Understanding CIBC’s carbon emissions

Dominique Barker: Welcome to the Sustainability Agenda, a podcast series focussing 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.

Linda Scala: We claimed our support for the disclosure framework that was developed by the TCFD or the Task Force on Climate Related Financial Disclosures. Such a big acronym, as we talked about earlier.

Dominique Barker: Alphabet soup.

Linda Scala: Alphabet soup. Exactly.

Dominique Barker: On today’s episode, I’m joined by Linda Scala, who has a really important role at CIBC. She’s in our risk group and environmental risks fall under her. She’s a chemical engineering background and has worked at IBM and Celestica before joining us just over two years ago. So today we’re going to untangle some of these acronyms that we’re hearing from organisations that we have joined as a bank. Welcome, Linda.

Linda Scala: Hi, Dominique.

Dominique Barker: So, Linda, as I said in the welcome, let’s untangle all these acronyms and I’ve called them alphabet soups that CIBC has signed on to and some of these definitions. And maybe we can start with an important one, which is the greenhouse gas emissions and what it means for CIBC. Can you help us define and delineate CIBC s footprint and define scope one, two and three emissions and how it relates to our bank?

Linda Scala: Sure, no problem. Before I get into the details around the greenhouse gas emissions, I think it’s important also just to take a step back for a bit and just define a few other important terms that I’ll use throughout this talk.

Dominique Barker: Sure.

Linda Scala: And I think the first one that we’ve all heard about is global warming. And really what this means and this really refers to that long term heating of the Earth’s climate and what’s happened since pre-industrial era of the eighteen hundreds, essentially. And a lot of that is attributed to human activity, things like burning fossil fuels, deforestation, agricultural practises have really driven up higher than normal levels of gases such as carbon dioxide in the atmosphere. And these gases, we refer to them as greenhouse gases because they really act as in a similar fashion to a greenhouse. They trap in the heat that comes from solar radiation. And this is a normal process. It’s what keeps our planet warm. But when that blanket becomes too thick, it really throws off that delicate balance and more heat becomes trapped. And then we see the warming happen. And then the last one I just wanted to mention is climate change. It’s a more broad in that it talks to the changes in weather patterns that have resulted from global warming. So that’s things like increased flooding, forest fires, rising sea levels. They’ve all been a result of climate change and global climate commitments to things such as the Paris Climate Agreement, which many of us have heard about that really aims to limit that global warming. And their target is to limit that warming to less than two degrees. And this is really being done to avert some of the most catastrophic impacts of climate change. And the most effective way to do that is to limit the amount of greenhouse gases that we emit and ultimately reach net zero by 2050. So that means that from 2050 onwards, we need to remove as much as we emit. And by the way, we’re sitting around one degree of global warming right now and we already know what that’s done to our climate. So if I go back now to your original question, which is on the different types of emissions, how does this factor in. So Scope one, two and three emissions that really refers to that classification system. It was developed by the greenhouse gas protocol. And it’s really there to help us better understand the source of our emissions and ultimately address them. So now we know where they come from. Now we can figure out how to reduce them. So if we look at Scope one, this really refers to our direct emissions. These are emissions that come from activities that are completely under our control. And for CIBC, this would include things like burning fuels for our heating. Scope two this is a bit further removed. So it’s an indirect emission and it really is resulting from the electricity we purchase. So they’re considered indirect since it’s the utility that’s actually creating the emissions, but we ultimately use the energy that they create. But lastly, Scope three, this is the category that you use to capture all of the indirect emissions, the other indirect emissions. So these are coming from sources that we don’t own or control in any way. So an example, in the past, we would have done a lot of work to capture our greenhouse gas emissions from business travel. So where the actual emissions are coming from the aeroplane or the train or the car that we rent.

Dominique Barker: But it’s also scope three emissions are also the emissions that are in our lending portfolio because we can influence whether or not that lending happens. And that’s scope Three, and that is an important part of financial institutions, in particular banks emissions. And that leads me to the next question, which is, are signing on to PCAF or the Partnership for Climate Accounting Financials? Can you speak briefly about that partnership and maybe answer the why in terms of our joining

Linda Scala: Absolutely. So kind of going back to our definition of scope, three emissions being those emissions that are resulting from activity that are beyond our control, but an important source of scope three emissions, as you mentioned, and that has recently become an area of interest for investors, is financed emissions. So these are the emissions that a bank finance is through loans and investments. And creating transparency regarding the climate impact of our loans and investments is really becoming a priority, and banks are being pressured to set net zero targets that apply to their lending. So although we have relatively low emissions resulting from our own operations, so as I mentioned, we have our electricity use and our fuel use, the influence of our lending and the emissions related to our lending can have a much greater impact. So the Partnership for Carbon Accounting, Financials or PCAF, that’s really that standardised measurement and reporting framework that we can use to calculate our scope three emissions related to financing. So if we lend a certain amount to a client, PCAF provides that formula to use so that we can all account in the same way for the appropriate portion of that client’s emission and including them in our scope, three emissions. So in order to limit global warming to well below two degrees, we all need to decarbonise collectively and reach net zero. But banks are seen as having a real critical role in financing that transition. And so we need to really understand those financed emissions. And they’re seen as a key metric to track our progress over time.

Dominique Barker: Great. And Linda, you did mention that our scope three emissions are of interest to our shareholders who are, of course, an important stakeholder. But I would also just point out that our employees really care about those three emissions. Absolutely. We’ve seen a lot of activity from some of our own employees. Maybe, Linda, we could move to other initiatives that we’ve signed on to. What are some of those initiatives and what do they mean for CIBC clients and CIBC employees and how we do our jobs?

Linda Scala: Sure, we’ve been pretty active in terms of either signing on to different commitments or partnering with organisations. But I would say one that’s very important, at least from within my role in risk is really focussing on our climate disclosure. And more recently, in the last couple of years, along with about almost 2000 other financial institutions, we claimed our support for the disclosure framework that was developed by the TCFD or the task force on climate related financial disclosures. So it’s a big acronym, as we talked about earlier.

Dominique Barker: Alphabet soup.

Linda Scala: The alphabet soup. Exactly. But prior to the TCFD, there was really this lack of consistent and comparable disclosure that was related to climate change and the TCFD framework, it changed that and it provided not only a methodology for disclosing, but it really is that blueprint to effectively identify, measure and report on the climate risks and opportunities that we face. So although much of the risk, identification and measurement would reside within risk and and teams within risk, there are really infinite possibilities when it comes to realising opportunities and the development of new products and services that support and facilitate the transition to net zero for our clients and communities. So for this, every CIBC employee has a role to play. So I think that’s an important thing to mention in that there really is an interest not only on managing risk, but on how we’re actually using climate change to drive opportunities.

Dominique Barker: And when we talk about scope three emissions and this whole conversation, what gets measured gets managed. So I think we can see once we get a baseline, I think you could see additional activity from CIBC in terms of managing those emissions. Absolutely. Linda, I wanted to end our conversation with a question that we ask all of our guests, and that’s what you’re doing personally, to reduce your own carbon footprint or reduce social inequalities within your own community. I know your bar is already quite high. I know you’re very this is part of who you are, but. Yeah, but do you have any ideas for the rest of our audience?

Linda Scala: Yeah, I think for me, I mean, I’ve had a passion around climate environment since my beginnings in university and that’s really what I specialised in. So it’s been a passion for me. And also, as I grew up, I lived in a family where the heat was turned down to the 60 degrees Fahrenheit through the winter because we all had to wear blankets and put on wool socks. But I think just for me, I’m just conserving and thinking about conservation and practically everything I do in terms of whether it’s the lights or the heat or my own footprint at home, we’re considering buying a new car and we’re thinking about maybe an electric car. So, just trying to take the things that you do day to day and make the small changes. I think that’s really where those ultimately will add up and become the big changes that we need.

Dominique Barker: I totally agree. If everyone makes small changes, I think it can make a big impact globally. Linda, thank you very much for your time today and thank you for your leadership at CIBC in the risk area. Thank you very much.

Linda Scala: No problem. Thank you.

Dominique Barker: 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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