Energy transition – mirror our clients

Dominique Barker: Welcome to The Sustainability Agenda, a 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. I’m your host, Dominique Barker. Please join me as we explore today’s most pressing matters with special guests that will give you some new perspective and help you make sense of what really matters.

Mike Freeborn: The world is changing, full stop. We’re on this inexorable march to lower carbon and just a change in energy systems. And so this is really becoming the thing that’s important. So to deliver the advice we strive to deliver, you know, we really need to be facile in this.

Dominique Barker: On today’s episode, I’m speaking with Roman Dubczak, Head of Global Investment Banking, as well as David Williams and Mike Freeborn. They’re both Co-Heads of the Energy Infrastructure and Transition team, or what I’ll call EIT. And we’re also joined by Kelsen Vallee, who heads our Energy Transition team, part of the Global Investment Banking team. We’re pleased to welcome everyone to The Sustainability Agenda. It’s great to have you. So at the end of April, it was actually Earth Day, CIBC announced the merging of our Energy group with the existing Renewables & Infrastructure team to a new group as I described EIT. We’ve seen a number of our clients make changes to their own structure and their own narrative related to energy transition. Roman, let’s start with you. Why the change and why now?

Roman Dubczak: Thanks, Dominique. It’s been a natural process for us. Over the years, our teams, be it on the power side of the equation or the upstream energy side of the equation, upstream and midstream, for that matter, have developed strong franchises and have become experts in energy markets in general. And I think what we’re seeing now is perhaps it’s accelerated by the pandemic, perhaps it’s accelerated by the precipitously falling cost curve as it relates to renewable energy, both solar and wind, but in any case emerging of the energy markets over time as it relates to lower carbon footprint for some of the production and a shift to electrification of the grid as we slowly but surely move more towards electric vehicles and other forms of combustion as it relates to industrial vehicles. So the teams who are experts in energy markets are we found were doing parallel types of work as it relates to end use and the ambitions of our clients. And so our clients are coming together in terms of the type of business that they’re pursuing. So it made perfect sense for our team to mimic the evolution of our clients. And it also forms a very good basis for us to improve and accelerate really our expertise in energy markets and the sector, because we, for a very long period of time had a leadership position in renewable energy and a very, very long time had a leadership position in the oil and gas sector as well. So bringing together those two very strong franchises into one, which over time will merge. It’s like this announcement is the beginning of a journey, so to speak, as we transition in energy markets occurs over the ensuing years.

Dominique Barker: Great. OK, Mike, let’s turn to you. What does it mean for our existing clients? So how are our traditional energy clients reacting to this announcement?

Mike Freeborn: Sure. Thanks, Dominique. It means a few things. First and foremost, I personally am the people that our clients will see from CIBC are the same people they saw before. So in many respects, the things we’ve sort of built our business on, so advising and financing, you know, our core clients doing the things they do is still our core business. There’s absolutely no change to that. I would say, though, that every client in the Energy Square would tell you that just the world is changing, full stop. We’re on this inexorable march to lower carbon and just a change in energy systems. And so this is really becoming the thing that’s important. So to deliver the advice we strive to deliver, you know, we really need to be facile in this. And so part of this, I think, from everyone’s perspective, was just formalizing our focus on some of these verticals that are becoming so important to our clients. You ask how our clients have reacted? The reaction has been great. I mean, you’ve seen them doing things along these lines every day. We saw an announcement this morning from Suncor and ATCO around building a world scale hydrogen plant. So this is just kind of them nodding and saying, good, we’re already talking about these things and this is about deeper dialogue and better advice. So it’s been well-received.

Dominique Barker: David, you now co-head the EIT group. You’ve recently made some expansions in the traditional renewable energy space globally. CIBC has historically been successful in infrastructure and renewables. But can you describe some of those changes you’ve made and describe those new areas of business that we could end up in?

David Williams: Yeah. Thanks, Dominique. Look, as Mike and Roman have said, the trends in this space are tremendous and they’re working in our favour. So in order to capitalize on those, we’ve done two things. One is we’ve expanded ourselves geographically, so we’ve doubled the team in London. We’ve added a lot of professionals in New York as well. Already more than 50% of our revenues are outside of Canada. So that’s a big factor, so geographic expansion. And then the other one is just along product lines. We’re hiring new folks who work in the tax equity space, for example. And we’re also adding folks on the infrastructure to capitalize on the Biden plan in the US. So we’re looking forward to both continuing that geographic and product expansion.

Dominique Barker: Great, thanks. Kelsen, I would presume that other areas of the economy could emerge, and I know that’s an area for you as heading the Transition team. What are the areas you’re focusing on and thinking about? And how is CIBC positioning itself as leader?

Kelsen Vallee: So energy transition isn’t uniquely an infrastructure or energy issue. As we all know, there are many parts of the economy that are grappling with the same issues that our energy clients and our infrastructure clients are grappling with. They have emissions targets in mind. And these would include groups that are emitting from mining operations, from agricultural operations, industrial manufacturing, et cetera. So it’s beholden upon us to expand our reach internally to make sure that connectivity of our body of knowledge is resulting in solutions for our corporate clients outside of the EIT group as well.

Dominique Barker: Great. Roman, Mike, David, Kelsen, thank you very much for your time today. And thank you for your leadership at CIBC. I think I’m going to repeat what Roman’s told our group over and over. This is the time of the great transition and it’s a great time to be in banking. We’re going to be playing a very important role in our economy as our economy transitions to lower carbon. And we heard today from Mike talking about Suncor and ATCO having announced a big hydrogen project. The traditional fossil fuel companies or traditional Calgary type of clients are going to play an increasingly important role in the energy transition and moving to lower carbon. I see carbon capture as an emerging infrastructure asset class. So it makes sense that we’ve got the people who are experts in infrastructure, married and working alongside with those who cover those traditional energy companies. I think it’s a really exciting time and stay tuned for more information on this topic and as we continue our work in the great transition. Please join us next time as we tackle some of sustainability’s biggest questions, providing different perspectives to help you move forward. I’m your host, Dominique Barker, and this is The Sustainability Agenda.

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