CIBC drives the sustainability agenda

Welcome to the next 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 mobilizing $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.

Biden to hold climate summit April 22 and 23

At the end of March, President Biden put out an invitation to 40 global leaders for a summit on climate. Earth Day is on April 22 so the timing could not be more appropriate. This is a key milestone ahead of the UN Climate Change Conference that is set to take place in November. The timing is also interesting for Canada, given our Federal Budget is to be released a few days earlier on April 19.

CIBC’s Carbon Capture and Hydrogen conference is set to take place on April 20, 2021. See below for the event details and to register (just click on the invitation).

Science Based Target Initiative expands its scope

The Science Based Targets initiative (SBTi) which drives climate action in the private sector by enabling companies to set science-based emissions reduction targets, is in the process of expanding their advisory scope to now include impact on nature. SBTi’s original mandate was to publish guidance on how different industries can reduce their emissions and limit global warming to the agreed 1.5°C Paris Accord pathway. That advisory/guidance mandate has now expanded to include impacts on freshwater, biodiversity, land and ocean. We will monitor take up by corporations on this additional scope.

China’s central bank begins work with EU on green investment taxonomy

Last week, we learned that China’s central bank will work with the EU on green investment taxonomy. As a reminder, the EU taxonomy helps define what is considered sustainable (in line with Paris Agreement) and has implications on the ‘investability’ of certain companies in a fund labeled ‘green’ or ‘ESG’.

In addition, ESG disclosure is taking hold in Asia: in 2020, we saw over 1,000 Chinese A-Share companies (companies listed in RMB on the Shanghai and Shenzhen exchanges) voluntarily publish ESG reports, from 370 companies in 2019. For H-Share companies (companies listed on the Hong Kong stock exchange), it has been a requirement to publish an ESG report since 2016.

ESG disclosure is rapidly gaining traction in China with regulators making efforts to keep pace. In February 2021, the China Securities Regulatory Commission issued a market consultation that included a proposal to add ESG information to a list of issues on which listed companies should update investors.

As Chinese companies emerge from COVID and rapidly grow their operations in an increasingly connected world, we are seeing more focus on ESG disclosure being driven by regulators, shareholders and the companies’ management themselves.

CPPIB creates Sustainable Energy Group

The Canada Pension Plan Investment Board (CPPIB) is creating the Sustainable Energy Group (SEG), a new investment group that combines renewables, conventional energy and new technology and service solutions, which, in our opinion, makes tremendous sense. We have seen other financial institutions take this route, in addition to corporate clients. This is a true convergence of energy sectors, so perhaps a new name for such a group could be ‘Joule’ ?

ISF shows that Canadian corporations lag in GHG reporting

In a recent report titled ‘Assessing Current Canadian Corporate Performance on GHG Emissions, Disclosures and Target Setting’, the Institute for Sustainable Finance (ISF) examined the firms in the S&P / TSX Composite Index, over 200 of the largest publicly traded companies in Canada, to determine the state of their greenhouse gas (GHG) emissions reporting. The findings put Canada below many countries in the world. Some highlights include:

• Approximately two-thirds (150 of 222) of TSX index firms provide GHG disclosures; placing Canada ahead of Japan, slightly above or equal to the US but well below European countries and the UK.
• The report also highlights that only a quarter of Canadian companies have set climate targets, compared to over 50% of companies on the S&P 500 and two-thirds of large UK companies.
• Of additional consideration, the level of detailed action planning, along with the link to compensation, varies significantly across the firms, with only 15% of TSX companies providing detailed plans.

To read the complete report, click here.

CIBC related events and publications

Upcoming events

‘Carbon Capture and Hydrogen’
Tuesday April 20, 8:30 am EST / 1:30 pm GMT

The event will feature a focus on UK and European developments with CCUS, following our successful North American CCUS conference, February 23. We will also be adding hydrogen as a focus for discussion.

New Podcast: ‘The Sustainability Agenda’

CIBC Capital Markets latest podcast series focusing on the evolving complexities of the sustainability landscape – with a view on addressing current issues in a concise format to help you navigate and take action.

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