Employee ownership is gaining momentum as companies confront two converging challenges: a wave of ownership transitions and growing expectations around stakeholder-driven business models. Increasingly, business leaders are asking whether employee ownership structures can deliver not only succession solutions, but also stronger alignment between financial performance and social outcomes.

In this episode of Sustainability Leaders, host Michael Torrance, Chief Sustainability Officer at BMO, speaks with Leah Turnbull, Managing Director and National ESOP Practice Lead at BMO. Their conversation explores how employee ownership models—especially ESOPs in the United States and EOTs in Canada—are evolving, why they are attracting renewed interest, and how they can support long-term value creation for employees, communities, and business owners alike.

Below are highlights from the conversation.

So, in the U.S., employee ownership and ESOP specifically have been around for about 50 years. In fact, 2026 marks the 50th year that BMO has been supporting employee-owned businesses. The main evolution is that we're seeing larger companies explore employee ownership, and part of that is due to some of the tax savings changes that's happened over the last 30 years. And also, the industry as a whole has become a lot more sophisticated in meeting the needs of these employee-owned businesses. In Canada, employee ownership is pretty much brand new, so it started in 2024.

There are studies that show that employees at employee-owned businesses have much stronger financial wellbeing and are able to manage through different economic cycles. Studies from the Federal Reserve and Economic Policy Institute demonstrate that equity growth in recent years has substantially outpaced wage growth, but only the highest income families actually own equity and assets and the people without assets have not participated in this growth. So, employees who participate in some form of employee ownership can benefit from both the capital appreciation and the wage growth, and this is one possible way to close the wealth gap between asset owners and workers, which I think obviously has lasting ripple effects throughout the entire community.

For most business owners that pursue employee ownership, the two words that resonate with them are liquidity. They're ready to diversify their wealth, which obviously they can get liquidity by taking a dividend or selling to a third party. But the second word is legacy. They built this business from the ground up. They really care about their employees and their communities, and they know that if they sold to a third party, things change.

Ideal candidates are businesses with steady financial performance and a management team that can run the day-to-day operations. Employee ownership is a great ownership transition tool. It is not a management transition tool. Additionally, given the leverage nature of these transactions, they need to have the financial strength to fund the incremental debt obligations.