Sustainability Newsletter – June 2025

Ecosystem Marketplace (EM), a leading global source of information on environmental finance markets, published The state of the voluntary carbon markets (VCM) 2025. The annual report highlights that the VCM experienced some contraction last year, both in total market value and average price. But it cautions to separate the signals from the noise, explaining that the VCM is in ‘transition’ and ramping-up to scale its next phase.

Quick recap: According to the report, the VCM experienced significant changes in 2024 with total market value falling to USD $535 million, representing a 29% decrease from 2023. In the same period, average VCM credit prices dropped 6% from USD $6.71/tCO2e to USD $6.34/tCO2e, and transaction volume dropped 25% from 112.4 MtCO2e to 84.4 MtCO2e. The report cautions that these figures are not a sign of weak demand for carbon credits, but rather that “we are seeing an ongoing reboot of the supply side of the VCM in response to the growing sophistication of the demand side of the market.” To put another way, the VCM is in transition. The report explains that the legacy market of credits from older methodologies is winding down, while the next phase of the VCM, with a stronger emphasis on integrity, is ramping up. The supply of credits will take longer to become available from new projects. In the meantime, the report highlights that steady demand from the end users of credits is pushing up the price of credits from existing project types that are considered high quality. For instance, carbon removal credits are now 381% more expensive than reduction credits, up from 245% in 2023. This trend benefits nature-based projects, particularly Afforestation Reforestation Revegetation (ARR), mangrove restoration and agroforestry. Engineered, or tech-based, removals (e.g. biochar, direct air capture) are emerging as high-value credit types, though they currently represent a small market share.

Why is this interesting?  The VCM is in a transitional phase due to the increasing sophistication of market participants. For instance, the impact of carbon offtake and pre-purchase agreements on market demand has seen significant growth from corporate buyers in recent years. Microsoft recently signed the world’s largest biochar carbon removal agreement with Bolivia-based Exomad Green. The 10-year landmark deal will permanently remove 1.24 MtCO2e – equal to the yearly emissions of over 260,000 cars. Microsoft continues to top the carbon removal leaderboard with over 21.6 MtCO2e purchases to date.

WeAreEurope, an independent association of European professionals, published a study on business perceptions to proposed changes to the EU Corporate Sustainability Reporting Directive (CSRD). It finds that 61% of businesses support CSRD, and 51% are dissatisfied with proposals that would lessen the scope of sustainability reporting requirements – striking a new narrative that CSRD is seen as potential geopolitical asset for European climate leadership.

Quick recap: In February 2025, the European Commission proposed an Omnibus package of amendments to simplify sustainability rules for EU companies to boost European competitiveness in light of climate policy shifts in the U.S. The Omnibus package seeks to revise and narrow the requirements for the CSRD, as well as the Corporate Sustainability Due Diligence Directive (CSDDD), EU Taxonomy, and the Carbon Border Adjustment Mechanism (CBAM). Key changes include removing 80% of companies from CSRD obligations (only the largest companies would apply), postponing CSRD reporting requirements starting in 2026 by two years, and simplifying due diligence processes to ease CSDDD compliance for businesses. The CBAM would exempt small importers, significantly reducing obligations for 90% of them while maintaining coverage of emissions.

According to WeAreEurpore’s study, based on survey responses from over 1,000 professionals across 26 countries working in companies concerned by CSRD, more than half of businesses (51%) are dissatisfied with the Omnibus package (as proposed) that would lessen the scope for sustainability reporting, citing concern for weakened transparency and comparability. Additionally, the concern that the CSRD puts EU companies at a competitive disadvantage was the least cited of the six potential barriers presented in the survey—challenging a commonly heard argument. In fact, 90% of respondents endorsed CSRD’s relevance as an element of Europe’s sovereignty and economic influence. The survey also found 61% were supportive of CSRD as voted in 2022 and support trends higher amongst larger firms – from 57% among firms with 250-500 employees, to 67% for corporates with more than 5,000 employees.

Why is this interesting? The study captures a broad snapshot of business views on the EU’s sustainability ambitions and policies. Alongside the Omnibus package in February, the EU also introduced the Clean Industrial Deal (CID) to enhance clean energy adoption, particularly in energy-intensive sectors. Last month, the European Trade Union Institute published its views, noting there is a significant gap in how CID will fund the green transition which had initially contemplated the use of Clean Trade and Investment Partnerships (CTIP) with international partners, among other levers. But the world has changed since February. The European Trade Union Institutes points out: “What would a CTIP with the U.S. look like now?”

Mission Possible Partnership, Rocky Mountain Institute (RMI), and the Bezos Earth Fund have published a new report that provides insights into the role and impact of clean industrial hubs as supportive ecosystems for first-of-a-kind (FOAK) clean energy and industrial decarbonization projects. It finds that 50% of projects supported by these hubs reached a final investment decision (FID), compared with a 20% global average.

Quick recap: The heavy industry and transportation sectors account for over 30% of global greenhouse gas emissions. Transitioning to clean industrial processes, such as low-emissions hydrogen, sustainable aviation fuel, low-emissions steel and cement, and zero-emissions trucking, can pose significant challenges, particularly for FOAK decarbonization projects which often struggle with bankability and other hurdles. In 2022, Mission Possible Partnership, alongside its partners, advanced the development of two clean industrial hubs in California and Texas, directly supporting 18 FOAK clean industrial projects. These hubs provided a collaborative ecosystem that shared infrastructure, resources, and technologies. The newly published report provides insights into the impact of clean industrial hubs on individual FOAK projects’ success by helping them to mitigate technology risks, lower costs, pool demand, increase clean energy supply availability to projects, facilitate community engagement and workforce development, and reducing financial risks for private investors. Projects participating in the hub not only reduced emissions more effectively than individual efforts, but they reached front-end engineering design (FEED) and FID stages of project development faster and with greater success than those that have not participated in a hub. For instance, since 2022, nearly 700 industrial decarbonization projects have been announced globally, yet only 136 projects (20%) have reached FID. By comparison, 50% of projects that participated in the California or Texas clean industrial hub reached FID for at least one major component (i.e. hydrogen or alternative fuels, electrification, or carbon-capture unit).

Why is this interesting? The report further highlights the importance of supportive industrial policies in enabling the pipeline of announced clean energy and industrial decarbonization projects to reach FID and become operational. By contrast, the U.S. government’s One Big, Beautiful Bill Act proposes to pare back or eliminate federal green energy tax credits enacted under the Inflation Reduction Act. According to data from non-profit group E2, businesses have been cancelling or delaying ~USD $14 billion in low-carbon manufacturing and energy generation projects this year amid fears over the future of the federal incentives and policy.

The U.S. has issued new executive orders in support of nuclear energy. The move aims to revitalize the U.S. nuclear industry and help meet rising power demand in the face of new challenges, including a race to dominate in artificial intelligence, a growing desire for energy independence, and access to uninterruptible power supplies for national security.

Quick recap: Four new executive orders were issued on May 23, 2025, with the goal of reasserting U.S. global leadership in nuclear energy and increasing American nuclear capacity from approximately 100 gigawatts (GW)  in 2024 to 400 GW by 2050. The directives include:

• Reforming the Nuclear Regulatory Commission. Focuses on modernizing regulations to meet contemporary safety standards and technological advancements. It streamlines the licensing process and sets an 18-month deadline to make final decisions on new reactor applications.
• Reforming nuclear reactor testing at the Department of Energy. Fosters commercial nuclear advancements. It accelerates the testing and deployment of innovative reactor designs, including microreactors and small modular reactors, and establishes a pilot program outside of the national laboratories to support advanced reactor construction.
• Deploying advanced nuclear reactor technologies for national security. Secures a reliable energy supply for defense and military facilities. It encourages and leverages private sector investment and innovation while promoting the export of American nuclear technology to allies and commercial partners.
• Reinvigorating the nuclear industrial base. Seeks to strengthen nuclear supply chains by reducing reliance on foreign uranium through domestic mining growth and improve spent fuel management. It prioritizes funding for ten new large reactors by 2030 and addresses domestic workforce gaps in the nuclear sector

Why is this interesting? Nuclear power is enjoying a resurgence not only in the US, the historical leader, but also globally most notably China. According to data from Global Energy Monitor which tracks and compares national nuclear power fleets, the U.S. had led the world in total operating nuclear power capacity with 102.2 GW as of July 2024, followed by France (64.0 GW) and China (58.1 GW). Note Canada ranked 6th (14.6 GW). However, in recent years, China has significantly expanded its nuclear power capacity at the fastest rate of any country in the 21st century. Last month, China’s State Council approved the construction of ten new reactors, bringing the total now under construction in the country to 28 – higher than the total of all units under construction worldwide. China aims to overtake the U.S. in installed nuclear capacity by 2030.

Circle Economy, in collaboration with Deloitte, have published The Circularity Gap Report (CGR) 2025, an annual report offering insights into the global state of the circular economy transition. It reveals that global materials consumption and extraction are growing rapidly, greatly outpacing improvements in resource recovery technologies and waste management capacity.

Quick recap: The report analyzes materials flow in the global economy, measuring the sourcing of recycled versus virgin resources and trends in consumption, recycling rates and waste generation. Over the past fifty years, global materials extraction has tripled, today exceeding 100 billion tonnes annually. The latest report finds that only 6.9% of the 106 billion tonnes of processed materials come from recycled sources, a decline of 2.2 percentage points since 2015 – meaning the majority of materials entering the economy are virgin. According to the CGR dashboard, circularity would need to increase from 6.9% to 17% by 2032 to help limit global warming below 2 degrees Celsius. While some circularity progress is underway, negative trends are offsetting improvements. For instance, global waste collection rates are improving, but value recovery remains low – leaving huge untapped potential for the recycling of materials that currently aren’t, such as heavy industrial wastes, short lived consumer products, and end-of-life vehicles or construction materials. But secondary raw materials still face price competition from cheaper virgin materials, and advancements in recycling technologies and environmental regulations are still needed to shift the market. To turn the tide, the report’s key recommendations include adopting circular design principles to prevent the generation of difficult-to-manage wastes, enhancing resource efficiency in business operations, designing products with longevity in mind, and calling on policymakers to establish global circular economy targets (akin to climate targets) to lower material use and boost recycling rates.

Why is this interesting? The report serves as a critical resource for understanding the challenges and opportunities associated with transitioning to a circular economy, with similar parallels to the energy transition which has benefited from the establishment of global climate targets and climate-related disclosures to assist with action and accountability. The upcoming Global Circularity Protocol for Business, an initiative of the World Business Council for Sustainable Development which is expected to launch in 2026, will play a key role in establishing a shared framework in this effort, to guide companies in target-setting, measuring, reporting and disclosing progress on resource efficiency and circularity.

In line with our commitment to make sustainability a reality for our clients and the communities we serve, CIBC Capital Markets continues to advise and lead significant client deals as part of a focused objective to help our clients achieve their sustainability goals.

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