This transcript has been generated using machine learning technology. While this technology was trained with CIBC terminology, it may contain errors.

Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I’m your host, Tom Heintzman. Please join me as we explore today’s most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters.

Roman Dubczak: We still do face the same climate stresses, you know, arguably worse now than they were five years ago in terms of the projected trends of global warming and whatnot. So it’s not a debatable point per se. It’s the methodology of which that energy is produced is probably more at the forefront. And that’s where the investment community is choosing their lane.

Tom Heintzman: Welcome, everyone. Today we celebrate a special milestone as we mark The Sustainability Agenda’s 100th podcast episode. Since our channel launched in March 2021, we’ve covered a wide range of sustainability and energy transition themes. We featured over 115 expert guests, moderated by eight CIBC hosts, reflecting the depth and expertise of our franchise and grown our listenership across a global demographic. Even over as short a period as the past several years, the life of this podcast, the business landscape for sustainability has shifted substantially. We began in what might be termed an ESG compliance phase. Then in 2022 and 2023, there were an increasing number of global, national and corporate commitments accompanied by a significant amount of on the ground change, particularly in the mix of new electricity investment and investment in carbon. Then more recently, we entered a period of recalibration with many of those public commitments falling away or being modified, but nevertheless, a significant amount of investment still occurring on the ground. Today, we’d like to pause for a moment, reflect on this evolution, and discuss the possible paths forward. Joining us for this discussion is our special guest, Roman Dubczak, Deputy Chair of CIBC Capital Markets. Roman is responsible for senior client relationships and strategy, as well as strategic opportunities at CIBC Capital Markets. He is THE architect of our energy transition banking strategy, and is a distinguished leader and a champion for solutions that can help our clients transition to a sustainable low carbon future. Good morning, Roman, and welcome to the show.

Roman Dubczak: Thanks for having me, Tom.

Tom Heintzman: Roman, let’s start by exploring how the business landscape for sustainability is evolving. While many companies and investors continue to view sustainability as a key commercial driver, they are navigating what is certainly an increasingly complex landscape marked by trade disputes that could reshape global supply chains and policy uncertainties that add unpredictability to name two of the challenges. Given these challenges, what feedback are you hearing from our clients about how they are approaching sustainability in the current environment? And in what ways are businesses adapting to these new realities?

Roman Dubczak: Thanks, Tom. I’m just reflecting on your introductory comments that it’s only been four and a half calendar years. They seem like many long years as it relates to the finance industry and what’s happened both in the financial community and then also geopolitically. And I would say that, we’re entering an era of what some call quiet progress where folks have pretty much got their heads down and following on a plan, whether that is the data center community developing renewable energy sources or nuclear as we’re now hearing, whether it’s countries in general that are executing on an energy policy. And I would cite, say Poland, for example, who when this podcast was initiated was relying heavily on coal energy and then just this last year, they’ve now crossed the lines with coal production and renewable energy production. And then likewise, what’s going on with SMR technology here in Ontario, where we sit, but also more globally and what will be the proliferation of nuclear energy. And so, like I said, it’s just that our clients, both on the investment side, as well as on the capital side are going about their way. Now clearly, and you surface this issue as to the political headwinds that certain sectors or certain geographies face. And, you know, that is perhaps unwelcome as it relates to some of the plans that were put in place. But we’re seeing flexibility with our clients and moving to areas of opportunity. And this comment is that our clients are exploiting current opportunities, the funding for what we would have called green energy five years ago, and now it’s really basically renewable and alternative forms of non-fossil energy. The financing pipeline is very strong. It’s very robust. It’s very sophisticated, so to speak. The cost of capital is very competitive. The energy sector in general is much, much broader than it would have been, five years ago.

Tom Heintzman: You mentioned a number of the trends that are going on, the rise of nuclear energy or the resurgence of nuclear energy, certainly a lot of geopolitical issues. Are you seeing repositioning? Are you seeing investors switching gears, taking a different tack than they might have taken two or three years ago? And if they are, how would you describe those changes?

Roman Dubczak: As it relates to the investment community, professional investors and even retail investors, five years ago, the narrative would have been focused around the great growth opportunities as related to the proliferation of renewable energy and some of the frankly hotter stocks out there were in the renewable energy space. Over time, they’ve come full circle and they’re valued on more definable metrics as other equities would, for example. And now the focus is really just on the energy production and the relative opportunities that each of these companies provide or each of these proponents provide. I would also say that the word sustainability was in hindsight, overused. And we’ve used sustainability now as something probably more related to the term resilience than it would be to sustainability. Clean energy production is a reflection of the fact that we still do face the same climate stresses, you know, arguably worse now than they were five years ago in terms of the projected trends of global warming and whatnot. So it’s not a debatable point per se. It’s the methodology of which that energy is produced is probably more at the forefront. And that’s where the investment community is choosing their lane. Some still invest in renewable energy. Some invest in the nuclear complex. Some will invest in liquid natural gas opportunities or just plain natural gas and others in fossil fuels which to a large extent, our clients have been leaders as it relates to energy technology evolution and cleaning and producing less taxing processes as it relates to extracting the resources from the ground. So climate change was less defined, if you will, five years ago, and now it’s much more defined as it relates to the investment opportunity.

Tom Heintzman: We’ve also seen some winners and losers over the course of the last five years. I would say solar lived up to its potential, but hydrogen, for instance, I think has sort of declined in its priority over the last five years. And nuclear, I would have said, has had a real resurgence in the last five years.

Roman Dubczak: I would agree on those. And I would say others have yet to prove to be a bigger space to invest in. And by that, mean sustainable aviation fuels, for example, biofuels. The technology is very promising. The scale of those industries are such that it’s not as investable a universe as initially thought. But that said, very important contributors to the production of cleaner energy and lowering emissions.

Tom Heintzman: Roman, you mentioned Poland, and I’d like to pull on that thread a little bit and just explore how the energy transition is proceeding globally. Simplistically, and perhaps too simplistically, the US with its abundance of domestic natural gas has seen strong growth in natural gas-fired generation, which by replacing coal has reduced emissions in the United States. In Europe, it’s been a bit of a different story. Reliance on natural gas imported from Russia as well as environmental priorities have provided support for renewable energy and particularly in the UK and France, nuclear power. In Canada, we seem to be pursuing all of the above. I’m curious how you see regional energy dynamics affecting client behaviors or needs.

Roman Dubczak: Yeah, energy usage continues to grow. What you wouldn’t have necessarily said a few years ago is that it’s growing at a faster pace than it had grew at around 2.2 % in 2024, faster than the average of the last decade. And a lot has to do with the continuously developing world, right? You’ve got parts of Asia and others that are continuing to consume on a per capita basis more than they had in prior years, which, that was a foreseeable trend, but it’s going to continue to grow. There’s the view that there’s 7 billion people that don’t have access to affordable energy and the billion or so that do. And so, like, there’s a readjustment in the world that way. And I think the view, not just politically, but the way the geopolitics have worked out in North America, especially as it relates to the conflict in Europe and the reshuffling of the energy decks in Europe, is that North America is extremely well positioned to be exporting lower carbon liquid natural gas to areas that are relying on higher carbon emitting other forms of fossil fuel, simply put. That’s what we’re facing. As it relates to the finance industry, that is a very, very strong trend. The institutional investing clients are also looking at those as very viable businesses, effectively exporting lower carbon energy than the status quo, so to speak, across the globe. A very, very strong theme is LNG right now. Another is nuclear. It’s got a longer tail to it, obviously, but the expertise that is based here in North America and very proudly here in Canada in particular is being exported and developed. And thanks to the good support from, if I may, the governments and governmental utilities that are using them. And not just governmental, but other utilities across North America that are investing heavily in making this nuclear power much more investable, so to speak, by lowering the cost base of the projects. So we’re going to be seeing a lot more of that. I think also one other point as it relates to renewable and that being wind and solar is there was always this element of the fact that it was a very much a domestic industry, meaning where you built this facility is where the source of that energy is, and it’s not relying on exports, it’s not relying on border controls, et cetera, and it’s much less susceptible, if not impossible, to being cut off, should conflict arise. Well, conflict has arisen, and concerns about defense and security are abound globally and I think renewable sources of energy to some extent provide that comfort that, it’s domestic production not susceptible to geopolitics, which, you know, at the time wasn’t as important as it is now, but I think it’s going to continue to be important going forward.

Tom Heintzman: Yeah, you see that in many areas. In Mexico, for instance, more than 50% of the electricity generation is from imported natural gas. And so, Sheinbaum is now pledging to dramatically increase the amount of renewable energy in the country. Similarly, down in Chile, given recent disputes with Argentina regarding natural gas, they’re doubling down on storage and renewable energy. So it’s not just a European phenomenon. Roman, under your leadership, CIBC has been an active thought leader on a wide spectrum of sustainability themes, including on sustainable finance, energy transition, electrification, carbon markets, and much more. Why, in your view, is it important for a bank to also act as a thought leader? And how does that thought leadership help clients?

Roman Dubczak: Well, I think, Tom, the role that banks play is that they are at their core, other than deposit-taking institutions, intermediaries, literally in between the process of developing energy and financing energy and everything in between, and increasingly so being tied into discussions as it relates to policy and where governments can and should lean into in order to promote the energy industry. At our bank and at other banks as well, we took an early view that we don’t necessarily know which technology specifically will be the winner. We just know that new technologies will be required. They’ll need to be invested in and seeded. And so we took a very, what I would say, a very broad approach. Obviously there were wind and solar, but we also invested in capabilities in hydrogen, biofuels, geothermal, et cetera. So we’ve been very involved across the board with many technologies and to date we’re still very devoted to all of them. I just would observe that some have taken off quicker than others. And nuclear has really taken off over the course of the last couple of years in its acceptance, social acceptance and the social license required to develop these facilities in populated areas. And so we’re very devoted across all of that and promoting the development of cleaner technologies, but also supporting our clients and helping them finance it on the most cost effective basis, wherever those markets exist. Despite our being headquartered in Toronto, we have a very, very global view on this sector. And we have a substantial teams equally as large in London, New York, Houston, Calgary and in Asia, in Australia, focused on this sector because that is where a lot of the opportunities arise for our clients in terms of new technologies and where their interests may take them in terms of investable projects. So, I wouldn’t say that the actual details of all the way anybody would have foreseen five years ago, but certainly the energy complexes continue to evolve and become frankly much more topical in the scheme of things than you might have assumed five years ago.

Tom Heintzman: Roman, on the topic of thought leadership, I’d be remiss if I didn’t put a plug in for the upcoming third annual Carbon Summit, which is occurring on October 23rd. And we get about 250 clients from across the spectrum gathered to talk about carbon. And then also in the spring, the next Electrification Summit will be coming up and these are annual events, but started under your auspices and have been very effective at pulling together hundreds and hundreds of clients from across the various spectrums, be it electrification or carbon.

Roman Dubczak: Well, and Tom, that’s thanks to you and your team. And everybody here at CIBC, we have a very broad, as I mentioned, global team devoted to energy infrastructure and transition, and very, very engaged in market leaders, in terms of financing renewable energy in particular; best in class, top 10 globally in terms of lenders globally, not just in North America. And so the team has come along very, very significantly. We’ve been able to add quite a few strong partners over the course of the last couple of years as well. So, it’s all going in the right direction. We just want to ensure that our clients have access to the best ideas and the best cost of capital that we can possibly help them achieve.

Tom Heintzman: So Roman, one of the things we do typically as a last question on the podcast is ask our guests to look forward and predict. It’s obviously extremely difficult to do given the rapidity of the changes. You were talking about LNG and very recently Russia goes and enters into a pipeline deal with China and suddenly the LNG markets get changed in the course of days or weeks. So this is difficult, but setting aside that dose of reality, how do you envision the next five years developing? What new opportunities do you anticipate will emerge for businesses as sustainability and the global energy transition continue to shape markets, drive innovation, and redefine investment opportunities?

Roman Dubczak: We’re in the business of trying to look around the corner, so to speak. And I would say, I had a couple points. One is, and I found this interesting, is that a recent survey showed that something like half of ESG funds in Europe are now invested in the defense industry. And, you know, that slots into the title of ESG, so to speak, or sustainability. So look, I wouldn’t have seen that one coming a few years ago, so as it relates to that being a trend, it probably is a trend. Investment in defense. That can be related to resiliency and sustainability of society to a large extent. So that’s kind of one interesting observation. I wouldn’t say I know where that ends up going over the course of five years, other than probably along a spectrum, a linear spectrum, because it doesn’t seem like geopolitics are going to get any less heated, so to speak, for the next five to 10 years. But I also actually sense a focus and a shift in nomenclature, if I may, away from the word sustainability towards the word that would probably be more synonymous with resilience and the hardening of assets and quite a bit of investment. And maybe it’s just an acknowledgement that like, okay, climate is changing. How best to deal with it obviously address the issues as to why climate is changing and that is the overheating of the atmosphere. But secondly, the hardening of assets and we’re seeing these instances of once in a hundred year floods or storms or other things happening on a every other year basis. And recently, not far from us, we had a once in 500 year event of a hundred millimeters of rain falling in a couple hours. And the talk post that was like flood control and sump pumps. Whereas 10 years ago, there was a massive blackout in North America and everyone was talking about, you know, energy grid resilience, et cetera. So the spectrum of concern and the spectrum of investable opportunities as it relates to what hardening of assets would be hardening and building defenses, if you will, economic defenses and physical defenses about what will be increasingly more varied and less predictable weather outcomes is going to be, I think, more and more of a focus. And I think entire industries may be spawned from that as it relates to just, you know, homeowner concerns, municipal concerns, broader concerns, travel concerns. I think all those areas are going to create investment opportunities for our clients and participants in the capital markets that they need to have an eye out for. And so, you know, the kind of the next phase of transforming the energy complex into transforming infrastructure. And then, the continued theme on infrastructure redevelopment, like it’s an aging infrastructure complex across most developed nations is at that point where everything’s got to kind of get rebuilt, bridges, roads, airports, et cetera, and they’re going to be built under new technologies, probably much more energy efficient, but also needing to be hardened against weird weather patterns, so to speak. And so that’s something that I think we’ll be seeing much, much more of going forward.

Tom Heintzman: Well, thanks, Roman, for your ideas and your views. Thanks for being part of this show for 100 episodes. And I look forward to seeing where the world’s at when we reach 150.

Roman Dubczak: Thanks, Tom. Thanks to you for a great effort, to you and your team for putting this podcast on. It means a lot to our clients. It means a lot to your partners at CIBC. And I think it contributes quite a bit to the narrative. So thanks to you.

Tom Heintzman: And thanks to the listeners for tuning in. You’ve been very supportive over 100 episodes and we look forward to taking this forward with you. Please join us next time as we tackle some of sustainability’s biggest questions, providing you different perspectives to help you move forward. I’m your host, Tom Heintzman, and this is The Sustainability Agenda.

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Sustainability 3.0: Recalibrating the conversation

Roman Dubczak

Deputy Chair

CIBC Capital Markets

Tom Heintzman

MD & Vice-Chair, Energy Transition & Sustainability

CIBC Capital Markets

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