# Accelerating climate action: Our Net-Zero Approach Version 2.0 # Table of contents About this document 3 Introduction 4 Overview 5 CIBC’s net-zero ambition 6 Oil and gas, Publication date: March 31, 2022 7 Power generation, Publication date: September 29, 2022 12 Key decisions and rationales 17 Achieving our net-zero ambition 18 Governance 19 Looking ahead 19 Contact 20 Glossary 21 A note about forward-looking statements 22 Disclaimer 23 # About this document Our Net-Zero Approach provides an overview of our ambition to achieve net-zero greenhouse gas (GHG) emissions from our operational and financing activities by 2050. It outlines our methodology for measuring our progress, including details on our sector-specific 2030 interim financed emissions reduction targets. We have prepared this document primarily to keep our investors, industry partners, and other stakeholders apprised of our efforts. This document (Version 2.0) is an update to the original release of Our Net-Zero Approach, published in March 2022. We intend to update this document going forward as we develop additional sector targets and evolve our methodological approaches to net-zero target setting, and as new information and guidance become available. Our Net-Zero Approach was informed by net-zero target-setting and reporting guidance from industry initiatives, including the Net-Zero Banking Alliance (NZBA), United Nations Environment Programme Finance Initiative (UNEP FI), Partnership for Carbon Accounting Financials (PCAF), Glasgow Financial Alliance for Net Zero (GFANZ) and Sustainable Markets Initiative’s (SMI) Financial Services Taskforce (FSTF). # Learn more - CIBC’s Sustainability Report - CIBC’s Task Force on Climate-related Financial Disclosures (TCFD) Report - CIBC’s CDP Climate Change Questionnaire Response # Introduction Climate change presents both risks and opportunities as we transition to a low-carbon future. In its 2021 report, the Intergovernmental Panel on Climate Change (IPCC) affirmed that the world needs to transition to net-zero GHG emissions by 2050 to avoid average global temperature rise above 1.5°C and reach the goals laid out in the Paris Climate Agreement.$^1$ Unaddressed, climate change could lead to significant, irreversible environmental, social and economic impacts.$^2$ At CIBC, we understand the urgency with which climate solutions are needed and the integral role that the financial sector has in the transition to a low-carbon economy. As a bank and major Canadian financial institution, we are doing our part in supporting the economic transition towards net-zero emissions in the real economy. In August 2021, CIBC announced our ambition to achieve net-zero GHG emissions associated with our operational and financing activities by 2050. This builds on our leadership and enhances our ability to continue creating long-term shareholder value as the landscape of climate-related risks and opportunities evolves. It also positions us to grow stakeholder relationships and work closely with our clients towards a low-carbon future. We recognize that embarking on this journey requires clear goals, ambitious action and effective collaboration across a variety of stakeholders, including our clients, governments, financial institution peers, industry bodies, regulators, and others. We believe that success lies in aligning our efforts, mobilizing our clients by supporting their own strategies to achieve net-zero, and remaining accountable by reporting transparently on our progress. We are setting interim targets to reduce the carbon intensity of our financed emissions by 2030. Recognizing the scale and urgency of climate change, we are prioritizing establishing paths to net-zero for carbon-intensive sectors as soon as possible. This document details the methodologies we developed to measure our baseline financed emissions and set our initial interim targets, leveraging the best available science, data, industry standards and emerging practices. Going forward, we will continue to publish our targets and methodologies in subsequent versions of this document. We are now working to accelerate our climate aspirations by embedding net-zero considerations throughout our business practices and financing activities. # Overview Achieving net-zero emissions means reducing our GHG emissions as close to zero as possible, while balancing any remaining GHG emissions by removing an equivalent amount of GHGs from the atmosphere. Financial institutions emit comparatively few GHG emissions from our operational activities. However, as we finance the activities of others through loans, corporate finance solutions and principal investments, we play a large, integrated role as change agents, helping to direct capital flows towards activities aligned with a low-carbon economy, and away from those that are not. Herein lies both the net-zero opportunity and challenge for financial institutions: to leverage our influence and expertise to support our clients on their net-zero transitions, while at the same time managing our exposure to high-emitting sectors and avoiding undue climate risks. # CIBC’s role in achieving net-zero As a leading North American financial institution with 11 million personal banking, business, public sector and institutional clients, CIBC plays a multi-faceted role in enabling the successful transition to net-zero. | CIBC’s net-zero role and actions | Operational eco-efficiency | Sustainable finance | Net-zero transition | | --- | --- | --- | --- | | **Our role** | We lead by example by taking responsibility for the environmental impacts associated with our operations. | We play a role in scaling up financial advice, products and services that address critical environmental challenges – such as climate change – and promote sustainability. | As lenders and investors, we support the transition of our clients to achieve net-zero emissions, especially those in carbon-intensive sectors. | | **Our actions** | In 2019, we committed to being carbon neutral by the end of 2024. | In 2021, we set a goal towards mobilizing $300B in sustainable financing by 2030.$^3$ | In 2021, we announced our ambition to achieve net-zero GHG emissions associated with our operational and financing activities by 2050. | # CIBC’s net-zero ambition # Our target-setting framework CIBC’s net-zero target-setting framework is guided by four principles: - **Science-aligned**: Informed by credible climate science$^4$ and aligned with widely accepted decarbonization pathways that limit warming to 1.5°C with no/low overshoot.$^5$ - **Comprehensive**: Captures the majority of our GHG emissions within our boundaries and strives for full coverage as soon as possible. - **Transparent**: Provides transparency in our methods, metrics and reporting of our GHG emissions calculations and targets, as well as in our progress towards our net-zero ambition. - **Iterative**: As new information becomes available, we will ensure our targets are consistent with the best available climate science, standards, guidance, data and industry best practices. We are a member of the NZBA which informs how our portfolios will align with net-zero emissions by 2050 and requires that we set interim scenario-based targets for carbon-intensive sectors, for 2030 or sooner. In 2021, with the objective of creating improved transparency related to our lending and investing, CIBC joined PCAF. Endorsed by the Task Force on Climate-related Financial Disclosures (TCFD), PCAF is an industry-led initiative that helps financial institutions assess and disclose GHG emissions from their loans and investments through a standardized measurement and reporting framework. In addition, the TCFD recommendation guides how we report on our progress towards our targets and address our climate risks and opportunities. # Oil and gas Publication date: March 31, 2022 # Our oil and gas interim 2030 net-zero targets CIBC has established interim targets to reduce the financed emissions associated with our oil and gas portfolio: - We are targeting a 35% reduction in the operational emissions intensity of our oil and gas portfolio compared to a 2020 base year, including Scope 1 and 2 emissions from upstream production and downstream refining of oil and gas products. - We are targeting a 27% reduction in the end use emissions intensity of our oil and gas portfolio compared to a 2020 base year, including Scope 3 emissions from the combustion of hydrocarbon-derived fuels sold into the market. We have included the emissions associated with our corporate lending commitments and facilitated financing, which is CIBC’s share of actual economic allocation for equity capital markets and debt capital markets underwritings. We chose two different target types (see Figure 2) to distinguish between corporate operational emissions and the end use GHG impacts of the energy products produced. This approach allows for increased customization and aligns with how many companies in the sector are developing their net-zero transition strategies. ### Figure 2: Oil and gas interim 2030 net-zero targets summary | 2030 targets | Base year | Emission scopes | Activities | Intensity metric | Scenario alignment | Data sources | | --- | --- | --- | --- | --- | --- | --- | | 35% reduction | 2020 | Scope 1 and 2 | Upstream production and downstream refining | g CO2e /MJ | IEA NZE2050 | Wood Mackenzie, Company disclosures | | 27% reduction | 2020 | Scope 3 | End use emissions associated with the use of oil and gas products | g CO2 /MJ | IEA NZE2050 | Wood Mackenzie, Company disclosures | We developed our oil and gas targets together with Environmental Resources Management (ERM), the world’s largest global pure-play sustainability consultancy, with deep sectoral, technical and business expertise in the low-carbon energy transition. # Sector selection Achieving net-zero will be challenging for all economic sectors, and this is particularly true for the oil and gas sector, where activities involve the extraction, production, refining and combustion of fossil fuel energy. We chose our oil and gas portfolio to prioritize one of the most carbon-intensive sectors. This is consistent with guidance from the NZBA and PCAF. The oil and gas sector is a major contributor to global GHG emissions and is Canada’s largest emitting sector, representing 26% of total national GHG emissions.$^6$ As a long-standing partner to oil and gas companies through our facilitated financing and lending activities, we have a responsibility to support our clients in their transition. Most of our oil and gas lending – which at the end of 2021 accounted for approximately 1% of our total drawn and undrawn lending commitments – is located in Canada where many are heavily exposed to transition risks, such as policy and regulatory changes. For example, the Government of Canada has pledged to reduce economy-wide emissions 40–45% below 2005 levels by 2030 and achieve net-zero by 2050. As the world transitions to new sources of energy, there is an opportunity for us to leverage our position as a capital provider, expert advisor and responsible climate steward to influence positive outcomes in the energy sector. For example, we can support the scale-up and commercialization of low-carbon energy technologies such as hydrogen, carbon capture, utilization and storage (CCUS) and biofuels (see Figure 5). In supporting low-carbon innovation and offering sustainable financing solutions to oil and gas companies looking to transition, we can have a measurable impact on emission reductions in one of the most carbon-intensive sectors in the economy and accelerate low-carbon energy transition pathways in alignment with the International Energy Agency’s IEA Net-Zero Emissions by 2050 scenario (NZE scenario). # Target type We chose a carbon intensity-based metric to calculate our oil and gas interim targets, which measures emissions relative to a unit of energy output. This allows us to measure whether a company or entire portfolio is making progress in applying strategies and technologies to reduce operational and end use emissions, regardless of changes in overall production. Furthermore, because the metric adjusts for energy output, it enables cross-company comparisons for firms of different sizes as we prioritize capital to enable the sector’s transition. Intensity targets are accepted by the NZBA. # Scenario alignment CIBC selected the NZE scenario as the basis for our oil and gas interim target development. The NZE scenario represents an ambitious transition in the global energy system with a rapid shift to renewable energy and a significant acceleration in the pace of change compared to other IEA scenarios. The NZE scenario aims to limit average global temperatures rise to 1.5°C with a 50% probability. In addition, it aligns with our NZBA commitments and is also favoured by investors and other stakeholders. The NZE scenario assumes emissions reductions will be required across all sectors of the economy to achieve net-zero by 2050, and these reductions will depend on rapid advancements in low-carbon technologies (see Figure 6). The scenario also assumes advanced economies will implement carbon prices that rise to USD $130 per metric tonne of carbon (tCO2) by 2030, and USD $250 by 2050,$^7$ while fossil fuel demand will decline sharply as a percentage of total energy use by 2050, with demand for oil declining by 75% and gas by 55% over the next few decades.$^8$ Furthermore, renewable energy sources are assumed to account for almost 90% of global electricity generation in 2050, a 425% increase.$^9$ These scenario assumptions will have major implications for our oil and gas clients, who will need access to transition financing and expert advice as they work to decarbonize their products and processes, respond to demand reductions and navigate more stringent regulatory environments. # Emission scopes Our oil and gas interim targets include emissions from pure-play upstream producers, pure-play downstream refiners and integrated companies with both upstream and downstream operations.$^{10}$ These components of the oil and gas sector are responsible for most emissions across the value chain. For each company, we included Scope 1, 2 and 3$^{11}$ emissions. Service providers are excluded in our current approach. This segment represents a small portion of CIBC’s oil and gas portfolio and cannot be meaningfully compared to oil and gas companies. This is because they do not produce oil and gas, thereby making a target based on the emissions intensity of energy produced inappropriate. While Scope 3 emissions and associated intensities could be calculated for companies providing services to direct oil and gas production, CIBC has chosen to focus its approach on the companies that produce energy. We may consider expanding our methodology to include these segments going forward. We included direct financing (our lending commitments, such as revolving credit facilities) and facilitated financing (our economic share of underwritten and arranged financings in the debt and equity capital markets) to provide a more comprehensive view of our activities. We chose to use lending commitments to eliminate potential year-over-year volatility related to drawn loan amounts and reflect credit commitments we provide to the industry. We also use direct financing and facilitated financing to provide a more complete view on our overall portfolio emissions. CIBC recognizes that this approach is currently not required under the NZBA guidance, but we believe doing so offers a more complete understanding of our exposure and enables a more comprehensive strategy towards net-zero that our investors will value. # Base year and interim target calculation methodologies To calculate our base year emissions intensity for our oil and gas portfolio, we used fiscal 2020 data representing all lending and facilitated financing. - **Operational emissions intensity calculation**: measures the efficiency of producing oil and gas that is ultimately delivered to the market.$^{12}$ - **End use emissions intensity calculation**: measures the GHG intensity of energy products produced by companies in the oil and gas portfolio, including reductions in the overall carbon content of fuels produced by expanding renewable resources and other forms of carbon-free energy. CIBC’s portfolio-level operational and end use intensities are calculated as exposure-weighted averages of the portfolio company intensities. Portfolio intensity calculations were used to set a target for CIBC’s entire oil and gas portfolio. We calculated our 2030 operational emissions carbon intensity target by applying absolute reductions to three categories of portfolio company baseline emissions – methane, flaring CO2 and other CO2 – aligned with projected declines in the NZE scenario. The relative contribution of each emission category to total emissions determined the 2030 intensity value for each portfolio company. We then calculated an exposure-weighted intensity representing the 2030 portfolio target. We calculated our 2030 end use emissions intensity target by using the per cent change (e.g., -27% for NZE) from a calculated IEA 2020 to IEA 2030 GHG intensity. The per cent change between the two calculated IEA intensities was applied to CIBC’s portfolio baseline GHG intensity to determine the final 2030 target value. # Data sources, considerations and challenges The GHG emissions data for upstream and downstream oil and gas companies was sourced from Wood Mackenzie (WoodMac) and from company disclosures for refinery input and production data. We selected WoodMac data because it provides a breakdown of emission estimates by specific categories, including methane and flaring. Operational and end use emissions intensity proxies were developed for approximately 20% and 25% of portfolio exposure, respectively, in cases where company data are not currently covered by WoodMac data.$^{13}$ Going forward, we will work to improve data quality, accuracy, and completeness by expanding portfolio data coverage, refining our calculations and reducing the use of proxy data. # Power generation Publication date: September 29, 2022 # Our power generation interim 2030 net-zero target CIBC has established an interim target to reduce the financed emissions associated with our power generation portfolio. We are targeting an emissions intensity of 156 kgCO2 /MWh associated with direct Scope 1 emissions from power generation activities by 2030, which represents a 32% reduction in emissions intensity compared to our 2020 base year. Our target includes portfolio companies with owned power generation, such as independent power producers and the power generation share of combination (power and gas) utilities and integrated (generation, transmission and distribution) utilities.$^{14}$ We have included the emissions associated with our corporate lending commitments and facilitated financing, which is CIBC’s share of actual economic allocation for equity capital markets and debt capital markets underwritings. We have also included project financing$^{15}$ in our power generation interim target. ### Figure 7: Power generation interim 2030 net-zero target summary | 2030 target | Base year | Emission scopes | Activities | Intensity metric | Scenario alignment | Data sources | | --- | --- | --- | --- | --- | --- | --- | | 156 kgCO2 /MWh (32% reduction) | 2020 | Scope 1 | Power generation | kgCO2 /MWh | IEA NZE2050 | S&P Global, IEA WEO 2021 | We developed our power generation target together with Environmental Resources Management (ERM), the world’s largest global pure-play sustainability consultancy, with deep sectoral, technical, and business expertise in the low-carbon energy transition. # Sector selection Decarbonizing the power generation sector is fundamental to achieving economy-wide net-zero emissions by 2050. We chose to set an interim target for our power generation portfolio to prioritize one of the most carbon-intensive sectors, which is consistent with guidance from the NZBA and PCAF. Electricity generation is responsible for 36% of energy-related CO2 emissions globally, making it one of the largest single sources of energy-related emissions.$^{16}$ In 2020, the power sector accounted for 25%$^{17}$ of US and nearly 10%$^{18}$ of Canadian total GHG emissions, respectively. Minimizing power sector emissions is also a critical step in achieving systemic emissions reductions across the economy, as many sectoral decarbonization pathways are premised on zero-emitting electricity. Global power systems are currently undergoing a transformation. Electricity demand is projected to rise significantly under the NZE scenario, a result of increasing economic activity and economy-wide electrification. By 2050, zero-emissions energy is projected to account for almost all global electricity generation, with nearly 70% sourced from solar and wind.$^{19}$ Many governments in North America and across the globe are increasing their renewable energy capacity to achieve their climate commitments, ensure long-term decarbonized energy security and meet increasing demand for zero-emissions power. These trends present a twofold opportunity for CIBC: firstly, to increase our lending support to companies already generating zero-emissions power, and secondly, to support clients as they reduce their emissions intensity and transition to cleaner power. As at October 31, 2020, CIBC’s power generation lending accounted for approximately 2% of our total drawn and undrawn lending commitments.$^{20}$ Additionally, of this lending exposure, 29% of the exposure is zero-emitting or renewables based. We continue to be a leader in scaling the renewable energy sector, ranking top 10 in financing for the renewable industry across North America in 2021.$^{21}$ We also continue to finance hydropower and nuclear power projects, as well as accelerate the scale-up and commercialization of alternative low-carbon technologies, such as CCUS, biofuels, energy storage and hydrogen-based fuels. Growing our suite of sustainable finance products and expertise will help facilitate power sector decarbonization in line with the NZE scenario. # Target type We chose a physical intensity-based metric to calculate our interim target, which measures carbon emissions relative to a unit of electricity generated. Intensity metrics are well-suited to track emissions for an expanding power generation portfolio, which normalize emissions based on electricity production. This will be increasingly important as CIBC accelerates financing to low-carbon power providers, as other sectors of the economy electrify, and as the demand for power – in particular zero emissions power – continues to grow. Intensity targets are accepted by the NZBA. CIBC’s power generation interim target is based on the 2030 emissions intensity of the power generation sector projected in the NZE scenario. This type of target is referred to as a convergence target, whereby companies within a given sector reduce their emissions intensity to a common value determined by global emissions pathways,$^{22}$ which is 156 kgCO2 /MWh by 2030 for the electricity sector in the NZE scenario. Under a convergence target, the per cent reduction of our financed emissions intensity depends on our baseline carbon intensity compared to the rest of the sector. # Scenario alignment CIBC selected the NZE scenario as the basis for our power generation interim target, which represents an ambitious transition compared to other IEA scenarios, aligns with our NZBA commitments and is favoured by investors and other stakeholders. The NZE scenario projects a 69% reduction in global CO2 emissions intensity of power generation by 2030.$^{23}$ This reduction is the result of a 40% projected increase in global electricity generation and 57% reduction in global CO2 emissions associated with power generation (see Figure 9).$^{24}$ The rapid and aggressive integration of renewables and the phase-out of high-emitting power sources, in particular coal, contribute to this trend. Under the NZE scenario, CO2 emissions from electricity generation reach net-zero by 2040 globally,$^{25}$ signalling the speed with which this transformation needs to take place to meet our global climate commitments. # Emission scopes Our power generation target includes direct Scope 1 emissions from power generation activities, which represent the majority of emissions from the sector. Scope 3 emissions associated with purchased power for resale by integrated utilities are currently excluded from our target-setting methodology and baseline. However, CIBC has many integrated utility clients that both generate and deliver electricity and may purchase electricity – via wholesale power purchases and power purchase agreements, or PPAs – to meet customer demand. As clients are increasingly incorporating purchased electricity into their climate targets and transition planning, CIBC believes including Scope 3 emissions from purchased power more comprehensively captures the role utilities can play in decarbonizing the power market. As data quality and reporting improves, CIBC intends to include the option of incorporating Scope 3 emissions from purchased power into the power sector portfolio calculations. Scope 2 emissions resulting from electricity used to operate power generation facilities are excluded from our target, as these emissions are not material. Pure transmission and distribution utilities are excluded from our current approach, as they do not significantly contribute to GHG emissions. Clients with committed exposure less than $5 million are also excluded as they are primarily power services companies, generally do not generate power, and represent a small share of CIBC power sector lending in aggregate. We include both direct and facilitated financed emissions in our target-setting approach. Facilitated emissions correspond with economic participation in debt and equity capital markets, which provide a more complete view of our overall emissions associated with the sector and a more comprehensive strategy towards net-zero.$^{26}$ We recognize that this approach goes beyond current NZBA guidance but in doing so best reflects our financed emissions associated with the power sector and provides value to investors. We also use total lending commitments rather than drawn loan amounts to reduce year-over-year volatility in allocated emissions and to more accurately reflect our decisions to allocate financing to our power sector clients. Our power generation target also includes project finance, as many such investments are associated with specific power projects that will, or already do, generate electricity.$^{27}$ We chose to include project finance in our target because it includes investments in renewable or lower carbon-intensity power projects, which contribute to reducing the emissions intensity of our portfolio. # Base year and interim target calculation methodologies To determine our base year emissions intensity, CIBC developed a methodology to calculate direct Scope 1 emissions from power generation for each portfolio company. - **Power generation emissions intensity calculation**: measures the amount of carbon dioxide released into the atmosphere per megawatt hour (MWh) of electricity generated. Company emissions intensities were calculated by multiplying power generation for each fuel type by the associated emissions factor (kgCO2), divided by total power generation from all fuel types (MWh). Installed power capacity data and a capacity factor were used if generation data were unavailable. See Data sources, considerations and challenges for details. CIBC’s portfolio-wide power generation intensity is the exposure-weighted average of portfolio company intensities. CIBC’s power generation interim net-zero target was derived from the Global NZE scenario trajectory for direct Scope 1 emissions intensity of the power generation sector in 2030: 156 kgCO2 /MWh. For more information on characteristics of the target, see power generation Target type. # Data sources, considerations and challenges CIBC used S&P Global data to source installed power capacity and power generation by fuel type at the asset level. We used IEA World Energy Outlook (WEO) 2021 data to derive emissions and capacity factors by fuel type and region. Our baseline emissions intensity was calculated using North American emissions factors and actual capacity factors, as most of our clients operate in North America. Generation and capacity data were available for most clients. In cases where data were not available, we used a proxy to represent the client’s direct Scope 1 emissions. Going forward, we will work to improve data quality, accuracy and completeness by expanding our data coverage where possible and refining our calculations as new data emerge. # Key decisions and rationales Setting net-zero targets across a complex set of financing activities is an emerging practice. Our methodology is informed by international standards and current industry best practices. For reference, we have included additional context about our decisions and the thinking that underpinned them. # Alignment with NZBA and PCAF To satisfy PCAF and NZBA disclosure requirements, we calculate and report our absolute financed emissions in our TCFD Report. We believe the combination of using intensity-based targets and disclosing absolute financed emissions for our portfolios represents a robust approach to managing and disclosing the bank’s financed emissions. To calculate our Scope 3 absolute financed emissions associated with our lending and investing, we adopted the PCAF methodology. Under PCAF, absolute financed emissions are calculated by multiplying an attribution factor by the emissions of the borrower or investee company, and then summing these emissions as described by the PCAF methodology. The attribution factor represents the proportional share of a given company – that is, the ratio of the outstanding amount to total equity and debt for private companies and Enterprise Value Including Cash (EVIC) for listed companies. Figure 10 presents our 2020 Scope 3 absolute financed emissions for carbon-intensive sectors for which we have published our interim 2030 net-zero financed emission targets. PCAF developed a scoring methodology to provide transparency related to our calculations, scoring data on a scale from 1 (more certain) to 5 (less certain). To learn more about the methodology behind the calculation of our absolute financed emissions, please reference our most recent TCFD report. ### Figure 10: 2020 Scope 3 absolute financed emissions | Sector | Outstanding amount (CAD Millions) | Total emissions kilotonnes CO2e (ktCO2e) | PCAF data quality (1–5)* | | --- | --- | --- | --- | | Oil & gas | $5,460$^{28} | 1,900 | 2.6 | | Power generation | $2,084 | 835 | 2.1 | * Score 1 represents the highest quality data whereas Score 5 represents the lowest quality data # Use of carbon removal credits Our net-zero approach prioritizes emissions reductions and incorporates accounting for verified carbon dioxide removals in our sector target calculation methodologies. CIBC supports the development of carbon dioxide removals as a tool to balance residual emissions, especially where there are limited technological options or financially viable alternatives to eliminate emissions. Our approach is focused on permanent removals, such as through CCUS, and certain high-quality nature-based solutions like regenerative agriculture and reforestation. Based on guidance and precedents set by internationally recognized organizations, such as the Science Based Targets initiative (SBTi), and in alignment with the NZBA and PCAF, CIBC will only accept portfolio companies’ use of carbon dioxide removal credits from projects that have been verified in accordance with standard GHG accounting protocols and registered on a recognized platform. The inclusion of carbon dioxide removals creates opportunities for our clients to complement their reduction efforts and reduce their overall emissions intensities. Currently, third-party carbon reduction offsets unrelated to removals projects are not recognized under our methodology. As guidance and industry standards for the use of carbon dioxide removals and carbon offsets in net-zero transition strategies evolves, we will adapt our overall approach and revise our methodology, as appropriate. # Achieving our net-zero ambition At CIBC, we understand that the transition to net-zero is a complex, multi-sectoral challenge that will require systemic economic, societal and technological changes. Navigating these changes successfully will require collective action by governments, companies, consumers and other institutions across the globe. We are committed to doing our part by supporting our clients to expedite their net-zero journeys, and collaborating with other key stakeholders to make meaningful progress. We acknowledge that there are factors outside of CIBC’s control that will influence our ability to achieve our targets. The evolution of decarbonization efforts across sectors and economies, the development of new technologies, industry-specific solutions, shifts in consumer behaviour, and the impact of geopolitical events will all significantly influence the pace and scale of the net-zero transition. Emerging climate policy and the development of regulations and international frameworks will also impact the extent to which we can achieve our targets. For example, the IEA Net Zero Emissions by 2050 scenario assumes government support to ensure the viability of low-carbon technology development at scale, as well as the development of policy and regulatory measures to support the transition to a low-carbon economy. We also understand that our facilitated and financed emissions exist outside of our direct control and that achieving our targets will depend on our clients’ abilities to innovate, reduce their emissions intensities, decarbonize their products and services, and invest in carbon removals. This is why supporting our clients to achieve net-zero through sustainable financing and capital market solutions is central to our approach. Finally, as a long-standing partner to companies across carbon-intensive sectors, we know we need to achieve our ambition while positioning our clients, team members, communities and shareholders to take advantage of new innovations, markets, supply chains, purposeful work, and quality jobs. We will consider a balanced, people-centred approach to ensure a just transition that supports workers and communities impacted by the low-carbon transition, while creating opportunities for a more sustainable, inclusive economy. We developed our interim targets based on the best information available and forward-looking assumptions aligned with our selected scenarios. With this in mind, we will continue to accelerate our climate action and adapt our net-zero approach as new information becomes available to ensure we remain on track to achieving our ambition. # Governance Our governance structure supports effective oversight, management and execution of our net-zero ambition. The summary below demonstrates how our net-zero targets are governed and integrated across the enterprise. More information about our Environmental, Social, and Governance (ESG) governance framework can be found in our 2022 Management Proxy Circular. ### CIBC Board of Directors - Our Board has oversight over CIBC’s net-zero ambition and broader ESG Strategy, including how the enterprise is measuring, evaluating and monitoring progress against our strategic goals. ### Executive Committee and Senior Executive ESG Council - Our Executive Committee is accountable for the advancement of CIBC’s ESG agenda and is responsible for management and decision-making around our net-zero efforts and progress, including approving our interim net-zero targets. Accountability for leading and coordinating our climate strategy is held with our Executive Vice-President and Chief Legal Officer (EVP and CLO), as the horizontal owner of ESG across the enterprise. Our Senior Executive Vice-President and Chief Risk Officer also plays a critical function as the executive accountable for initiatives that manage climate risk. - Our Senior Executive ESG Council, chaired by our EVP and CLO, was established to ensure coordination of ESG activities across CIBC, including our net-zero by 2050 ambition. ### Governance and execution support - Our Enterprise ESG team and our Enterprise Risk Management function works alongside other teams and ESG experts across the bank to advance CIBC’s net-zero by 2050 ambition, including regularly monitoring and assessing progress and measuring our financed emissions on an annual basis. - Our Strategic Business Units and functional groups are engaged in ESG activities and will be responsible for accelerating and incorporating climate action into business strategy and execution as applicable. # Looking ahead Establishing our net-zero ambition and setting our interim targets for carbon-intensive sectors are the initial steps on our journey to align with the Paris Climate Agreement. Going forward, we are focusing on: - Aligning our investment decisions with our net-zero ambition; - Continuing to engage with our clients to facilitate their transition journeys, providing leading expertise and advice, and encouraging consumer behaviour through tools and product solutions; - Setting additional interim targets for other sectors, prioritizing those that are most carbon-intensive and contribute most to global emissions; - Engaging with governments, industry and third parties to advocate for policies, subsidies incentives, and net-zero transition plans. We will also ensure that our advocacy or support of industry groups aligns with efforts to reach net-zero by 2050; and - Reporting our net-zero progress in our annual TCFD Report or related disclosure. Given the urgency and magnitude of climate change, the governance structures and accounting protocols around net-zero commitments are evolving rapidly. Informed by evolving standards, methodologies, industry best practices, climate science and regulations, we will continue to evaluate and transparently update our approach to net-zero over time. This will include reviewing our targets every five years at a minimum and setting subsequent interim targets with an aim to increase our financed emissions coverage iteratively. # Contact As a relationship-oriented bank, we value the perspectives and expectations of our stakeholders to inform our net-zero efforts. CIBC will continue to engage with our stakeholders openly and regularly on this topic, and welcome feedback on how we can enhance our approach, governance practices and communication about our net-zero ambition. ### Contact us sustainability@cibc.com # Glossary - **Absolute target**: a reduction in absolute emissions attributed to a financial institution’s lending and investing activity over time.* - **Attribution factor**: the share of total GHG emissions of the borrower or investee that are allocated to the loan or investments.** - **Carbon capture, utilization and storage (CCUS)**: the process of capturing GHG emissions from fuel combustion, industrial processes or directly from the atmosphere. Captured GHG emissions can be stored in underground geological formations, onshore or offshore or used as an input or feedstock to create products.*** - **Convergence target**: emission reduction target whereby companies within a given sector reduce their emissions intensity to a common value, determined by global emissions pathways, by an agreed-upon date. Reduction ambitions for a company depend on the sectoral decarbonization pathway and a company’s initial carbon intensity and growth rate compared to other companies within a given sector.**** - **Emissions removal**: the action of removing GHG emissions from the atmosphere and store it through various means, such as in soils, trees, underground reservoirs, rocks, the ocean, and even products like concrete and carbon fiber.** - **Facilitated emissions**: GHG emissions that are a result of off-balance sheet facilitated financing (the economic share of underwritten and arranged financings in debt and equity capital markets) which take the form of a flow of transaction activity rather than financing held on book.***** - **Financed emissions**: absolute emissions that banks and investors finance through their loan commitments and investments.** - **GHG Protocol**: establishes comprehensive global standardized frameworks to measure and manage GHG emissions from private and public sector operations, value chains and mitigation actions.* - **Greenhouse gas (GHG) emissions**: the six gases listed in the Kyoto Protocol: carbon dioxide (CO2); methane (CH4); nitrous oxide (N2O); hydrofluorocarbons (HFCs); perfluorocarbons (PFCs); and sulphur hexafluoride (SF6).* - **Intensity target**: a reduction in the ratio of emissions attributed to a financial institution’s lending and investing activity, and a business metric over time.$^{29}$,* - **Scope 1 emissions**: direct emissions from owned or controlled sources.** - **Scope 2 emissions**: indirect emissions from the generation of purchased energy.** - **Scope 3 emissions**: all other indirect GHG emissions (not included in Scope 2) that occur in the value chain of the reporting company. Scope 3 can be broken down into upstream emissions that occur in the supply chain (for example, from production or extraction of purchased materials) and downstream emissions that occur as a consequence of using the organization’s products or services.** * GHG Protocol Corporate Standard ** PCAF *** IEA Net Zero by 2050: A Roadmap for the Global Energy Sector **** SBTi Foundations of Science-based Target Setting ***** PCAF Capital Market Instruments Discussion Paper 2021 # A note about forward-looking statements From time to time, Canadian Imperial Bank of Commerce and its subsidiaries (CIBC, we, us or our) make written or oral forward-looking statements within the meaning of certain securities laws, including in this document, in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission (SEC), and in other communications. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to our priorities, targets, commitments (including with respect to net-zero financed emissions targets and reducing operational greenhouse gas (GHG) emissions) and goals, as well as our economic and environmental, social and governance (ESG) related impacts and objectives. We have included forward-looking information in this document to assist our stakeholders in understanding our priorities, targets, commitments and goals, as well as our economic and ESG-related impacts and objectives. Forward-looking statements are typically identified by the words “believe”, “expect”, “expectation”, “aim”, “anticipate”, “intend”, “estimate”, “commit”, “forecast”, “goal”, “target”, “strive”, “objective” and other similar expressions or future or conditional verbs such as “will”, “may”, “should”, “would” and “could”. By their nature, these statements require us to make assumptions and are subject to inherent risks and uncertainties that may be general or specific, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our priorities, targets, commitments and goals, and economic and ESG-related impacts and objectives will not be achieved. In addition, our climate risk analysis and net-zero strategy remain under development, and the data underlying our analysis and strategy remain subject to evolution over time. A variety of factors, many of which are beyond our control, could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements and may require CIBC to adapt its initiatives and activities or adjust its targets as the quality and completeness of its data and methodologies continue to improve. These factors include but are not limited to: inflationary pressures, geopolitical risk, global supply-chain disruptions, the failure of third parties to comply with their obligations to us and our affiliates or associates, and strategic, reputation, conduct and legal, regulatory and environmental and social risk, and other risks disclosed in the “Management of risk” section of our 2021 Annual Report, as updated by our quarterly reports. In addition, as we work to advance our ESG goals, external factors outside of CIBC’s reasonable control may act as constraints on achieving these goals, including but not limited to varying decarbonization efforts across economies, the need for thoughtful climate policies globally, the availability of comprehensive and high-quality GHG emissions data (including from CIBC’s clients), the evolution of our lending portfolios over time, reasonably supported methodologies, the need for active and continued participation of stakeholders (including enterprises, financial institutions and governmental and non-governmental organizations), deployment of new technologies and industry-specific solutions, the evolution of consumer behaviour, the challenges of balancing interim emissions goals with an orderly transition, and the development of regulations and frameworks internationally. For CIBC to meet its ambition to achieve net-zero GHG emissions associated with its operational and financing activities by 2050, and for CIBC’s clients to meet their GHG emissions reduction goals, CIBC and its clients may need to purchase voluntary and/or compliance carbon and renewable energy instruments (“Carbon Compliance Instruments”). The market for these instruments is still developing and their availability may be limited. Some Carbon Compliance Instruments are also subject to the risk of invalidation or reversal, and CIBC provides no assurance of the treatment of any such Carbon Compliance Instruments in the future. There may also likely be changes to applicable regulations and standards that impact the market for Carbon Compliance Instruments. The maturity, liquidity and economics of regulated and voluntary carbon markets may make it more difficult for CIBC and its clients to achieve their goals and may impact CIBC’s ambition to achieve net-zero GHG emissions associated with its operational and financing activities by 2050. This list is not exhaustive of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting our stakeholders in understanding our objectives and strategic priorities, and may not be appropriate for other purposes. While certain matters discussed in this document may be significant, any significance should not be read as necessarily rising to the level of materiality used for the purposes of complying with securities laws and regulations, even if we use the word “ material”. We do not undertake to update any forward-looking statement that is contained in this document or in other communications except as required by law. # Disclaimer This document is provided solely for informational purposes, and does not constitute an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax or other advice, and such information should not be relied or acted upon for providing such advice. After the date of this document, CIBC does not assume any responsibility or obligation to update or revise any statements in this document, regardless of whether those statements are affected by the results of new information, future events or otherwise. No representation or warranty, express or implied, is or will be made in relation to the accuracy, reliability or completeness of the information contained herein. No liability whatsoever is or will be accepted by CIBC for any loss or damage howsoever arising out of or in connection with the use of, or reliance upon, the information contained in this document. Climate metrics and data and other information contained in this document, including but not limited to those relating to scenario analysis, GHG emissions, financed emissions, carbon-related assets and emissions from our own operations, are or may be based on significant assumptions, estimates and judgments. In addition, as discussed herein, some of the information provided, including regarding financed emissions, is based on estimated data with very limited support. Given their inherent uncertainty and complexity, and the significant issues with some of the underlying data, assumptions, estimates and judgments believed to be reasonable at the time of preparation of the document may subsequently turn out to be inaccurate. In addition, many of the assumptions, estimates, standards, methodologies, metrics and measurements used in preparing this document continue to evolve and may differ significantly from those used by other companies and those that may be used by us in the future. Legislative and regulatory changes, market developments and/or changes in data availability and reliability could materially affect the assumptions, estimates, standards, methodologies, metrics and measurements used by us and/or other companies, and could materially affect the comparability of the information and data across industries or companies and from one reporting period to a subsequent reporting period, as well as our ability to achieve our priorities, targets, commitments and goals. Any priorities, targets, commitments and goals discussed in this document, including but not limited to our net-zero emissions commitments, targets and goals, are aspirational and there can be no assurance that any such commitments, targets and goals will be achieved. See “A note about forward-looking statements” above. This document and the information contained within it is unaudited. Certain metrics and data contained in this document have been subject to limited assurance. You can read more about the data sources, considerations and challenges on pages 11 and 16 of this document. This document may provide addresses of, or contain hyperlinks to, websites that are not owned or controlled by CIBC. Each such address or hyperlink is provided solely for the recipient’s convenience, and the content of linked third-party websites is not in any way included or incorporated by reference into this document. CIBC takes no responsibility for such websites or their content, or for any loss or damage that may arise from their use. If you decide to access any of the third-party websites linked to this document, you do so at your own risk and subject to the terms and conditions of such websites. This document is intended to provide information from a different perspective and in more detail than that required to be included in mandatory securities filings and other regulatory reports, including filings with Canadian securities regulators and the SEC. While certain matters discussed in this document may be of interest and importance to our stakeholders, the use of the terms “material”, “significant”, “important” or similar words or phrases should not be read as necessarily rising to the level of materiality used for the purposes of securities laws and regulations or other laws. All data and examples in this document reflect activities undertaken during the 2020 and 2021 fiscal years (November 1 – October 31), unless otherwise noted. All amounts in this document are in Canadian dollars unless otherwise noted. The CIBC logo is a trademark of CIBC. $^1$ Intergovernmental Panel on Climate Change (IPCC). 2021. *Climate Change 2021: The Physical Science Basis*. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. $^2$ Intergovernmental Panel on Climate Change (IPCC). 2022. Press release | Climate change: a threat to human wellbeing and health of the planet. $^3$ Sustainable financing largely relates to client activities that support, but are not limited to, renewable and emission-free energy, energy efficiency, sustainable infrastructure, green buildings, sustainability-linked financings and green financial products. The products offered by CIBC included in our mobilization commitment to support these client activities include loans and loan syndications, debt and equity underwritings, M&A advisory and principal investments. $^4$ Intergovernmental Panel on Climate Change (IPCC). 2018. *Global Warming of 1.5°C*. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. $^5$ The term ‘overshoot’ refers to global warming in excess of 1.5°C. Temperature trajectories which overshoot the 1.5°C target will result in higher impacts and associated challenges compared to pathways that limit global warming to 1.5°C with no or limited overshoot (Intergovernmental Panel on Climate Change (IPCC). 2018. *Global Warming of 1.5°C*). $^6$ Government of Canada. 2021. *A Healthy Environment and A Healthy Economy*: Canada’s strengthened climate plan to create jobs and support people, communities and the planet. $^7$ International Energy Agency. 2021. *Net Zero by 2050: A Roadmap for the Global Energy Sector*. $^8$ Ibid $^9$ Ibid $^{10}$ The emissions scope for our oil and gas sector interim targets closely aligns with our current financial reporting, therefore midstream companies (e.g., pipelines) are not included. While service providers are included in the oil and gas sector financial reporting category, these segments are excluded from the target. $^{11}$ The methodology captures Scope 3 category 11 emissions from the Use of Sold Products; other categories of Scope 3 emissions are not material and are therefore excluded. $^{12}$ Includes emissions from equipment and flaring, and methane emissions from vented and fugitive sources. $^{13}$ To develop proxy data, companies were first categorized by business segment and then the 75th percentile performer was selected (as a conservative proxy) from CIBC clients with data within the corresponding segment. The same approach was taken for operational and end use carbon intensity metrics. The proxy data approach was applied to baseline and target calculations. $^{14}$ The geographic scope of our power generation sector target includes our lending activity in Canada, US, UK and Australia, which account for the vast majority of our generation clients. $^{15}$ Tax equity financing is included in the project finance component of our power generation target. $^{16}$ International Energy Agency. 2021. *Net Zero by 2050: A Roadmap for the Global Energy Sector*. $^{17}$ United States Environmental Protection Agency (EPA). 2020. *Sources of Greenhouse Gas Emissions*. $^{18}$ Government of Canada. 2022. *Greenhouse Gas Emissions: Canadian Environmental Sustainability Indicators*. $^{19}$ International Energy Agency. 2021. *Net Zero by 2050: A Roadmap for the Global Energy Sector*. $^{20}$ The geographic scope of our power generation sector target includes activity in Canada, US, UK and Australia, which account for the vast majority of our power generation clients. Power Generation activity in FCIB has been excluded. Also, excluded are pure transmission and distribution utilities as they do not significantly contribute to GHG emissions, and clients with committed exposure less than CAD $5 million as they are primarily power services companies, generally do not generate power, and represent a small share of CIBC power sector lending in aggregate. Lending commitments include standby and performance letters of credit. $^{21}$ North American Renewables Leagues Tables by Inframation. See page 6 of CIBC’s 2021 Annual Report for more information. $^{22}$ Science-based Targets Initiative (SBTi). 2019. *Foundations of Science-based Target Setting*. $^{23}$ International Energy Agency. 2021. *Net Zero by 2050: A Roadmap for the Global Energy Sector*. $^{24}$ Ibid $^{25}$ Ibid $^{26}$ Only facilities online and generating electricity in the applicable year are included in portfolio intensity calculations. $^{27}$ For project finance, projects are only included in the portfolio intensity calculations if the commercial operations date (COD) is achieved in the applicable year. $^{28}$ Includes upstream and downstream clients only. Excludes pipelines, and oil and gas-related services. Data is as at October 31, 2020. $^{29}$ Note CIBC’s oil and gas interim target emissions intensity targets include our committed lending only at this time.