, but with the right tools and willing partners, we can be prepared for what lies ahead.

Read more
 profile photo

Michael Torrance

Chief Sustainability Officer

Michael Torrance is Chief Sustainability Officer of BMO Financial Group and is passionate about sustainability, especially as it pertains to corporate governance ...(..)

View Full Profile >

What to Read Next.

Discussing Sustainable Investing and Capital Allocation

Darryl White | November 18, 2021 | Business Strategy

Darryl White and John Graham speaking at IEFA 2021 Click here to play video.

John Graham of CPP Investments joined Darryl White, CEO, BMO Financial Group, at this year's International Economic Forum of the Americas&...

Continue Reading>

Related Insights

stock image

Resource Title

Jan 99, 2099 | Primary Category, Secondary Category
short description goes here

Find a Banker

Tell us three simple things to
customize your experience

search 1
search 2
clear selection
clear selection
clear selection
search 1
search 2
search 1
search 2

Commercial

  • Personal
  • Wealth Management
  • Small Business
  • About BMO Harris

Commercial

  • Who We Are
  • Industry Expertise
    • Engineering & Construction
    • Engineering & Construction
    • Agriculture
    • Agriculture
    • Trucking
    • Trucking
    • Public Sector
    • Public Sector
    • Commercial Real Estate
    • Commercial Real Estate
    • Auto Dealerships
    • Auto Dealerships
    • Professional Services
    • Professional Services
    • Media
    • Oil & Gas Services
    • Retail & Wholesale Distribution
    • Technology & Innovation
    • Manufacturing
    • Manufacturing
    • Media
    • Oil & Gas Services
    • Retail & Wholesale Distribution
    • Technology & Innovation
    • Private Equity Sponsors
    • Private Equity Sponsors
    • Healthcare
    • Healthcare
    • Franchise Finance
    • Franchise Finance
    • Business Properties
    • Business Properties
    • Cannabis & Emerging Industries
    • Cannabis & Emerging Industries
  • We Can Help
    • Business Strategy
    • Business Strategy
    • Equipment Financing & Leasing
    • Equipment Financing & Leasing
    • Manage Cash Flow
    • Manage Cash Flow
    • Economic Insights
    • Economic Insights
    • Doing Business in the U.S.
    • Doing Business in the U.S.
    • Doing Business Internationally
    • Doing Business Internationally
    • Asset Based Lending
    • Asset Based Lending
    • Loan Syndication & Agency Services
    • Loan Syndication & Agency Services
    • Finance Growth
    • Finance Growth
    • Manage Deposits
    • Manage Deposits
    • Manage Risk
    • Manage Risk
    • Mergers & Acquisitions
    • Mergers & Acquisitions
    • Subordinated Debt/Equity
    • Subordinated Debt/Equity
    • Wealth Management
    • Wealth Management
    • COVID-19 Financial Relief Programs
    • COVID-19 Financial Relief Programs
    • Addressing COVID-19
    • Addressing COVID-19
    • Road to Recovery: Expert Conversations
    • Road to Recovery: Expert Conversations
  • Our Bankers
phone hover icon email hover icon phone hover icon email icon phone icon share icon
Contact Us
  • Find a Banker
  • Get on our email list

Follow BMO Harris

  • Phone
  • Book Appointment
  • Find a Branch
  • Report Lost/Stolen Debit Card
  • Report Lost/Stolen Credit Card
  • Modern Slavery Act Statement
  • Privacy
  • Legal
  • Security
  • Careers
  • Investor Relations
  • Accessibility
  • Support
  • Sitemap
  • CDIC Member cdic_canada cdic_canada

Please note important disclosures for content produced by BMO Capital Markets. BMO Capital Markets Regulatory | BMOCMC Fixed Income Commentary Disclosure  |  BMOCMC FICC Macro Strategy Commentary Disclosure  |  Research Disclosure Statements

 

third party Third party web sites may have privacy and security policies different from BMO. Links to other web sites do not imply the endorsement or approval of such web sites. Please review the privacy and security policies of web sites reached through links from BMO web sites.

Please note important disclosures for content produced by BMO Capital Markets. BMO Capital Markets Regulatory | BMOCMC Fixed Income Commentary Disclosure  |  BMOCMC FICC Macro Strategy Commentary Disclosure  |  Research Disclosure Statements