Canadian Imperial Bank of Commerce is preparing to launch what it says will be the country’s first bond aimed at advancing women’s leadership, at a time when social and governance issues are top of mind for institutional investors.
CIBC’s Women in Leadership Bond will fund organizations striving to improve gender diversity in their leadership ranks. To qualify, the company receiving the loan must have either 30 per cent of its executive ranks or its board seats occupied by women, or have signed on to the Catalyst Accord 2022, which calls on companies to boost the number of women on their boards and in executive positions to 30 per cent by 2022.
The loan recipients must also have at least one woman on the board and one in an executive position in order to be included in the bond offering. The product will be targeted at Canadian institutional investors such as pension funds, money managers and life-insurance companies.
Canada’s largest pension funds have become vocal proponents of the importance of environmental, social and governance factors – often referred to as ESG factors – when making investment decisions. That’s putting pressure on companies to improve their practices with respect to board governance, climate risk disclosure, environmental risk mitigation and more.
“We’ve been hearing from institutional investors in Canada that they are increasingly focused on environmental, social and governance factors when they’re thinking about their investment mandates," Susan Rimmer, CIBC’s head of global corporate banking, said in an interview.
“We’re showing them an opportunity to invest in a bond that helps them achieve that objective.”
In addition to its focus on gender diversity, the bond offering will also steer clear of financing companies whose primary business is alcohol, tobacco, gambling, military contracting, fossil fuels, predatory lending, palm oil, adult entertainment or the construction of new large-scale hydro. Companies involved in major environmental, social or governance controversies will also be excluded.
Ms. Rimmer said the bank chose those additional criteria based on advice from research firm Sustainalytics so that companies who have one bucket for all of their ESG investments will be able to purchase the bond.
Ms. Rimmer noted that the investment criteria is merely a framework.
“Obviously, for the rubber to hit the road, we’ve got to do a deal," Ms. Rimmer said, adding that she was not able to share any details around the anticipated timing of a deal.
Some of the country’s largest pension funds have made public commitments to weigh environmental, social and governance factors more heavily when making investment decisions. Among the most public pronouncements was a pledge by the Caisse de dépôt et placement du Québec, the country’s second-largest pension fund, to reduce the carbon footprint of its overall portfolio by 25 per cent by the year 2025.
Meanwhile, the heads of both OPSEU Pension Trust and British Columbia Investment Management Corp. spoke out about the importance of gender diversity during an event held by the Canadian Coalition for Good Governance last June.