Canadian Imperial Bank of Commerce (CM) Earnings Call Transcript & Summary

[Presentation] Hello, and thank you for joining us today. My name is Anita McOuat, and I am President of the Canadian Club of Toronto and National Leader of technology, media and telecom and consumer markets for PwC Canada. Even though we're connected virtually today, it's still important to recognize the land on which the Club sits and where many of us live and work. We're gathering on the traditional lands of many indigenous peoples over the centuries, and most recently, the Mississauga's of the new first -- of the Credit First nation, and we're grateful for the opportunity to meet on this plan. Today, we're joined by Victor Dodig, President and CEO of CIBC to discuss the responsibility that organizations and leaders have when it comes to building a sustainable, inclusive economy of the future. But before we dive into today's topic, here's some information about how to participate with us. If you find that your Internet is slow, try to click here to switch stream button, the video quality may decrease but the audio should stay strong. And we do want your questions today. So if you have a question, just click the Questions tab, type it in and it will go straight to our moderator. Thank you today's event sponsors, PwC, Lakes and Canadian Bankers Association. The Canadian Club is a nonprofit, and we've been gathering together for 124 years, and it's because of our sponsors that we're able to do that. So we are grateful for your support of today's conversation. After his remarks, Mr. Dodig will be joined a discussion by Rola Dagher, Global Channel Chief for Dell Technologies; and Richard Manley, Managing Director and Head of Sustainable investing for CPPIB. Their conversation will be moderated by BNN's Amber Kanwar. One of the club's traditions that has not changed during these virtual times is a toast that we make to our country at the start of every event. So if you have a drink nearby, please join me in a toast. To Canada. Now I'd like to turn the podium over to my colleague Diane Kazarian, the GTA Managing Partner for PwC to introduce Mr. Dodig.

Thanks, Anita, for the very warm welcome, and thank you, everyone, for joining us today. So I've had the pleasure of knowing Victor Dodig now for many years. And in my capacity as the GTA Managing Partner, we've done some great work together. And I can tell you that his leadership at CIBC with his people and clients and communities is making a tremendous difference. And his leadership in our communities, where he shows care, persistence and courage is outstanding. And I can attest to this firsthand in the work that we've done together at St. Joe's foundation as one example. Since he became the CEO of CIBC in 2014, as a business community, we've watched Victor work to usher in a new era for the bank, positioning CIBC as a relationship-oriented bank for the modern world. In 2016, he led the acquisition of the Private Bank, establishing a strong North American platform for CIBC, to serve their clients and deliver growth. Victor also shares his over 25 years of experience on critically important boards where he serves as Vice Chair of the Business Council of Canada, Co-Chair of the Black North Initiative and member of the Global Catalyst Canada Advisory Board in CD Hall. As part of his efforts, Victor has been an absolute trailblazer, particularly when it comes to sustainability and inclusive growth and broader inclusion and diversity. By putting CIBC's people and clients first, Victor has been able to demonstrate why and how embedding ESG considerations into the bank's core strategy has helped create significant value and trust. And at PWC, we're also committed to achieving growth in this way, which benefits our entire society. Last year, we pledged to digitally upskill 1 million Canadians, especially those in marginalized communities and I'm proud to say that to date, we've successfully reached over 250,000 Canadians on this journey to close the digital divide. We've also made a global commitment to be net 0 by 2030, and we've been working closely with business leaders and engaging them on this important journey. And most importantly, we believe that these conversations are rooted in building trust with stakeholders. Trust is critical. It is valuable, it is measurable and requires accountability. And it's only developed through inclusive, transparent and open leadership like Victor's, and this will be critically important coming out of COVID-19. And now to speak more on the role of the private sector and driving the economies of the future through sustainability and inclusion, it is my distinct pleasure to welcome Victor Dodig, President and CEO of the CIBC group of companies Victor, take it away.

Thank you, Diane, and thank you, Anita. Thank you for that very generous introduction. This continues to be a time of many firsts. Again, in 2021, this is the first time I put on a tie, it's always good to practice in case you forget. This is the first time I've sat in my living room, wearing a suit. Looking into my laptop, speaking to what I believe to be is almost 1,000 people listening to a speech. If I were to describe something like that to you a year ago, you would have thought I would be at the height of my own ego. But that's not the case. This is just simply the reality that we're living in, and it's a privilege and a pleasure to be with you here today. I hope that during this short speech and importantly, during the discussion with Amber and Richard and Rola, we can share some thoughts that you will all take back to your respective organizations and networks to make Canada a more robust economy, make it more sustainable and make it more inclusive as we go forward because we will get past the pandemic. At the same time, I think it's only appropriate to recognize that we are in a health crisis. It's important to recognize those, many of which cannot be on this call because they're working with their hands, their hearts and their minds. People on the front line in health care, pharmacists, sanitation workers, people who make our food for us, people work in grocery stores and people work in banking centers. To all of them, I want you to know that we all genuinely care for you and respect what you're doing during this very difficult time. At the same time we're in a health crisis, we're in a unique economic crisis. A economic crisis that has 3 defining features. The first with the speed with which it arrived. It arrived overnight. It dislocated family lives, it dislocated our GDP, it dislocated companies and our government spending, like no situation could have before with such speed. The second thing, and I think we'll see this as we come out of the pandemic, what you hear it is manifested in the K curve, and you see it in retail, you see it in the hospitality and tourism industry, just the devastation and inequality that is going to emerge and in fact, exacerbate some of the quality that we went into this pandemic with going forward. And we have to be mindful of that. Parts of our economy are ravaged. Those at the lower end of the income spectrum have felt the economic -- adverse economic impact more so at the higher end of the income spectrum. And it has been asymmetric in every sense of the definition, while there are some industries that have done well. The third thing I'd say is it could end quickly. And while we listen to the news each and every day, and we hear about the vaccine rollouts and the lack of supply and the commitments to the future, I know and you all know, it will end. It will end with the vaccine rollout. It will end as the R number goes below one and the virus exponentially starts to diminish. And then we're going to have to ask ourselves where do we go from here and what kind of an economy do we wish to build? Too often, I hear about the liquidity that's been built up in the system. I hear numbers like $140 billion, $170 billion, $80 billion more in stimulus that were in excess of lost wages. And there's no doubt about it. You see that in the Canadian banking system. Across all institutions, deposits have gone up. They've gone up on the personal side. They've gone up on the business side. And they are -- they will be there to stimulate the economy once we come out of lockdown. But I have to caution everyone that, that stimulus that has been pent-up is not what's going to drive the Canada of the future. It's going to help some parts of the economy get back on its feet, but it could manifest itself in conspicuous consumption. And that is something that does not build sustainability and inclusion in terms of robust economic profile going forward. I want to frame the discussion around sustainability and inclusion in terms of our ability to grow. During this pandemic, I see it as returns have been privatized and risks have been socialized. The fact of the matter is, the government debt has grown, our ability to borrow and our capacity to borrow was there. But we all know that when interest rates normalize, there'll be more of a crunch on government finances. We're living in an era where our family business, our energy business is under fire, due to climate change, which is very real. And how do we respond to that as opposed to responding to others decisions? And how do we deal with inequality and the freeing social cohesion that we see in society, we saw it in the U.S., we see it in Canada as well. And the pandemic, as I said earlier, has exacerbated that. I think the quality of our life in the future is going to rely on growth and growth over redistribution of income. We're going to have to grow the pie so that there's more there for those to share. And my message to the public sector, the policymakers, would be to enable the private sector. Yes, support us through this period of the pandemic, but enable the private sector to bring capital to the table to grow our economy. And grow it in a sustainable and inclusive fashion. I believe that the public sector there is there to enable. The private sector there is there to drive growth. And we've seen many, many examples of this in the past where both work well, both are integrated in terms of building a stronger Canada. I hate to take the page out of an American historians book, but there's the late Alfred Chandler wrote a book about The Visible Hand, some of you may have heard me refer to that in the past. Because it's not all about the free market. The free market works when the visible hand of leadership makes a difference. The visible hand in his context was how Americans Industries got built up in the early 1,900s. I think that concept of the visible hand is going to play an important role in the private sector's role going forward to make sure we have a sustainable and inclusive economy. So what's going to feature in terms of the sustainable and inclusive economy and what's going to feature in terms of driving our growth? I look at 3 specific pillars when I think about driving economic growth. I look at the financial pillar. And the financial pillar means that we need to bring in more foreign direct investment into Canada. The financial pillar means we need to have deeper capital markets in Canada because when interest rates normalize, we better have a pool of risk capital that's known as that equity that can play a role in growing the economy because debt will, at some point in time, and it's hard to picture this, it will get more expensive. For 1 reason or another, it could be credit risking, it could be inflation. I look at intellectual capital. I think here, Canada is making some good headway in terms of its immigration policy, which is there to attract skilled immigrants and post pandemic, we should see the uptick that the government has announced and the global express entry for those who are skilled to come in more quickly and with ease. But we also need to think about technology and how it's impacted those in society positively, but also adversely, I'll get to that in a moment. And the final pillar is social capital. How do we build social capital going forward? And some people will hear the speech and they say, hey, he's not a capitalist. Let me say unequivocally, that I am a capitalist. I believe that companies exist for a reason. They exist to ensure that clients are served and shareholders benefit. And it's an ecosystem that works very, very well. But I also believe we have a role, a social role to play in addition to the government is playing that role. These 3 elements of financial capital, intellectual capital and social capital all need to work together to build that sustainable and inclusive economy. As we go forward, we talk about the sustainable future. I want to use the ESG lens and some people will roll their eyes and say, there's too much in the headlines about ESG, environmental, social and governance factors. But it is an important lens with which investors are going to look to, and it is an important lens which leaders, whether in the public, private or nonprofit sectors must look to going forward. I know at our bank at CIBC we take it very seriously. We've got commitments in terms of supporting our oil and gas clients, but at the same time, commitments to grow and fund the renewable sector, which is playing an increasingly important role in making sure that we play our role in getting to a carbon-neutral footprint as a bank. We have a role to play in making sure that our employees all feel like they're included in our culture, irrespective of their backgrounds, what they look or what their social orientation is like or what they believe. I always say to them, just come with your entire self to our bank and we don't compromise on talent, but we'll make the most diverse team work together. And the third thing on governance, our Board has come a long way. We're almost half men and half women. We are chaired -- we will be chaired starting in April by Kate Stevenson, and we've got a diverse set of Americans and Canadians with a diverse set of skills to move our company forward. So that's our little page, but what does it mean for Canada when you use that lens? The environmental factor of ESG. What does it mean to Canada? Today, our energy industry, our family business is under assault. People are talking about how we produce and how it's not responsible and how it's thick tar sands crude. When the fact of the matter is our energy industry has worked very responsibly to reduce GHD emissions by a significant factor and continues to work on carbon sequestration -- carbon capture and sequestration technologies that will make sure that Canada's oil and gas is produced responsibly. And sustainability and inclusion goes beyond the individual. It's also a political and a federal mission. It's making sure that the parts of Canada that produce things that are from our family business are included in terms of our economic rebound and are doing so in a responsible fashion. I think we all know that climate change is happening. But to transition to a gas and oil-free future will take quite a bit of time. So let's make sure that we're focusing on our family business, and we're investing in the technologies and providing policies that can support those technologies so that Canada is seen as the place that produces nonrenewable resources in the most responsible way. But at the same time, making sure that the renewable energy that we produce. So we've got the most generous portfolio of assets in our country is able to get to market and is able to get the risk capital that it needs. And indeed, we're starting to see that in a very significant way. Canada also fuels the world in terms of agriculture. Let's make sure that, that gets out to markets so that all parts of our country are benefiting from this rebound. When it comes to the social aspect, I think this year has been a defining year because of some of the tensions that have come to the surface again. And as I said earlier, it's happened in the U.S. on the racial front where you see anti-black systemic racism and where you see anti-indigenous systemic racism in our own country, and that needs to be removed. But on the social side, I want to take a broader lens for a moment and talk about how we ensure inclusion and sustainability for our economic growth going forward on the social front. Childcare policies, like we have in Québec, that is a blueprint for what the rest of our country should be doing so that families can have affordable child care and more and more of our Canadian population that wants to participate in the economy, not just in the short term, but in the long term. And particularly women who are often burdened with the the primary responsibility of childcare, have the ability to get out there and can do that in an economic way in terms of caring for their children and contributing to our economy. Supporting the marginalized groups and the groups that really have suffered from this pandemic and pre pandemic, the black community, the indigenous community, initiatives like Black North, initiatives like the Black Entrepreneurship Loan Fund where the Canadian banks have come together with the government to make sure that capital gets to those areas so that they can also contribute to the economic growth and well-being of our country in a sustainable way. The third group is the group that's been displaced by technology or maybe complemented by the technology and needs to reskill or upskill in terms of their own contributions to our economy. So one policy measure that the government may want to consider is making sure that lifelong learning is part of what we do in this new economy that we're living in. Making sure that, for example, the registered education savings plan, the RESP, which now has about CAD 63 billion in it can be used not just for beneficiaries that are on the youthful side of their life that can be applied to your lifelong learning equation as you seek to upskill and reskill. And the fourth area would be small businesses. How do we ensure that our small businesses remain a vital part of our economy going forward? As I said earlier, we know what parts of the economy have been ravaged by the pandemic. And we know some of those businesses. We're on the robust to begin with because of technological changes. We need to get more capital to them. And we also need to have policies that ensure the private sector can come in and make its equity contribution to that part of our economy. So perhaps, the government should be considering an increase to the capital gains exemption for Canadian control private corporations to make sure that current owners could sell to new owners who are willing to carry the torch forward. There's a generational change happening in our small business sector. Now that it's really, really suffered in many ways, let's give them some tailwind, so they can come back after the pandemic and have new and fresh capital come and contribute to the small business sector. When it comes to governance, look, Canada is known as a country that has a very low corruption index, puts governance at the very forefront of what we do: transparency, integrity, trust, and it manifests itself in the boardrooms. Most recently, the focus has been on gender diversity in the boardrooms through catalyst, through the 30% club and through the fine efforts of all of you who made sure that our talented women, our talented Canadian women, are making a contribution in the boardroom. You know 5 years ago, when the 30% cold chapter started in Canada, 247 TSX-listed companies did not have a single female on their board, they all of them do, and they need more. Then we need to focus on a visible minorities, the black community, the indigenous community and other visible minorities in Canada. We want to build our companies in governments and ministries that reflect the population we're trying to serve. That's what builds sustainability. That's what builds inclusion, and every one of you play a role in that. Again, the government reaction, I just want to conclude with a couple of things because I don't want you to think I'm telling everybody what should be done that hasn't been done. I believe that we have really come a long way through this 10-month of this pandemic. The government response, in spite of some of the bumps on the road, has taking care of companies and has taking care of the least vulnerable and is addressing the healthcare crisis. They've also done their role in terms of the economic crisis. So we see this in many parts of the world, particularly, the developed world where the resources are there to help. We've also seen the private sector play and will continue to play a role in that recovery. But we need to kind of continue the tailwinds for the private sector to continue to contribute. And inclusive Canadian economy is premised first and foremost on quality economic growth. With that, not dividing the current pie, better or more, but growing that pie so that everybody can see the quality of their life improve. And if we dedicate ourselves to moving beyond that status quo of it's going to be okay, the stimulus in the system will carry the day, I think we've got about false sense of security. We all know where the global economy is moving. We all know that we've got to bring the family business along and focus on the newer parts of our economy. And with that, make sure that all our citizens are feeling like they have a hand up, not a hand out to make sure that they can meaningfully contribute to our growth. And with that, I'd like to hand it off to Amber and our panel, and we'll get into a discussion. Thank you for listening to me.

Thank you so much, Victor. You said a lot of really important things that we're going to hope to tackle in the panel discussion. By way of introduction, my name is Amber Kanwar. I'm a host at BNN Bloomberg, I host the morning show. And we're going to bring in Rola Dagher, who you may know the Dell Technologies; and Richard Manley, who's with CPPIB. And we hope to have a really great conversation with the audience's participation about some of the elements that Victor was talking about, particularly about how we build a recovery that's not about going back to where we were, but it's more reflective of the lessons that we've really learned over the past 10 months, which is that you can't succeed if everyone else is not succeeding with you. So this idea of both social inclusion and environmental inclusion. And so that's really going to be the focus of the conversation for the next 20 minutes or so.

And maybe, Victor, I know you just spoke for quite a bit of time. But I'll start it off with you because you picked up on, and clearly, you're a champion of a number of causes, the black north initiative, getting women on boards, getting more visible, diversity, not just in the rank and file, but in the executives of the organizations. A number of causes for a bank CEO, who is in the middle of one of the worst economic recessions that we've ever seen, where it seems like crisis is all around you could be focusing on other things. And I'm just curious why this particular cause is something needs to be -- you think need to be at the forefront of the conversation.

I want to ensure all our viewers that they spend a lot of time on our bank. And that is important to me but through our bank we can see the lens of the economy. The Canadian banking system is a concentrated industry structure but through that you actually get to see the entire spectrum of what's going on. You get to hear from your employees, you get to hear from the distant franchise, clients and employees. And you see the pain but you also see the potential for prosperity. And the pain points today are revolving around climate change, and we see what's happening. It's real, sheets of ice are melting. The ocean water levels are rising. Investors are spending more attention on this. And if we want to make sure that capital comes to Canada, we need to make sure that companies, the private sector broadly publicly traded companies and private companies are focused on that because capital won't come here otherwise. The frame of society, the inequality of income that is going to be further ravaged by the pandemic is something that you cannot build a stable civil society that actually grows economically without everyone feeling like they can meaningfully participate. And for those reasons, it's an economic reason. People say, why are you doing this? It's not a sociological project. It's an economic reason. I want everybody to feel like capital will come to Canada because we're doing the right things, and all those who work with our hands, hearts and minds...

Rola, I'm wondering if you can pick up on that because, in many ways, these are conversations that we've been having for years now, but something does feel different about the last 10 months in terms of putting those words into actions. And I'm sure you see it at the corporate level, but also as part of your own lived experience. I mean, in many ways, you're the embodiment of the type of person that we're trying to lift from obscurity essentially.

Absolutely, Amber. And it's hard to go after Victor because he covered everything. So I'm not sure where to start now. But I have to tell you, and this is what attracted me to work with Victor when he tapped me on the shoulder a couple of years ago to join the catalyst 30% club, and him and I sit on the Black North. Two things as an immigrant, and Victor will relate to this as well, is 2 words, as leaders, it's a purpose and impact, right? To me, how we learned it and how we earned it and now we're returning it back because it starts and it ends with people. Because Amber, leadership is not just a title that you own, and it is our duty to return it back to the people of the country, the community and our home, in our family business, as Victor says, which is Canada, period. So to me, gone are the days where organization talk about shareholders because today, it's all about stakeholder capitalism. You'll see what's happening in the world economic forms in all companies, including Dell this week that signed the World Economic forum pledge, which is all about capitalism, and it's all about social impact. In more and more, we need leaders to step up and actually preach in practice, those the -- when we talk about ESG, the S is so important because we need to double-click on that S, which is a social impact. Because once you start with your biggest currency in any organization, and it's your people because your people have the ripple effect of impacting the cost culture in impacting the community partners and customers, and that is our job as leaders. And women like me that actually had fought brought the system to get to where we are today because the system wasn't set up for me to be a president or to be a Chief Officer and look where we are today because we know that once you learn that, everything that you know and you earned it, it's time for us to give it back. And hence, Victor says that he does focus on the business, I do focus on the business. But the biggest impact for us is to give it back.

And you mentioned focusing on the S, the social impact, that's part of an investing framework. And Richard, I want to bring you into the conversation because pension funds have really been in the forefront. Yes, there are companies like what Victor is doing and doing it from a top down approach, but pension funds have been at the forefront of essentially agitating for that change as especially on the environmental side. But it seems like what's burgeoning now is okay, how do we put emphasis on social side? What metrics should we be looking at? What metrics should companies disclose? How do you vote on something? How do you agitate for that as an investor saying, I'm not going to give you these dollars. I'm not going to invest in your company unless you meet these criteria.

Thanks for the question, Amber. So maybe one thing I'll start by saying is we find it very helpful. Not to talk about ESG, which I'm sure is going to have the audience slightly curious. But we find it much more helpful to talk about managing and engaging with 21st century business risks and opportunities. This is a reflection of this New Century and the operating reality that companies are working in. We're trying to meet the demands of almost 8 billion people in a globally and digitally connected world. And simultaneously, corporations are confronting ferocious competition, pushing them to drive financial performance using all the levers available to them. Now that means we effectively have externalities that are reaching tipping points, changing consumer and regulator expectation of industry, at a time when companies are taking risk and they got the COVID crisis as [indiscernible] shed a light on this. Taking risk to drive financial performance at a time when society and the markets are less tolerant than they ever have been when companies miscalculate risk. So our view is that this is the macro reality that corporation is operating in and that corporations and investors who seek to outperform in this new macro need to embrace this reality and take a more expansive view on the risks and opportunities intrinsic in their business. And you touched on social, I think I say is social is in a world where we are seeing the largest percentage of market capitalization as a wells equity markets attributable to intangibles, which can really only be attributed to their talent. We clearly need to raise the focus on how corporates retain their talent, how corporates engage with their stakeholders and communities. Because when they miscalculate the risk of how their business impacts those stakeholders, the feedback loop today is more violent and more tangible than it has been before. Now...

I wanted to pick up because, I guess, my question is, how do you examine that, right? I mean, how do you go from traditional financial analysis where you're looking at models and discounted cash flows to now trying to handicap that?

It requires us to take a view on what are the key externalities associated with each industry's business model that may require internalization. Where could the customer, where could the regulator, where could the client decide to change their position on that company's value proposition if they are deemed to be assuming too much risk. So at CPP, we have a proprietary materiality matrix at an industry level, where we identify what we believe are the key issues that the Board and the executive team need to be engaging with if they seek to both create value and crystallize optionality in the medium term, but also mitigate risk and protect value in the short term. It requires us to score data. Companies publish a lot of data. Unfortunately, most of the ESG data we are provided with today is policy statements. I think we would like to see the reporting standards and the data reported converge towards numeric performance metrics. I think it's fair to say that over the last 3 months, we have seen momentum towards around the world, and I would hope that in the not-too-distant future, we will see consolidation towards a common standard at an industry-specific level that we can have tribute globally.

It's interesting you talk about policy statements to metrics. And I'd like to bring it back to you, Victor. Yesterday, we were chatting. And I found it interesting that you -- one of the ways that you're putting policy into practice is through time compensation to direct targets around ESG. Could you elaborate on that? And maybe talk about other ways you're trying to move from just policies saying nice things to actually implementing into the business?

Very much so. And Richard, I concur with you. I mean, like in the end, I think we're getting to the point where we're not specifically speaking about ESG, it's embedded in terms of how we do our business, and it recognizes some of these macro trends that you outlined earlier in your comments. We have added the ESG metric in a hardwired way to our rewards system at CIBC in 2021. It's a 10% component, and it is based on our target. So it's really hard to measure that on policy statements alone. It is overwhelmingly based on targets in terms of our commitment to the renewable sector. Our commitments to being carbon neutral by a certain year. Our commitments on the S side in terms of diversity, where we're measuring that because in the end, my philosophy is, if it's not measured, it's not managed. It just becomes fluff. And when it comes to governance, you see it reflected in our Board as well as other factors. So we have a coated arithmetic way of doing things. I will say that over time, we'll get better and better at measuring it. But without starting it, it will never get going. So we've decided this year, this is the year we're going to do it. It's going to be a meaningful enough, but it's also going to be on the radar screen. Everybody is going to watch it. Everyone's going to understand what we are rallying around as a company. We've also assigned one of our executive committee leaders to be the responsible executive for tying together all of what CIBC is doing into a framework that our investors can understand.

Let's introduce the topic of technology and how that either helps or hinders the goal of social inclusion. Rola, maybe I'll start the discussion off with you. In some ways, yes, technology can really even the playing field, but in others, there is a tension there because often, it's used for cost cutting, and that can be code word for job cuts, leaving people behind and often it is already the disenfranchise part of the community that feels the brunch of that. How does a company reconcile with the need to cut cost and that happening through technology with not being the best community member.

Great question, Amber. And it's like the love-hate relationship where we love technology, but then you hate it because you have to create discipline around it. So let me start by saying technology is an enabler, but people are the transformers. And technology is an equalizer today and not a source of division because we're seeing technology as creating some digital divide, and we've seen it in the last election how they use technology to manipulate and we're seeing in the political view, and we're seeing on a personal level and a professional level in terms of how technology could be used. So no matter what, when the Internet started back in the days, they said, my goodness, how many jobs are going to be lost and then yet, the technology and the Internet created so many jobs. And as we introduce our new technology like AI, machine learning, all of that technology, it's going to help create more jobs in the right areas that we need to focus. And Richard touched on reskilling and upskilling, which is really important. So if I look at Canada overall from a technology perspective, we have about 250,000 jobs that will be created in the new digitally transformed Canada that we need to tap on that. Because today, the biggest challenge that Richard, myself, Victor, that we face as leaders is the innovation economy isn't just an idea or a concept. It is an international war that we have to go and fight for skills and how do we actually attract skills to Canada. But the most important part, how do we retain those skills and make sure that Silicon Valley is not taking all the Canadian engineers because they pay more. And how technology in Canada and the government is helping, but we still have a long way to go. So it's all about the quality of the technology and the quality of data, you decide to use as an organization to help you advance and actually provide the people, the tools and the collaborations like yourself Amber and the 4 of us now on the call, a lot of people don't have the luxury of having these technologies at their desk to do what we do. And how do we ensure we as leaders and organizations are providing that technology to enable human progress because right now, technology more than ever is impacting human progress, but how do we use it widely? And how do we, as an organization, embed those measurements in terms of -- are people using it the right way? Are we using it for a social impact the right way? Are you using it in a future where it's all an inclusive culture across the board that technologies help enabling every single person in the organization?

Victor, do you want to pick up on that? Because I imagine there's a bank that is laser-focused on technology and the transformation and providing digital products to your customers. That's one of the things you have to think about is how you can do it in an inclusive way.

Yes. Technology has always reshaped banking. I always like to remind everybody that we installed the first ATM in the country in 1968. And back then, it was a key with a $30 packet of money, Cloverdale Mall in Etobicoke, Ontario. So it's been there all the time. It's getting more accelerated and more of it is getting into the power of the consumer. Our clients are demanding that we reshape the bank. They want to do more things on their own. Today, 92% of consumer transactions are done on a ATM, a tablet or on your laptop. It's going to 96% and ultimately 100% -- well, I won't get to 100% because there's just some things that are difficult to process that way. So it is reshaping the bank. We are repurposing our old investments in legacy areas and putting them into new areas to simplify and transform our bank so that we have the resources to grow and which is particularly important when interest rates are low. But it is being driven by consumers. The same time, to Rola's point, having the skilled talent to be able to put into those roles to play defense, whether it's cybersecurity or anti-money laundry or offense, which is growth in our bank is really, really more. And I will say this, as I visit our team members in the technology area of our bank, not everybody has a degree from Waterloo and MIT. Many of them come from community colleges, some of them have 2-year programs, but they come up with very, very hard skills. So one of the things I think our education system is going to need to do is it's going to need to serve that group that growing group and that growing demand with new ways of getting educated with the very, really real hard technology skills that we need. And that's what I'm encouraged by. There's more of it. We need to double down in that regard.

Just like 2 points on that. So that I'd like to add to Victor, as he touched on, when it comes to the bank and the innovation because innovation happens in every single organization, not just technology, and it's so important right now what Victor talked about is the customer experience. Because the customer experience is everything. We're living in a world where it's all based on experience and personalization and everything we do as an organization has to come down to, Amber, you download an app or if there's a new feature from CIBC is downloaded on your app. Is this personalized enough? Because if it's not going to help you because you'll be like, okay, whatever, I'm just going to pass on. And the second point that Victor touched on in terms of giving a broader opportunity to the community where immigration is so important to the success of Canada. And we, as leaders, need to ensure we're tapping into the new immigrants that come to Canada and going out there and reaching that broader perspective because you don't want to hire people that look like you, and you don't want to hire people that think exactly like. We want to hire people that have the same value and drive to help us impact in the community.

Richard, as an investor, we've certainly had a difficult relationship with technology. What's good for business doesn't necessarily always mean good for society. And because ESG is just embedded, as you said, in all the investments that you look at, how do you reconcile that tension?

Is this the tension in terms of the double side of technology?

Yes, yes.

Yes. Actually, I was just listening to Rola there. I think one of the really interesting things is that actually technology has been one of the things that has created information symmetry. And as you think about launching products, the reality is we have nearly 8 billion journalists with digital capabilities wandering the planner today. And that is, I think, creating tremendous equality of insights such that when corporates misstep the feedback loop now and the distribution, the voice of an individual is something that I think has changed the nature of the ESG risk profile of the industry. I think there's a few elements to the technology sector that we have in the materiality matrix. The first is actually how the industry thinks about the data that it's managing. How it ensures the security of the data that it's managing. And increasingly, I think how that data is used, that data is monetized and those companies' influence society is creating not only reputational risk for them that may manifest itself in their cost of equity, but importantly, how it may be creating other forms of risk that over time, may be manifest themselves in the scale of their addressable markets. I know we haven't seen many examples yet of people deleting apps from their phones and totally compromising overnight, the addressable market of a single platform, but I think customer patients with technology companies is evolving in a way that we are closer today than we have been to a point where consumers could easily turn their back on a technology company when it miscalculates risk. That could present itself as a catastrophic reduction in evaluation?

That's an interesting point. And from technology, I'd like to go back to one of the topics you brought up, Victor. And I actually have never heard anybody talk about energy as Canada's family business, but it makes it -- it kind of captures it seems how Canada feels about the energy sector. Yes, there's some family in fighting, but there's no denying, I guess, the contribution to the Canadian economy. How then should the family feel about things like the cancellation of Keystone XL? And what that means for economic inclusion, people that are left out as a result of transitioning to a more sustainable energy.

That's a good question. Let me say first and foremost, because I don't want my remarks there to get misconstrued. I fully believe all the fact-based and climate change, but I also fully believe that we're responding to that in a responsible way. The cancellation of the Keystone XL pipeline that was announced last week by the Biden administration was a regrettable decision. Regrettable because infrastructure projects require certainty. And when you're dealing with your biggest trading partner. Yes, it was denied a few years ago, but significant steps were taken to reduce GHG emissions to change the stakeholder composition of who's involved. So it's a win-win situation. And then to see it ground to a halt is very unfortunate. What I think we need to do is Canadians is we need to get the message out to the rest of the world that when it comes to the production of our nonrenewable energy, we are more responsible than any nation on earth. And when it comes to investing in technologies to advance carbon storage and sequestration to reduce GHG emissions, we can demonstrate in a fact base. That we can do it cleaner and better and transport it more safely than anyone else. And that is going to win in the end of the day because nonrenewable energy is not disappearing. Renewables growing dramatically, but it cannot displace nonrenewable. So we need to go out there and advocate the fact base so that people know that Canada produces it and produces it responsibly and will continue to do so.

Richard, I'd actually like to dip into the pool of viewer questions for this follow-up. It follows up nicely from what Victor was saying. But when will the market be able to price in climate risk as part of investment decisions? Do you feel like you guys are there at CPPIB?

I think we respect the complexity of the challenge. This is arguably the biggest investment risk and opportunity of a generation. And I know as a species, we'd like to confront complexity with simplicity. Unfortunately, I think the challenge of climate is one that merits respect and requires us to, frankly, roll up our sleeves and do the hard work. Victor just talked to innovation. I know a lot of people focus on the notion of any transition, but we need to pursue the optimal transition and the optimal transition is the one that removes the most carbon from the economy with the least impact to the economy. And there's 3 really important variables we need to understand in shaping that outlook. And one of them is the long-term equilibrium cost of all abatement solutions. This is not just about wind and solar. Victor just talked to CCS, when you think about hydrogen, deep geothermal. We are not, I think, in a position where we can contemplate an either/or approach to the transition. It needs to be everything is thrown at the solution. I think another consideration is the regulatory landscape and also the carbon prices that companies need to feed into their investment decision-making, because we are confronting decisions that will require billions of dollars of CapEx to be deployed in ways that will shape a corporate strategy for many years to come. Now with respect to innovation, the energy industry has been in a permanent state of innovation for a century. Responding to every economic and every engineering or geological challenge they've confronted in that time. But I think it is fair to say that they've only really had an economic incentive to confront CO2 for a relatively short period of time. And I think we have yet to see this industry unveil anything like the full potential of it to deploy its financial and human capital to pursue solutions. So I think there's a real opportunity to reframe the discussion here away from what's the carbon challenge to potentially what is the hydrogen opportunity. And I think one of the things we'd say is we clearly are investing in technologies that will shape the greening of energy. But at the same time, I think we're very keen to support companies that are identifying challenges of the transition and a commitment to decarbonize and transition their businesses to provide them the capital they require to transition their businesses and support their transition. With respect to pricing it, we're getting closer. We're certainly seeing the cost of equity of the solutions providers fall. It strikes me at the moment. We're seeing the cost of equity of companies yet to announce a transition strategy rise. But I think we're also starting to see, as companies provide visibility into their transition approach, the market can move quite quickly to reprice those securities as they provide visibility.

Victor, I'll hop this one over to you. It's another follow-up from a viewer on Keystone XL. I don't know if you'll be able to answer it directly, but the spirit of it. With the cancellation of Keystone XL, where do you see oil and gas in the Canadian economy? Why are large organizations not speaking out and supporting the oil and gas industry and the west with the current federal government? And I think, Victor, that question also gets to at heart of and a feeling of disenfranchisement.

Yes. And this is where I think we have to treat. And first of all, Richard, your articulation was so eloquent. I agree with everything you've said. Absolutely everything. In terms of what we need to do is we need to be thinking about our portfolio of energy assets as a country. I always remind everyone that Hydro-Québec was trying to get its power to the state of Massachusetts, and was dealing with issues in the states in between in terms of transmitting that power, but I heard nobody else speak about it. That was a pipeline issue of a different form, getting hydroelectric power to the United States. I think we need to think about our portfolio of energy assets as a country, it can be a unifying force. I think the common element is the reduction of carbon and producing it more responsibly. And I think the government really needs to think about public policies that will drive private sector capital into making sure that Canada can produce our nonrenewables. More responsibly than anyone on Earth, they should be buying our technology in other oil-producing nations of the world because we've got the best technology to reduce the carbon footprint in nonrenewables, while thinking about our overall energy assets. Nobody talks about uranium. Uranium is going to play an important role as well. We're one of the world's largest uranium producers. So the dialogue has to move from issue to issue to issue to one of how do we pull together as a country and make sure that Canada in the 21st century and beyond can fuel the world. When it comes to the energy assets we have, when it comes to the agriculture we have, and when it comes to building that service and innovative economy that we're capable of doing, and we need to get that discussion going. It's about growth. It's about growth of our family business. And the businesses that are emerging around the world, and we want to capture our fair share because we've got the intellectual capital to do it. We just see the policies and financial capital to drive forward.

This will be the last question. I'm going to put it to each of you, and I'm going to ask for a specific example. The viewer is asking for the best strategy. To promote more effective representation of women, minorities in our corporate, political and other public and private institutions. So I know that's a big question. And so I just want to distill it down, maybe just to your own organization or what you see, what's an example of something really concrete intangible, you've been able to implement that it has been effective that at least at the very lease breaks down some of the barriers. And maybe Rola, I'll start with you.

It's such an important question, especially now more than ever the last 10 months have created so much. And I'll start by saying that we, as leaders, need to be comfortable of being uncomfortable. We need to be more visible, more empathetic and more vulnerable telling stories. Our own struggles because those are the power of our people tomorrow. So I will give you a couple of examples. Have -- I started the mental health conversation in the workplace, especially now more than ever mental health is held and so many people are actually being impacted during the pandemic, that's one. Two, is starting the conversation of being uncomfortable of actually changing the culture around how we think and be actually courageous about putting changes out in the organization, like Victor and I, when we were asked to go and sit on the Black North, where we said that the black community and black people in each organization need to have a voice and an equal opportunity to do everything in the indigenous community, the immigrant community all of that. Those conversations are so difficult because it doesn't matter which way you tackle the conversation. Someone in the organization will have an issue, how come it's not about me. We need to understand the challenge. We need to be courageous to actually see the change and be the change and go out there and execute on the change.

Richard, I was wondering -- I don't know if you have a specific example, but I'm interested to learn more about the voting tactics that a pension fund takes when a company doesn't meet the standards you're looking for, particularly on ESG.

Absolutely, Amber. And I think we can tie it to the audience question. And what I would say is develop a really clear basis to support your position, articulate your expectation and then reinforce it in your actions. And we've had a diversity voting policy now for several years. We articulated that policy when it became very clear from the academic research we were reading and the research we did ourselves, that more diverse boards deliver companies with superior risk-adjusted returns. Our mandate, therefore, requires us to advocate for greater boardroom diversity. And we presented that position. We set our expectation very clearly of companies and that is that we expect you to build the best Board for our business and the best Board will demonstrate diversity in all of its forms, but we do think that over time, we will have minimum representation of women in the boardroom of over 30%. And then we reinforced that in our voting actions. And we said very clearly that if a nominating committee of your Board is not able to provide us the boardroom that we need to steward our company, we will reflect that in how we vote for the reappointment of these directors. And Victor alluded to it earlier on, we have seen Canada go from, I'd say, the sorry position of having many companies with no women in its boardroom. So the situation today where all of the composite companies have women in the Board, but I think all of those on the call would probably concede as well. We have much further to go, and we will continue to ask executive directors in enhancing diversity even further.

And Victor, I'll give the last word to you before I turn it to Anita.

I think Rola and Richard articulated it very well. So I would agree with what they outlined. I'd say there's a couple of things that I'd go back to as well. One is, it's much easier to do this when you're growing your economy because it creates more opportunities, and it creates a human mindset of there's more to share. That's just natural. Things are shrinking or things are flatlining. Everyone tends to put their guard up and change doesn't occur. So I think that's something that I would add. And then something that's very noncorporate, very nonstrategic, but I can speak to it personally. I'm the son of an immigrate, a refuge in fact. My mother cleaned houses, my dad worked in a warehouse most of his life. And I remember the summer when I was 6 years old, and my mother is cleaning house of one of her clients, who's the Chairman of a hospital, and he took interest in me and took me around, showed me the inside of a hospital, show me how offices work. And it was those small gestures where someone says, "Hey, you, let me show you how the rest of the world that you don't know looks like." And maybe you'll take an interest in it, and here's where I am today. And the kindness of strangers sometimes goes a long way, and we shouldn't discount that.

And especially in these times, Victor, Rola and Richard, thank you so much for being so open and candid in this conversation. I really appreciate it. I hope the viewers appreciate it. And Anita, I'll turn it back to you.

Thanks, Amber. Victor, Rola, Richard, thank you for taking the time to join us today. Victor, you certainly made a strong case for Canada's energy sector and striving to be a world leader in responsible and sustainable energy. And it's clear from all of your comments that the risk profile of any company today now includes ESG and any companies would ignore this at their apparel. Amber, as always, it's wonderful to have your guidance of today's conversation. Guests will hope that you join us for some of our upcoming events. Tomorrow, Thursday, January 28, we'll host a panel of Chief of Police for Ottawa, Waterloo and Kingston to discuss policing in 2021 and the challenges and changes facing Canadian communities. And then on Wednesday, February 3, we'll be joined by President of Shoppers Drug Mart, Jeff Leger for a conversation on how pharmacies have stayed focused on patient care and digital services and how Canadian pharmacists can help support the vaccine rollout. Thank you again to our sponsors, PWC, Lakes and Canadian Bankers Association. We are very grateful for your support. Thank you to our AV supplier Bent Valkenburg communications and livemeetings.ca for making it possible for us to come together virtually today. Guests, thanks for joining us today. Stay healthy and stay safe.

Thank you.

Thank you.