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.
In the Innovation Corner
ETFs are going green – recently Canada’s Evolve Funds launched the world’s first carbon neutral ETFs. Evolve’s CleanBeta™ Series of ETFs will offset the carbon footprints of their portfolios by employing a variety of strategies, mainly including purchasing and retiring carbon credits. Using a carbon footprint calculation provided by Trucost, a division of S&P Global, Evolve will buy credits to neutralize the carbon in their portfolios. CleanBeta™ is a unique product which allows retail investors to make an impact with their investing.
Ipsos illuminates on the public mindset
CIBC Capital Markets hosted Steve Levy from IPSOS during our Investment Banking client call on May 19th. Among many interesting public opinion findings, of particular interest in the ESG realm, were the key sentiments that consumers want to see corporations doing something and they perceive corporations as filling a vacuum that has been created by governments.. “business has an opportunity to shine as beacons of clarity”. Also, in Canada, while greenhouse gas emissions and climate take prominence in the media, in actuality, Canadians are more interested in reducing waste, pollution, and plastics. Some key highlights can be found in the table below. Upon review of the findings, it becomes apparent that some of the environmental / societal concerns of the average consumer don’t always match the news of the progressive agenda.
Source: Ipsos study, 2021.
“Net Zero by 2050 means no new oil production”, reports the IEA
The number of governments across the globe that are committing to achieve net-zero emissions over the coming decades is increasing, which is certainly a promising sign of progress. That said, the commitments that have been made, even if fully achieved, fall well short of what is actually required to bring global energy-related CO2 emissions to net zero by 2050.
The International Energy Agency (IEA) has produced the world’s first comprehensive study of how to transition to a net zero energy system by 2050 while ensuring stable and affordable energy supplies, providing universal energy access, and enabling robust economic growth.
The report sets out a cost-effective and economically productive pathway that results in a clean, dynamic and resilient economy dominated by renewables like solar and wind instead of fossil fuels. “Net zero means huge declines in the use of coal, oil and gas. This requires steps such as halting sales of new internal combustion engine passenger cars by 2035, and phasing out all unabated coal and oil power plants by 2040.”
Furthermore, the report examines the key uncertainties, such as the roles of bioenergy, carbon capture and behavioural changes in reaching net zero.
Of note, as displayed in the above graph from the IEA report, in order to achieve Net Zero by 2050, by 2040 the following needs to be true:
- 50% of existing buildings retrofitted to zero-carbon-ready levels
- 50% of fuels used in aviation are low-emissions
- Around 90% of existing capacity in heavy industries reach end of investment cycle
- Net-zero emissions electricity globally
- Phase-out of all unabated coal and oil power plants
Increasing momentum of hydrogen investment in Asia
As sustainably sourced energy becomes more important globally, we are seeing a significant commitment for Asian Energy State Owned Enterprises (SOEs) towards hydrogen development.
For example, in January of 2021, Korea Gas (KOGAS) established a hydrogen business headquarters and has since been selected by the Korean government as the main hydrogen distributor under the Korean government’s hydrogen economy roadmap. KOGAS has drawn up plans for construction of large-scale hydrogen production bases and hydrogen refueling stations (HRSs) in Korea, and has established renewable energy power plants and electrolysis facilities abroad. KOGAS plans to create a nationwide hydrogen network connecting 25 hydrogen production facilities and 132 HRSs by 2030. In addition to its hydrogen distribution business, KOGAS is expected to engage in a fuel cell venture via utilization of LNG terminals. Outside of Korea, KOGAS has been active investing in hydrogen opportunities in the middle east and in Australia and is beginning to look farther afield.
In China, Sinopec Corp. plans to build and operate 100 hydrogen refueling stations in 2021, and 1,000 in the next five years, to lead the high-quality industrial development of hydrogen energy. At the end of April, the Chairman of Sinopec Mr. Zhang Yuzhuo, stated “It’s our goal to become the No.1 hydrogen enterprise in China”.
Hydrogen Consumption – Mt H2 per year
The International Energy Agency (IEA) expects hydrogen applications in the transport sector (golden colour in bar graph) to be the most promising application for hydrogen in the coming decades.
The role of critical minerals in clean energy transitions
Critical minerals, such as lithium and cobalt, are vital to many of today’s rapidly growing clean energy technologies. As such, demand for these minerals is expected to continue to grow quickly as the transition to clean energy increases its pace.
A new World Energy Outlook Special Report, produced by the International Energy Agency (IEA), provides a comprehensive analysis of the complex links between critical minerals and the prospects for a secure, rapid transformation of the energy sector. Among other findings, the report examines whether today’s critical mineral investments can meet the needs of this swiftly changing sector. The report considers the work require to promote sustainable development of these minerals and offers insights, including six key IEA recommendations for a new holistic approach to critical mineral security.
Voluntary Carbon Markets – Progress is being made
The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) is a private sector-led initiative that is working to scale an effective and efficient voluntary carbon market to help meet the goals of the Paris Agreement. The taskforce has completed its initial phase of work on the topic and is looking for feedback. If you intend to buy, sell or transact in voluntary carbon credits, please submit a response. CIBC is a participant in the TSVCM, so please feel free to contact Dominique Barker on the topic.
You can access the consultation documents and survey link on the TSVCM website.
CIBC related events and publications
Upcoming events
‘Sustainable Finance – A View From the Thought Leaders’
Wednesday June 9, 2021
Listen to the perspectives on sustainable finance from Principles of Responsible Investing (PRI), Rocky Mountain Institute’s Center for Climate-Aligned Finance and the Institute for Sustainable Finance (Canada).
To learn more about this event, talk to your CIBC representative or visit the conference page and register directly.
‘CIBC Sustainability: The view from Asia’
Wednesday June 30 @ 8:00 am – 9:30 am ET / 3:00 pm – 4:30 pm GMT / 8:00 pm – 9:30 pm CST
Please join our virtual CIBC Sustainability Conference which will feature discussions with Asia’s top experts on the following topics:
- The importance of Asian companies in the global energy transition
- Greening the balance sheet, sustainable infrastructure investment and the role of SPACs
- Energy transition strategies from international energy companies and state owned enterprises
- Asia policy momentum for decarbonization
- To learn more about this event, talk to your CIBC representative or visit the conference page and register directly
Publications
‘The Sustainability Agenda’ – Podcast Series
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.
The CIBC logo and “CIBC Capital Markets” are trademarks of CIBC, used under license.
