Bank of Montreal 2008 Annual Report Download - page 88

MANAGEMENT’S DISCUSSION AND ANALYSIS
MD&A
84 | BMO Financial Group 191st Annual Report 2008
It is the responsibility of all employees to conduct themselves in
accordance with FirstPrinciples, BMO’s code of conduct, and thus build
and maintain BMO’s reputation.
The Reputation Risk Management Committee considers potential
reputation risks to the enterprise, specifically reviewing complex credit
and structured financings as required.
Reputation Risk
BMO’s reputation is one of its most valuable assets. Key to effectively
building and maintaining BMO’s reputation is fostering a business
culture that:
•incorporates integrity and ethical conduct as core values; and
•promotes a conviction that every business decision must reflect the
enterprise’s core ethical values.
The potential for damage to our corporate reputation exists in every
business decision. Therefore, we believe that active, ongoing and
effective management of reputation risk is best conducted through
integration of explicit assessments of reputation risk into strategy
development, operational implementation and transactional decision-
making. Reputation risk is also managed through our corporate
governance practices, code of conduct and risk management frame work.
Reputation risk is the risk of negative impacts resulting from
the deterioration of BMO’s reputation with key stakeholders.
These impacts include revenue loss, reductions in our customer
or client base and declines in BMO’s share price.
To establish a baseline from which we can track our progress,
we retained the services of an independent climate change consulting
firm with extensive experience in developing and verifying corporate
greenhouse gas (GHG) emissions inventories. We now have a compre-
hensive GHG inventory database tool which is fully compliant with both
the World Resource Institute/World Business Council for Sustainable
Development GHG Protocol Initiative and the International Organization
for Standardization (ISO) 14064 Part 1: Greenhouse gases –specification,
with guidance at the organization level, for quantification and reporting
of GHG emissions and removals.
In 2008, we updated our lending guidelines to provide more
specificity in the inputs for identifying and evaluating environmental
risks relating to climate change and forest biodiversity.
Environmental Risk
We are committed to minimizing the impact of our operations
on the environment and to demonstrating leadership by integrating
environmental considerations into our business practices.
Environmental risk covers a wide range of concerns, such as
climate change, biodiversity and ecosystem health, unsustainable
resource use, pollution, waste and water.
As a North American financial services company, we acknowledge
that our actions affect the environment directly in terms of our own
operations and indirectly through our procurement practices and the
products and services we provide to our customers.
We are addressing climate change through a series of internal
operating initiatives designed to reduce our impact on the environment.
As part of our environmental action plan, we have developed a
strategy to help focus employee efforts on managing the environmental
impacts of our operations in five key areas: energy consumption,
transportation (employee business travel), material consumption, waste
and procurement. Some of our environmental initiatives fall outside
of the five key areas but will continue to be addressed within the BMO
Environmental Management System.
Environmental risk is the risk of loss or damage to BMO’s
reputation resulting from environmental concerns related to
BMO or its customers. Environmental risk is often associated
with credit and operational risk.