Climate Change
Global climate change has been recognized by scientists as a looming problem for many years. While the earth's climate has always been changing, the speed and magnitude of those changes have been greater than expected over the past few decades. Mounting scientific evidence indicates that humans are exacerbating the natural variations in the earth's climate through activities which emit large quantities of carbon dioxide, methane, and other gases that affect the earth's ability to moderate temperature. These gases, collectively known as greenhouse gases (GHGs), are increasingly the target of regulation in Canada, the U.S., Europe, Japan, and many other countries and regions.
At CIBC, we recognize that climate change is the most important environmental issue facing the planet. Its physical effects, along with regulations designed to mitigate it, will have a measurable impact on communities and businesses all over the world. As such, we are committed to understanding and responsibly managing the regulatory and physical impacts of climate change on our business.
- Our Carbon Risk Management program
- Taking action in our facilities and operations
- Our performance
- Taking action in lending and investment
- Carbon Disclosure Project
- Supporting research and knowledge building
Our Carbon Risk Management Program
As service-based companies, banks have a very low greenhouse gas (GHG) emission intensity and are very unlikely to face regulation of greenhouse gas emissions. However, many of our clients operate businesses that will face new GHG regulations in the near future or may operate in jurisdictions where GHG regulations already apply. Furthermore, we recognize that there are opportunities to improve our performance with respect to GHG emissions associated with our operations, supply chain, and business activities. We have summarized the potential commercial risks and opportunities of climate change to CIBC in the following table:
| Impacts | Direct | Indirect |
| Physical |
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| Policy |
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CIBC began examining climate change issues in 2002 and our efforts evolved into a carbon risk management program designed to assess and manage the impacts (both positive and negative) of climate change and climate change-driven regulations on our business operations and those of our clients. The program now has 5 elements:
- Managing greenhouse gas emissions from CIBC's Operations (our own climate change footprint)
- Assessing impacts of Climate Change Regulation on CIBC's credit portfolio
- Tracking opportunities in emerging North American carbon markets
- Developing screening tools for climate change risk in credit risk assessment
- Developing a study of physical impacts of climate change to CIBC's operations, and to our lending & investment portfolio
Taking action in our facilities
Green Power
The purchase of Green Power (renewable energy that emits zero greenhouse gas emissions) is an important element of our Carbon Risk Management program. To offset a portion of CIBC's GHG emissions as well as contribute to the future development of cleaner sources of electricity, from 2003 to 2005, CIBC purchased a total of 6,000 megawatt hours of Evergreen Energy Green Power from Ontario Power Generation (OPG) - the most purchased by any commercial or industrial customer of OPG at the time. When compared to the equivalent amount of electricity generated by a new coal-fired power plant, our 3-year purchases reduced 5,400 tonnes of carbon dioxide, 6.6 tonnes of nitrogen oxide, and 21.6 tonnes of sulphur dioxide.
| Quantity of Air Emissions Reduced | |||||
| Indicator | Unit | 2003 | 2004 | 2005 | Total |
| Carbon dioxide | Tonnes | 1,800 | 1,800 | 1,800 | 5,400 |
| Nitrogen oxide | Kilograms | 2,200 | 2,200 | 2,200 | 6,600 |
| Sulphur dioxide | Kilograms | 7,200 | 7,200 | 7,200 | 21,600 |
In 2006, we entered into an agreement with BC Hydro to purchase approximately 2,100 MWh per year of Green Power Certificates for the next 2 years. This purchase will eliminate approximately 1,500 tonnes of carbon dioxide, and offset the carbon dioxide emissions from 18 CIBC branches in the Vancouver area.
Energy conservation
In 2004, CIBC, with the assistance of our property management service provider, began collecting data on energy consumption and associated carbon dioxide emissions at each of our locations, so that we could more easily identify opportunities for energy conservation and emissions reduction.
CIBC has a number of initiatives underway to reduce energy use, and thereby lower our direct greenhouse gas emissions (mainly from oil or natural gas heating) and our indirect emissions (from purchased electricity). In 2006, CIBC authorized our building design service provider, HOK, to seek more efficient electrical, HVAC and mechanical standards for our branch network. CIBC is also currently assessing existing branch mechanical & electrical standards and we intend to incorporate energy saving and LEED principles into the HVAC design, building design and electricity use for new buildings.
In the evaluation and selection of new vendors, we incorporate a number of environmental criteria into our standard request for proposal (RFP) process, including encouraging our suppliers to demonstrate the energy efficiency of all products and applicable services.
As part of CIBC's environmental responsible procurement program, CIBC uses the U.S. Environmental Protection Agency's Energy Star® certification criteria in the selection of desktops, laptops, monitors, printers and fax machines.
Climate neutral carpet
In 2005, CIBC purchased a total of 42,741 square metres of environmentally friendly climate neutral carpet for our retail and corporate premises. We estimate that this project alone reduced GHG emissions by approximately 881 tonnes of carbon dioxide. In 2006, CIBC continued to install over 17,000 square metres of climate neutral carpet, offsetting approximately 358 tonnes of greenhouse gas emissions.
Business travel
Like any other service-oriented company, banking depends heavily upon personal contact, making business travel imperative. CIBC's Global Expense Policy stipulates that, in locations with high concentrations of CIBC sites (Toronto, New York), individuals are expected to walk or use public transportation to travel between CIBC sites, where practical and safe. Guidelines to this policy also state that employees should rent vehicles that are mid-sized or smaller. Furthermore, CIBC offers video conferencing technology in our New York and Toronto offices (where CIBC has its highest concentration of employees), to further reduce business travel.
Our performance
Since 2004, CIBC has been monitoring and reporting its carbon dioxide (CO2) emissions in an effort to measure our direct and indirect impacts. Over the last 3 years, CIBC has reduced CO2 emissions from the combustion of heating fuel by over 2,500 tonnes, and over 1,800 tonnes produced through employee business travel. CO2 produced from the purchase of electricity has increased just over 900 tonnes. Collectively our total CO2 emissions have been reduced by 5%.
A summary of our progress in reducing CO2 emissions may be found in CIBC's Environmental Performance Indicators.
Taking action in lending and investment
Lending
Climate change can give rise to credit risk where clients operate in industries that face new regulatory, reputational, physical, operational and other risks as a result of physical changes to the climate or greenhouse gas regulations. CIBC has been actively researching the impacts of climate change regulation on our credit and investment portfolio through a number of initiatives.
A key element of CIBC's Carbon Risk Management program was the completion of a research study in 2006 entitled, "Climate Change Policy in Canada: Portfolio Risk Review". In this study, CIBC's Environmental Risk Management group partnered with ICF Consulting to assess the degree to which CIBC's clients, industry sectors, and our portfolio of loans and acceptances would be affected by anticipated carbon dioxide emission regulations. We based the analysis on federal greenhouse gas emission regulations that had been proposed under "Project Green" in April 2005. Our study showed that a few large clients may face financial challenges with the advent of carbon dioxide regulations, but that there is a great deal of variation among industry sectors, and among companies within any particular sector. The study provided us with a robust methodology and framework for assessing regulatory impacts going forward, and we recognize that updating will be required once new federal greenhouse gas legislation is released.
The results of the report will be used to establish a framework for assessing carbon risk in the credit risk management process in the future. In the meantime, our Environmental Credit Risk Management Standards and Procedures include a requirement to qualitatively assess a borrower's strategy for managing greenhouse gas emissions from their operations.
In November 2005, we added an Environmental Issues section to the annual Industry Review Reports that are prepared on many of the sectors in which CIBC has clients. Climate change issues have been and will continue to be an important part of the Environmental Issues section for many of the Industry Reports.
Investment
CIBC World Markets has been an equity underwriter of Energy Technology companies (underwriting energy companies which offer a specific technology) in North America over the past several years. We have financed several power technology companies that have environmental benefits such as hydrogen fuel cells and natural gas/diesel engines. For example, CIBC World Markets has financed the only technology company that delivers cost-efficient, clean power to the diesel vehicle, power generation and after treatment markets today.
CIBC World Markets has also been involved in several recent public market wind development financings, including:
- Creststreet Power and Income Fund LP
- Creststreet Kettles Hill Wind Power LP
- Algonquin Power Income Fund
- Northland Power Income Fund
In June 2007, GHG Emission Credit Participation Corp. (the "Corporation") announced that it had filed a preliminary prospectus in respect of an initial public offering of units, led by CIBC World Markets. The Corporation will provide investors with exposure to Carbon Emission Credits, which are intended to assist companies, industries and governments achieve greenhouse gas ("GHG") emission reduction targets. The Corporation will seek to acquire Carbon Emission Credits and assets that provide direct and indirect exposure to Carbon Emission Credits, both through exchanges where Carbon Emission Credits are bought and sold, and through private transactions, typically with entities whose activities generate Carbon Emission Credits, with the objective of achieving capital appreciation.
Carbon Disclosure Project
The Carbon Disclosure Project (CDP) is a co-ordinating secretariat for institutional investors' collaboration regarding climate change. Its aims are to:
- Inform investors of the risks and opportunities presented by climate change
- Inform senior management about concerns of shareholders regarding the impact of climate risks on company value
CIBC has been a respondent to the CDP since its initial launch in 2003 and, since 2005, we have been a signatory to the CDP information requests as well as a respondent. In 2006, CIBC was pleased to receive the top score among North American banks for its response to the CDP4, indicating a good awareness and disclosure of climate change risks and opportunities arising from our business activities and operations.
In 2007, CIBC was recognized as "Best in Class" for our approach to climate change disclosure in a report by the Carbon Disclosure Project (CDP). CDP is a coalition of 315 global institutional investors and asset managers, representing more than $41 trillion in assets.
CIBC is one of 68 companies worldwide included in the international Climate Disclosure Leadership Index. These companies showed distinction in their submissions to a CDP survey, based on their reporting of greenhouse gas emissions and assessment of climate change strategies. They were selected from the top 500 international corporations as measured by the FT500.
CIBC's disclosure has also been recognized by the Conference Board of Canada, which selected CIBC as a CDP 2007-Canada 200 Carbon Disclosure Leader. This designation was awarded to the 16 Canadian corporations that made the best submissions for the 2007 request for information. The request was issued by the 315 investors that are signatories to the CDP.
View our 2007 submission (200 KB)
Supporting research and knowledge building
CIBC is a member of, and presently holds the Chairmanship of, the United Nations Environment Program Finance Initiative (UNEP FI) North American Task Force (NATF), which commissioned a study in 2005 to review climate change risks to the North American financial services industry and, more specifically, carbon risk to bank loans. CIBC and 4 other NATF member banks contributed loan data to the study, which looked at whether changes to bond spreads could be used as a proxy for changes caused by the introduction of climate change regulations.
In 2005, CIBC also participated in a study commissioned by the UNEP FI's Climate Change Working group to examine future climate policy frameworks beyond Kyoto's first commitment period, and its implications for the financial services industry. This publication contains recommendations from the UNEP FI Climate Change Working group to policy-makers on how international climate policy should develop up to 2012 and beyond.
In October 2006, the UNEP FI North American Task Force hosted a workshop for approximately 45 bankers from Canada, the U.S. and Europe on Climate Change Risks and Opportunities for Banks. The workshop, held in New York, included presentations from climate scientists, European banks active in carbon markets, energy and environment consultants, State government representatives, and others. Learn more about the workshop and obtain copies of presentations.
View a copy of the CEO Briefing on the Future of Climate Change Policy: The Financial Sector Perspective (1.4 MB)
View all other UNEP FI publications from the Climate Change Work Programme
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