An aerial shot of solar panels in a field

CIBC is fully committed to advancing sustainability

Welcome to the first 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 and Clean Energy 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.

2021 will be the year of Transition Finance

We believe that 2021 will be the year of Transition Finance. The Canadian Standards Association is expected to release taxonomy details on transition finance sometime in the first quarter of 2021. This follows the ICMA (International Capital Markets Association), which released its Climate Transition Finance Handbook in December. We expect this will be the catalyst needed to mobilize the issuance of transition finance bonds in Canada. Members of our team participated as a moderator and a panelist at a transition finance event in December 2019, hosted by the IIAC (Investment Industry Association of Canada). If you are interested in a replay or a summary of the event, please reach out to your CIBC relationship manager.

Pandemic drives changes in carbon policies

Our CIBC Capital Markets Research team published a report on global carbon policies (‘COVID-19 Advances Global Carbon Policies’, January 6, 2021). In this report, we update our six year old CIBC Carbon Tracker for the S&P/TSX Composite index and find that emissions declined by about 320 MT for 2019 year end for all composite members – this represents a drop of 4.7% over 2018. The drop in greenhouse gas emissions in 2020 was around 7% globally. The report highlights the growing global attention paid to carbon policies, with an in depth examination of the action taken in Europe, the US and Canada. If you are interested in receiving this report, please contact your CIBC relationship manager.

Voluntary carbon markets garner additional focus

Carbon credits have garnered an increasing amount of focus over the past year. We recommend that if you have an interest in carbon credits, either as a carbon credit buyer or supplier, that you read ‘Taskforce on Scaling Voluntary Carbon Markets’. Watch for carbon to play a more important role as a ‘commodity’ going forward. The Taskforce is expected to publish a final report at the end of January 2021. If you would like additional information on CIBC’s efforts in carbon, please contact your CIBC relationship manager.

The direction from Ottawa

The Canadian Federal Government has taken significant steps in advancing their sustainability agenda:

They have entrenched in legislation the establishment of an Advisory Body whose mandate is to provide the Minister of Environment and Climate Change with advice with respect to achieving net-zero emissions by 2050. Further, the Minister must publicly respond to advice that this advisory body includes in its annual report.

The Minister of Finance has committed funding to create the Sustainable Finance Action Council which will be focused on developing a sustainable finance “market” in Canada. This would see capital flows redirected toward green initiatives. Furthermore, as a part of their mandate, this council will look at enhancing climate disclosures.

Looking at the Global Perspective

The International Financial Reporting Standards foundation (IFRS) completed a consultation on a new Sustainability Standards Board this past December, which shows promise of moving forward. We continue to advise our corporate clients to use SASB and TCFD for disclosure guidance.

The UK’s Department for Business, Energy, & Industrial Strategy put out their Energy White Paper (Powering a Net Zero Future) on December 18.

This paper builds on the Prime Minister’s Ten Point Plan which includes: offshore wind quadrupling to 40 GW by 2030; 5 GW of low carbon hydrogen production capacity by 2030; advancing nuclear energy as a clean energy source; the end of the sale of new petrol and diesel cars by 2030; target to remove 10 MT of carbon dioxide by 2030 through carbon capture and storage; increased efficiency in homes and public buildings; spending on public transport, cycling, walking; planting of trees; allocating capital to innovation and finance through a £1 bn innovation fund announced earlier in 2019.