Susan Rimmer reads CIBC for sustainable finance talent war

Three months into her new job as head of global corporate and investment banking at the Canadian Imperial Bank of Commerce CM-T, Susan Rimmer is focusing on a trend that is set to play out over three decades.

Ms. Rimmer, who has three decades of experience in debt markets and corporate banking, is hoping the bank’s newly-formed energy infrastructure and transition group will be first to carve a successful niche in climate-change-related financing, as well as by hyper-focusing on US renewable power projects. The goal, she said in her first interview since taking on the new role, is to develop long-term strategies to fund energy transition plans that can withstand the volatility of market cycles.

“Under my leadership, I am going to continue to really lean into this trend,” Ms. Rimmer said.

The group, formed in mid-2021, now boasts more than 100 investment bankers working exclusively on the energy transition thesis. That means identifying and securing financing deals for companies operating along the renewable energy supply chain – from turbine builders to utilities – with a specific focus on the US market.

It is a politically popular focus and one with the potential to be extremely lucrative; a recent Royal Bank of Canada report said this country alone must spend roughly $2-trillion to successfully transition to a net-zero economy.

“We all know the questions around growth and inflation, those are quite uncertain, but in the energy transition we continue to see real opportunities,” Ms. Rimmer said. “Our offering is already differentiated, having built our renewable power financing and advisory team in the US over five years ago, and that is also something that exports well.”

Ms. Rimmer is far from alone in placing renewed emphasis and resources on sustainable finance, however. Every major Canadian bank is now seeking to bolster its energy transition bona fides.

As the transition becomes more complex and continues to spread beyond clean tech and renewable power to encompass every other sector of the economy, Ms. Rimmer is entering a war for highly specialized talent, in which victory requires unique expertise.

Other major banks have already set up dedicated teams similar to the one CIBC established last year. The banks’ approaches differ, but all are dedicated to reshaping the existing universe of financial products to include sustainability components, while also developing new products in hopes of gaining a competitive edge.

“If you think of the evolution of sustainable finance, there was a point where it was quite narrowly viewed by the majority as being just green bonds,” said Jake Lawrence, chief executive and group head of global banking and markets at Bank of Nova Scotia . “It is so much more than that now.”

Not only has the sustainable debt space grown to include dozens of different products in recent years, he said, but executives have started migrating from other areas of banking to focus on the energy transition trend. Fanny Doucet, for example, will become Scotiabank’s head of sustainable finance in late 2021, after spending several years in debt markets.

“The sustainable finance market has evolved in such a way that structuring green bonds, most banks can do that now,” Ms. Doucet said. “So we have to bring something that is different and is additive and is going deeper and we can now go very deep and very technical on sustainability topics with clients, which I don’t think every team can do.”

Jonathan Hackett, co-chair of the energy transition group at Bank of Montreal, is building a similar team focused on offering highly-specialized expertise.

“You do need to have more intellectual capital and more people who are able to bring in the different pieces that you need,” he said. For example, Mr. Hackett pointed to Rachel Walsh, who has been BMO’s carbon innovation analyst based in Calgary for little more than a year.

“I contrast her work to others in the space, where she has to understand the way carbon credits are created and [others] are trying to do that in addition to covering 24 other industries? I just don’t understand how [creating positions such as carbon innovation analyst] is not something that others are doing.”

When bankers approach clients involved in transition from a more general background, Mr. Hackett said, clients can tell. “I think people do realize when they’re being approached opportunistically, versus by people who are focused on the space,” he said.

Aaron Engen, Mr. Hackett’s co-chair, said the more generalized approach has been reflected in the job ads he has seen posted by other large banks, which often use ambiguous language and overly broad descriptions.

“It was a managing director job called midstream-downstream energy transition. Like, make up your mind. What are you really doing in a job like that?” Mr. Engen said. “I have seen a lot of those where they have just tagged energy transition to the end of whatever it is they are doing. We have not done that.”

As spending on energy transition projects ramps up, all of Canada’s largest banks are bracing for a fight.

“There will be, if you want to call them, ground skirmishes across the economy where people are chasing things like small modular [nuclear] reactors where there are only so many players,” BMO’s Mr. Engen said, “but that will be just a teeny, thin wedge of what is going on.”

Sustainable finance products are expected to become ubiquitous in the coming decades. Scotiabank’s Mr. Lawrence is among those who believe competition between financial institutions will be healthy.

“For the sustainable market to continue to function, it is going to need multiple participants supporting it, on the buy side but on the banking side as well,” he said. “You’ll need multiple investors who are interested in these products, not just one, and you’ll need multiple banks who are willing and able to structure, sell and, frankly, where it is appropriate, trade and make markets in these assets .”

“I don’t see any bank wanting to corner the entire market,” Mr. Lawrence said. “That concentration produces a type of risk that I think wouldn’t be fully attractive.”

Competition is why Ms. Rimmer at CIBC is taking what she calls a “more specific” approach, targeting renewable power generation projects directly, specifically those based in the United States. There are early signs that her laser focuses on a subset of the otherwise amorphous energy transition theses is achieving success.

According to New Jersey-based data analytics firm New Project Media, CIBC was the third-largest financier of US renewable energy in 2022, having lent projects roughly US$1.9-billion. The only other Canadian bank to make the top 10 was the National Bank of Canada, which placed seventh for lending slightly more than US$1-billion.

Ms. Rimmer hopes CIBC’s niche focus will allow him to build a critical mass of relevant expertise before his rivals. Her team already includes multiple renewable power bankers and tax specialists, she said.

“I already have built a lot of that competency at home, but we are not done,” Ms. Rimmer said. “It is a competitive landscape, but I find that we are very well positioned to win.”