Sustainability Newsletter Edition 23

Aerial view of a river flowing through a temperate rainforest

The information you need to make your sustainability ambitions a reality

In this edition

 

Powering Canada’s net-zero future: Canadian Climate Institute launches “The Big Switch”

Reaching Canada’s net-zero climate targets requires a significant switch from fossil fuels to clean electricity, and to achieve this, Canadian electricity generation capacity will need to grow 2.2 – 3.4 times. In response, the Canadian Climate Institute prepared two reports exploring both the technical and policy changes needed in Canada’s energy systems to achieve its net-zero goals.

The first of these reports, Bigger, Cleaner, Smarter, outlines that electricity systems must become bigger, cleaner and smarter through accelerating solar and wind growth, maintaining nuclear power and building upon carbon capture, utilization and storage capabilities. The companion report, Electric Federalism: Policy for aligning Canadian electricity systems with net-zero, assesses and recommends policy tools to bring about electric federalism in a cost-effective and equitable manner.

An infographic titled "Using electric federalism to power Canada's BIG SWITCH"

Source:  Canadian Climate Institute

As an enabler of the “Big Switch”, the Transition Accelerator, a pan-Canadian charity focused on net-zero transition pathways, is set to commence the execution of its electrification strategy to accelerate the development of viable pathways to a net-zero electricity system in Canada. Specifically, through electrification and grid integration work.

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Progress towards Canada’s national adaptation strategy

On May 16, 2022, the Government of Canada released a discussion paper on its upcoming National Adaptation Strategy. The Strategy aims to unite all orders of government, Indigenous peoples, the private sector and academia to ensure that Canadians are prepared for the impact of climate change. Through setting concrete objectives, the Strategy will strengthen Canadians’ health and well-being, the building and maintenance of infrastructure, environmental stewardship, support a strong economy and reduce the risk of climate-related disasters.

To ensure its success, the Strategy is built upon the Federal Disaster Mitigation and Adaptation Fund, which has previously received significant investment (C$3.4 billion) for climate-related infrastructure projects. However, concerns have been raised about the Strategy’s ability to “hold future governments to account,” in addition to monitoring and evaluating progress on objectives. As such, stakeholders are invited to share their opinions on the Strategy by participating in the online consultation portal until July 15, 2022. The Government is expected to finalize the Strategy by Fall 2022.

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World Meteorological Organization releases the 2021 State of the Global Climate report

The World Meteorological Organization (WMO) released its flagship State of the Global Climate report for 2021. The report highlights that key indicators, including atmospheric greenhouse gas concentrations, sea levels, ocean temperatures and ocean acidification levels all set record highs. In response, the United Nations Secretary General, António Guterres, released a video message where he refers to current climate change reduction efforts as “the dismal litany of humanity’s failure to tackle climate disruption.”

Guterres’s video highlights a call to action for the implementation of critical initiatives including a commitment to the development of access to renewable energy, increased private and public sector investment in renewables and the extinction of fossil fuel subsidies.

WMO Secretary General, Professor Petteri Taalas, made a specific call for the development of technology which captures carbon from the atmosphere – read more about direct air capture technology here.

This WMO report will be used as an official guiding document at COP 27, where world leaders will meet to discuss climate action.

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SEC ESG disclosures for investment companies

The SEC passed two proposals focused on how investment companies make disclosures related to their ESG funds. Continuing the SEC’s commitment to make ESG disclosures more transparent, the approval of these policies comes just two months after the SEC approved a proposal requiring investment companies to be more transparent in the naming and strategy of their ESG funds.

The first proposal requires investment funds that have an ‘ESG’ focus to carry 80% of assets which align to that ESG focus, similar to the requirements for funds deemed ‘growth’ or ‘equity’. The second proposal requires funds which claim to be ESG focused to provide more information on the specifics of their investment process as it relates to sustainability. It classifies ESG funds as: integration funds, ESG-focused funds, and impact funds.

Integration funds are those with ESG and non-ESG investment factors. These funds will have to describe how both these factors are incorporated in their decision making. ESG-focused funds are those that make their investment decisions primarily on ESG factors, they will be required to disclose their strategy in detail. Lastly, impact funds are those that invest to achieve a certain goal. These funds will be required to disclose how they measure the progress made towards their objective.

The SEC previously issued a proposal on corporate disclosures, which was published for comment in March 2022. Watch Garry Gensler’s video on the SEC’s Climate Related Disclosure Proposal here.

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Center For Climate-Aligned Finance (CCAF) launches aviation-focused working group

The aviation industry is responsible for 2.5% of global emissions, and if left unchecked, could use 10% of the global annual carbon budget by 2050. Aviation emissions must be reduced in order to align the industry with a 1.5-degree global warming benchmark. Enter the Aviation Climate-Aligned Finance Working Group – comprised of six top lenders in the industry, the group aims to create a framework to evaluate the efforts airlines have undertaken to align their emissions with a 1.5 degree global warming benchmark. They look to do this by providing guidance on measurement methods, emissions benchmarks, data pathways and reporting requirements. This builds on the CCAF’s mission to create specific guidelines for the decarbonization and climate alignment of various industries.

Listen to the Sustainability Agenda podcast on Decarbonizing the Aviation Industry for more on efforts in this regard.

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OSFI releases new draft guidelines on climate risk management

At the end of May, OSFI released new guidelines establishing expectations of financial institutions with regards to how they manage their climate-related risk exposure. The guidelines aim to ensure financial institutions become more resilient to potential risks brought on by climate change.

The desired outcomes of these guidelines is to ensure all federally regulated financial institutions understand and mitigate against the risks climate change poses to their business model and strategy. It will also ensure institutions develop the appropriate governance and risk management practices. Ultimately, the guidelines hope to poise institutions to remain financially and operationally resilient in the result of any disruption caused by climate disasters.

As the climate changes around us, OSFI is ensuring that companies are ready to operate in this new environment.

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Land degradation – $44 trillion of world’s annual economic output at risk

In its Global Land Outlook 2022 report, the UN reports that 40% of the world’s land is facing degradation due to modern agricultural practices fuelled by overconsumption in developed countries. Degraded lands, which are depleted of natural resources, soil fertility, and biodiversity, give rise to food insecurity, impairs community resilience to extreme weather events and reduces GDP. Notably, $44 trillion of the world’s annual economic output is at risk of land degradation.

In response, the UN suggests rethinking our global food systems through changing farming methods, practicing rainwater harvesting or regrowing trees to prevent soil erosion. If action is taken, the economic benefit of restoring degraded land could amount to $125-140 trillion a year, 50% more than the $93 trillion recorded global GDP for 2021.

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ClimeCo announces plastic credit project

ClimeCo, a global sustainability company advancing the low-carbon future with market-based solutions, recently announced its first verified Plastic Credit Project on Verra, under its Plastic Credit Program.

This plastic credit mechanism drives private sector capital to scale projects focused on removing environmental plastics and creating next life solutions. For example, ClimeCo supports the Women and Young Empowerment Initiative from Conceptos Plasticos. This project recovers post-consumer, non-recyclable, ocean-bound plastic waste that would have otherwise remained in the environment. Through collaboration with UNICEF, collected plastics are transformed into durable bricks which could be used to build schools. As a result, the social impact of this plastic crediting project parallels its environmental benefits.

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Conservation Impact Bond to scale sustainable agriculture

Dr. Diane-Laure Arjaliès was recently awarded the CSFN Research Grant for her proposal, “The Opportunity for Conservation Impact Bonds to Finance Natural Infrastructure and Regenerative Agriculture on Canadian Farmland.” The project aims to apply the Conservation Impact Bond, facilitated by Carolinian Canada, to scale investments in sustainable agriculture.

Sustainable agricultural systems are notable as they are productive in the long-term, require less costly inputs and can be a sink for GHG emissions. These systems have the further potential to generate multiple environmental, societal and economic benefits for farmers, investors and other stakeholders alike, in our opinion.

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TNFD set to release second beta framework

The Taskforce on Nature-related Financial Disclosures (TNFD) is a risk management and disclosure framework for the finance and business sector to better report and manage their nature-related risks from 2023 onwards. Since the first release of its beta framework for market consultation in March 2022, professionals from over 65 countries and territories have engaged with the framework via its interactive online platform.

Ahead of the second beta release in June 2022, the Taskforce states its focus is tackling priority areas to meet their mission of shifting financial flows away from nature-negative outcomes and towards nature-positive outcomes. This includes data & analytics availability, approaches to establishing nature-based metrics and sector-specific guidance for financial institutions.

Pilot testing of the second beta version will run through June 30, 2023. Corporations and financial institutions keen to explore how the TNFD framework may apply to their specific organizational context can test the pilot framework.

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Carbonplace and Visa complete pilot transfer of carbon credits

Global carbon credit settlement platform – Carbonplace – successfully completed a carbon credit transfer in collaboration with payments company, VISA. This transaction demonstrates the capability of Carbonplace’s unique settlement technology to significantly support the growing demand for voluntary carbon credits, and to effectively drive private sector capital towards global climate solutions. Carbonplace’s unique approach leverages blockchain technology and removes friction from completing the transaction.

At its inception, Carbonplace was a collaboration between 4 banks, including CIBC. It has since grown to include 8 global banks, including the recent admission of SMBC of Japan. Member banks are looking to combine their infrastructure, technology and expertise to efficiently scale the market, which is projected to grow annual trading volumes from 127 million today to 7 billion credits by 2050 in order to reach climate targets set in the Paris Accords.

Sustainability across CIBC

We are committed to making sustainability a reality for our clients and the communities we serve. Whether through greening their balance sheet or providing sustainability advisory services, our objective is to help our clients become global leaders in environmental stewardship and sustainability.

Successful business man and woman in an outdoor meeting

 

The Sustainability Agenda

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

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Chart of the day

Comparing the total cost of ownership between gas and electric vehicles.

A bar chart showing the cost of ownership between gas and electric vehicles

Source: Clean Energy Canada in CBC News

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Roman Dubczak
Deputy Chair
Susan Rimmer
Managing Director And Head, Global Corporate & Investment Banking
Dominique Barker
Managing Director and Head, Sustainability Advisory
Amber Choudhry
Managing Director, Debt Capital Markets
Siddharth Samarth
Managing Director, Sustainable Finance
Robert Todd
Managing Director, Energy, Infrastructure & Transition
Giorgia Anton
Managing Director and Head, Research
Gayatri Desai
Managing Director, Global Corporate Banking
Adam Janikowski
Executive Director Global Investment Banking

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