by NEI Investments.

Progress on diversity and inclusion, working through climate strategy challenges.

Editor’s note: This article first appeared in our Active Ownership Report from Q4, 2021.

CIBC is advancing its diversity and inclusion programs and policies and is receptive to ideas about how to alter its executive compensation structure for more equitable pay. Progress toward net-zero is mixed, which is the norm for Canada’s big banks in these early stages of the transition. We met with the bank twice in October after they reached out to us for input on their climate strategy.

CIBC provides comprehensive diversity disclosure and has taken many positive steps. New targets for board-approved executive roles were set for women, visible minorities, and Black leaders. Noticing the lack of executive-level targets for Indigenous peoples and persons with disabilities, we learned that the priority for the bank is to first create stronger representation for both these groups more broadly. While CIBC’s employee engagement score for 2020 was relatively high at 90%, we encouraged them to break down the result by diversity group to get a clearer picture of worker satisfaction, which one of their peers is doing.

We updated the bank on changes to our proxy voting guidelines regarding our cap on executive pay, even though its CEO pay was below our threshold. We highlighted the important role they could play to help address broader income inequality risks. We discussed the idea of setting a cap in their executive compensation framework, perhaps as a multiple of median household income, which is a fundamental metric we use in our own analysis. We are glad the bank was willing to take a closer look at this issue.

CIBC has been restructuring the governance of its climate strategy since they began re-focusing their ESG work at the request of the CEO in 2020. A key change is the appointment of the Chief Legal Officer as executive sponsor of ESG. Unsurprisingly, the bank identified lack of reliable data as a stumbling block to setting net-zero targets. We supported their decision to press ahead anyway, as the important thing at this stage is working through the process with transparency.

Next steps: We intend to review the bank’s most recent and forthcoming disclosures regarding interim net-zero targets. We will be especially interested in the bank’s stance toward lending to clients in high carbon-emitting industries, and what their expectations of those clients will be.

As of December 31, 2021, CIBC was held in NEI Canadian Bond Fund, NEI Growth & Income Fund, NEI Canadian Equity Fund, NEI Canadian Dividend Fund, NEI Fixed Income Pool, and NEI ESG Canadian Enhanced Index Fund. Holdings are subject to change without notice.

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