CIBC drives the sustainability agenda

Welcome to the third edition of the CIBC Capital Markets Sustainability newsletter. At CIBC, we are committed to making sustainability a reality for our clients and the communities we serve. We have built a market-leading Renewables franchise to provide our clients with expert advice, capital and access to capital markets in this important sector. Whether through greening your balance sheet or providing sustainability advisory services, our objective is to help our clients become global leaders in environmental stewardship and sustainability. Our bank is committed to supporting $150 billion in environmental and sustainable finance activities by 2027 to support clients in transitioning to a lower carbon economy, and we’re well on our way to achieving this target.

Enbridge’s landmark sustainability linked loan

CIBC arranged a syndicated sustainability-linked loan for Enbridge – the first sustainability-linked loan for the energy infrastructure sector in Canada. This facility includes terms that allow Enbridge to reduce borrowing costs if it meets targets related to certain ESG goals which were announced by the company in November 2020. CIBC is the Administrative Agent, Joint Bookrunner and Co-Lead Arranger on the $1 billion credit facility and additionally acted as the Co-Sustainability Structuring Agent – working with Enbridge to establish its ESG targets during the term of the credit facility. To learn more, and to see Enbridge’s detailed 2020 financial results, click here.

The Biden vision

The third volume of our series “Brave New World” hosted by Laurie Mahon, Vice Chair CIBC Investment Banking, took place February 9, 2021. The webcast discusses some of the key themes around the Biden Vision through a sustainability lens with a panel including Nuria Haltiwanger, Chair and CEO of ACS Infrastructure, Bryan Martin, Founder and Executive Chair D.E. Shaw Renewables Investments and John Porcari, Managing Partner of 3P Enterprises.
Two themes to note:

1. Infrastructure investing: Infrastructure investing: the panelists mentioned novel ideas like treating school buses and transit fleets as distributed energy, but also more conventional ideas like increasing electrification of vehicle fleets. The transport sector is the largest CO2 emitter in the US so the government focus on the sector is not a surprise.
2. Trends and challenges within private renewables investment: U.S power infrastructure is currently in a replacement cycle and is replacing fossil fuel plants with renewables as the older fleet is retired. Almost 70% of these new renewables investments have been in Republican states, so this evolution is a bipartisan, local effort. The driver of this change is primarily cost, as solar and wind today are cheaper than other alternatives. The cleaner, greener attributes of renewable electric power are secondary, meaning that this market will continue to grow even without forceful federal policy.

If you would like to hear a replay of the series, please find it here.

The electrification decade is here

The 2020s are expected to be the decade of electrification, as projects kickstart across the world. Several key events, in the past few months alone, support a more aggressive move on this agenda:

Andrew Forrest, Chairman and founder of Fortescue, an iron ore producer based in Australia that has been making waves down under with near daily press coverage.  Fortescue is undertaking feasibility studies that could lead to 300 GW of power, more than four times what Australia can produce.  His end goal is to produce zero-carbon steel in Australia.

• In an assertive move, oil majors including BP and Total won a majority of the contracts in an auction ahead of many of the utilities that have dominated the space to date.  The Crown Estate, owned by the British monarchy, auctioned seabed rights that will allow 8 GW of new offshore wind farms.
• On February 4, 2021, Northland Power updated its long-term plans and objectives, and announced its growth aspirations, with 12 GW of gross offshore wind capacity in its pipeline.  For additional details, click here.

These are just a sampling of datapoints that support the trend toward material investment in the renewables space in 2021 and the rest of the decade.

The accounting profession continues to push forward on Sustainability ESG

As noted in Edition 1 of this newsletter, in December 2020, the International Financial Reporting Standards Foundation completed a consultation on the inclusion of a Sustainability Standards Board (SSB) as part of IFRS. It appears the consultation resulted in a conclusion to press on, with next steps announced on February 2, 2021 on January 11, 2021. The IFRS Foundation is expected to announce a proposal by the end of September 2021, with a potential establishment of the SSB to be announced at COP26 in November 2021. CPA Canada is asking to host the new global headquarters in Toronto and is requesting support from Canadian stakeholders.

Fed letter on climate change

By now it is not a surprise, but it is still notable that San Francisco Fed economist Glenn Rudebusch released a paper highlighting how climate change is a source of financial risk which could threaten financial institutions and the stability of the overall financial system. The paper has a useful summary of the financial regulators’ official initiatives this past year related to climate risk.

CIBC Related Events

Events:

‘Black in the C Suite’
Wednesday February 17, 2021, 12:00pm – 1:00pm EST
The conference will feature Kikelomo Lawal, CIBC’s Chief Legal Officer, presenting at a free virtual event hosted by the Canadian Club. Register here.

Carbon Capture, Utilization and Storage conference
Tuesday February 23, 1:00pm – 3:30 pm
The conference will feature discussions with North America’s top experts on the following topics: the CCUS need and opportunity, carbon capture applications and technology, CO2 transportation requirements, and Canadian and US governments’ policy momentum for CCUS. If you are interested in registering, please reach out to your CIBC representative. 

‘Pension Funds Commitment to Net Zero – What Does it Mean?’
Wednesday February 24, 3:30pm – 4:30 pm EST
The event will feature a conversation with Jo Taylor, CEO of Ontario Teachers’ Pension Plan. If you are interested in registering, please reach out to your CIBC representative.