BMO pledges $5.1B toward closing racial wealth gap

Dive Brief:

BMO Financial Group is pledging $5.1 billion over the next five years to counter the racial wealth gap in the U.S. and make economic recovery more inclusive, the company announced Tuesday.
The majority of the commitment — $3 billion — will go toward community reinvestment in affordable housing and neighborhood revitalization, the company said.
With its pledge, BMO, North America’s eighth-largest bank and the Canadian parent of Chicago-based BMO Harris Bank, becomes the latest financial institution to invest a sum in the billions toward racial equality — a social goal that has rapidly gained traction in the U.S. since the May killing of George Floyd by police.

Dive Insight:

In addition to its community reinvestment pledge, the bank aims to put $500 million toward lending for Black- and Latinx-owned commercial businesses; $500 million toward mortgage lending in low-to-moderate income level communities; and $500 million toward business diversity initiatives. Half of that last amount — $250 million — will mark an increase in spending with diverse suppliers, including an outreach and development program to engage diverse business communities.

The bank also pledged $300 million toward expanding resources for women-, Black- and Latinx-owned small businesses, and another $300 million in critical support for municipal and nonprofit clients.

BMO additionally wants to support diverse talent advancement programs and boost philanthropy targeted at systemic change, and said it will increase availability of Black and Latinx investment managers on its wealth management platform.

"The barriers that disproportionately affect minorities — and in particular, Black and Latinx communities — have only intensified during the COVID-19 pandemic," David Casper, BMO Financial Group’s U.S. CEO, said in a press release. "There is no middle ground on issues of racial injustice and inclusion, and we are working to ensure that we are a meaningful part of that change.”

Since May, Bank of America, PNC, U.S. Bank, PayPal, Netflix, American Express and fellow Canadian lender Royal Bank of Canada have all pledged sums of $100 million or more toward racial equality.

JPMorgan Chase last month said it would contribute $30 billion to close the racial wealth gap, including $8 billion in mortgage origination for Black and Latinx households and $14 billion to create affordable rental units in underserved communities.

Columbus, Ohio-based Huntington Bank pledged $20 billion in September to improve economic opportunities — particularly in low-income communities and for people of color — across its seven-state footprint over the next five years.

BMO will launch its five-year inclusion initiative, which it calls EMpower, in a virtual event Thursday.

The effort comes little more than two months after the bank updated its workplace diversity goals. BMO said in September it aims to boost its Black and Latino senior leadership in the U.S. to 7% each by 2025 and give people of color 30% representation in senior leadership roles. It also wants people with disabilities to comprise 5% to 7% of its workforce, and is setting a goal of 3% representation companywide by LGBTQ employees.