The Caisse de dépôt et placement du Québec (CDPQ)—Canada’s biggest pension fund, with more than C$286.5 billion under management—is receiving some cross-border kudos this week for announcing a North America-leading strategy and targets to tackle climate change across its investment portfolio.
“The CDPQ strategy includes commitments to increase its already significant low-carbon investments by 50% by 2020, and to reduce the carbon intensity of its portfolio by 25% by 2025 across all asset classes, making CDPQ the first institutional investor in North America to set such a goal,” said Mindy Lubber, President and CEO of Ceres, a Boston-based sustainable investment network. “Tackling climate change presents the greatest economic challenges and opportunities of our time, and CDPQ has taken a critical step to show it understands that reality.”
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A CDPQ release casts the wide-ranging strategy as a first step that includes factoring climate change into every investment decision, boosting low-carbon investments by $8 billion over the next three years, and reviewing “the risk-return profile of our investments and reduc[ing] our exposure to the assets with the highest carbon intensity in our portfolio, such as activities related to coal.”
“In the wake of the Paris Agreement and changing consumer choices and technology, we are already seeing markets undergoing rapid change,” said Caisse President and CEO Michael Sabia. “In building this strategy, we have undertaken a thorough analysis of markets and institutional investors’ best practices. We have also been guided by our longstanding conviction that we need to think and act as builders, in everything we do.”
If the fund’s assets grow 60% by 2025, he calculated, climate change will be a factor in decisions on $170 billion in new assets.
Sabia added that CDPQ investment teams will be given fixed carbon budgets, “and their performance will be evaluated and remuneration linked to how well they stick to these budgets,” the Montreal Gazette reports. “Experts will be hired to help the Caisse teams analyze climate impacts of investments, including a senior executive who will monitor how the plan is working across the organization.”