Two sessions at the Association for Financial Professionals (AFP) annual conference in Nashville - among several others covering various subsets of the discipline - offered practical and promising insights into the continuing growth of sustainable finance
in the corporate and consumer arenas. One involved the Canadian/global bank CIBC and two of its corporate customers, and the other highlighted the efforts of a new company, CNote, that is striving to connect corporate treasurers and other finance leaders with
authentically sustainable deposit and investment opportunities in community banks, credit unions, and local projects.
CIBC’s roundtable, called “Tailoring Sustainable Finance to your Business” was moderated by the bank’s head of global liquidity solutions, Tim West and its head of sustainable finance, Siddharth Samarth. It featured panelists from two very prominent companies,
Bechtel Corporation and Circle K/Couche-Tard doing business in two vastly different industries – speaking on how their companies had taken holistic approaches to sustainably managing their organisations and especially financial activities.
Toronto-headquartered CIBC, operates mostly in Canada and the US. They are a member of the
Net Zero Banking Alliance and recently introduced their Sustainable Deposit Account as part of a broader sustainability offering for the bank's various customer sectors.
Investing in underserved, minority institutions magnifies financial, community impacts
CNote's presentation, moderated by CEO Catherine Berman and featuring treasury and investment leaders from digital water solutions provider Xylem, a key supplier to the pharmaceutical industry, and Block, parent of Square, offered two widely divergent industry
viewpoints, albeit with many common themes and values.
The session's focus was on how “Corporate Deposits Can Directly Address Climate Goals” and how targeted investments of what Berman emphasised as their key aim - “FDIC-Insured deposits into strong, climate-focused community banks” – can deliver not just security
but greater impact for every dollar invested. In essence, she said, their company is all about putting money right where it can do local good at the community level, and through financial institutions aiming directly at helping communities, in many cases,
supporting historically underrepresented minorities, and their businesses, grow and develop more prosperous futures.
Two audience polls were presented during the hour-long gathering. The first asked “Is your treasury team currently participating in sustainability or net zero goals via investments or deposits?” and the second concerned alignment of sustainability goals with
company activities and operations over the next year.
Berman shared a few key details on her company - a certified B Corp – and highlights of the community investment solutions they offer. A women-led fintech platform, employing 80% women or people of colour, the firm hosts a network of vetted FDIC or NCUA
insured financial institutions “to access, deploy, and report on competitive, impactful deposit opportunities.”
Their network is concentrated in financially strong, climate-focused community banks and credit unions under $10 billion in assets. The central idea behind CNote, Berman explained, is to promote investments in these providers not only for the ‘good’ they
do in their local communities, and for the environment, but also because they are very sound investments, in fact with stronger credit quality and higher capitalisation ratios than those found in most larger banks.
Aaron Johnston, director, treasury for Xylem and Michael Nourafshan, investment manager for Block, both had positive things to say about how CNote had helped their organisations accomplish their unique sustainability goals. In Block’s case, the company’s
“Sustainable Banking Initiative," Nourafshan explained, is a $25 million investment aimed to help decarbonise the economy and promote sustainability through community lending. Through the program, and with assistance from CNote’s research and network to complement
their own, Block placed deposits into several community banks and specialised ‘green’ funds. This commitment helped them fulfill the fast-growing ecommerce provider’s purpose and mission of encouraging economic empowerment and supporting the needs of small
businesses. Additionally, the company dedicated substantial deposits to community-based lending and Community and Minority depository institutions (CDFIs and MDIs) beginning in 2019.
Key outcomes for those investments? Several innovative programs were funded, including construction loans for single family modular homes made of used cigarette butt bricks and fly ash concrete in the especially unaffordable San Francisco Bay area, as well
as community solar projects in Colorado and Minnesota that benefit local businesses and low-to-moderate income residents. Renewable energy upgrades were also funded, including efforts to bring clean energy and jobs via a special solar energy program to traditional
“coal country” regions in the eastern US.
All investments carefully evaluated, yielding win-win results for companies and communities
Nourafshan repeatedly emphasised how thoroughly they vetted each opportunity for community investments. These sustainable investments were strong financial opportunities, not unprofitable “giveaways,” he said.
Asked by an audience member how the Block finance team gained executive support to participate in the CNote program, Nourafshan said it just made sense given their corporate mission and objectives. “We have a ton of buy-in, including from our CEO, CFO, and
our entire board. It’s really a part of the company’s culture – they very much believe in advancing these critical social issues, so I never have to do any arm-twisting to convince them why sustainability is important.”
Block needed strong solutions, while Xylem gained valuable community investment insights
Johnston said that his company’s senior finance team appreciated CNote’s guidance on how to mirror the company’s core values and focus on clean water and lowering emissions in their approach to financial opportunities. “We like the idea of using our deposits
to help us meet our sustainability goals.”
However, that did not mean it was easy, as he noted that his company didn’t have the resources or knowledge in-house – at least at first - that Block and others did to quickly explore and evaluate community-oriented deposit “impact” options. CNote shared
several alternatives with them, some focused on promoting sustainable water programs, and Xylem’s leaders were surprised how well they could meet a key company priority by aligning their deposit activities geographically with where the company had a significant
market and customer presence, and by placing funds with institutions doing important development work in local communities.
Nourafshan made it clear that while the Block team did “have the tools” in place to do a thorough analysis of many investment options in several categories, other organisations might not. That’s where CNote provides a valuable service, he said. “I have so
much admiration for Cat (Berman) and everything she’s built. She has created a turnkey solution where folks who don’t have those capabilities can still engage in this (sustainable investment) work in a really meaningful way, and with great accountability.”
Sustainable deposit accounts offer comparable returns, yet “align with broader ESG objectives”
Bechtel Corp’s Assistant Treasurer Dan Degagne led off the CIBC panel discussion sharing how his organisation viewed sustainability. The Reston, Virginia-based construction and engineering firm works across the globe, building airports, power plants, and other
major infrastructure projects, including the recently completed Elizabeth Line (high-frequency hybrid rail service for London and its suburbs) in the UK.
Degagne said as assistant treasurer for Bechtel he oversees credit and bank relationships and the company’s investment portfolio. That includes bank deposits, which were a key subject of the day’s presentation. Noting that the company has been focusing on
building in a sustainable way for more than 50 years, Degagne said that it was a high priority of Bechtel to create a “positive, lasting impact” in communities through its “very big, and very visible” projects.
“We’re an engineering and construction company. That is our core business. Everything else in the organisation exists to support or service the engineering and construction side of our company, and that includes the finance side of the house.”
With what Degagne called a “very conservative” financial management policy, relying on “traditional vanilla” financial products, what made Bechtel a candidate for the new account?
Degagne says he was “somewhat skeptical” going into the discussions. "I wasn't sure what it entailed – as the alternative for us was a traditional demand deposit. I needed to make sure that getting into a sustainable deposit would not introduce new risks
to the organisation, or if it did, I needed to make sure I was clear about what those risks were.”
Ultimately, explained Degagne, it wasn’t as tough a decision as expected. “Thankfully, CIBC was incredibly helpful and patient as I asked the “thousands of questions” about the bank’s sustainable deposit product. “It was sort of a Goldilocks scenario for
us, where the terms and conditions relative to a demand deposit were effectively the same, so they were not introducing any new risks for us.”
The ‘upside’ he said, are the product’s benefits: “The funds that we place in that deposit are allocated towards ESG related products and loans across the industry - so the benefits of an SDA align with our broader ESG objectives as a company.”
For Circle K, the sustainable finance journey started with a big bunch of bonds
Circle K’s story was a bit different, says Robert Sway, the global convenience store giant’s head of health, safety, and environment and sustainability. They started their sustainable finance journey in 2021 as the first convenience store retailer. “We were
looking to refinance a billion dollars in bonds, in ten year and 30-year tranches.”
With that successful issuance, the next step was to find ways to put the money to work in authentically sustainable ways, he said: “We put internal processes in place to establish a framework and a committee to evaluate projects that would be funded by that
bond.
Way says that was still ‘early days’ for the retailer’s sustainability journey, as they had just issued their first sustainability report in 2019.
The bond issuance program, he said, “gave us access to a new audience and we saw a lot of activity on the over-subscription. Inside the company he explained, the sustainability team and others “put our money where our mouth was, [and] we communicated to our
leadership internally that we were very serious about these programs.”
Key messages delivered on why and how to pursue sustainable banking options
Sustainable finance, said the CIBC team, in the form of operating accounts or bonds funding environmental and social investments, “can be used to drive genuine institutional change,” by taking a ‘holistic approach’ to instilling sustainability across stakeholder
groups and a company’s entire value chain.
The bank’s Samarth wrapped up the session’s conversation with his views on the best way to approach sustainability from a corporate standpoint. “First, think about what's the right product for your organisation- where is it going to deliver the most impact?”
That could be through the company’s supply chain, or to expand its investor base, or as in the case of Circle K/Couche-Tard, on the debt front. He also stressed how important it is to know from the start what you are trying to accomplish and then - in choosing
the right sustainability products - to focus lots of time and effort on coordination and involvement with other key players within the organisation.
“Ask yourselves the ‘why?’ first,” he urged audience members. “Are you trying to align your strategy with (your bank’s) sustainability strategy?” and then “ensure that there is buy-in" across the firm’s communications, legal, and other teams, along with treasury.
This, he emphasised, may provide unexpected, but happy benefits to the company.
“One of the beauties of this sustainable finance offering is that it helps integrate different teams within your organisation.”