The Caisse de dépôt et placement du Québec will now be factoring climate change into every investment decision it makes, setting out targets and actions to reduce its carbon footprint and seize profitable investment opportunities.
The components of the strategy are three-fold, according to the pension fund. First, it will consider the fight against climate change as a fundamental factor to investment decision-making akin to risk. Second, it will increase its low-carbon investments by 50 per cent, equating to more than $8 billion in fresh investments by 2020. Third, between 2017 and 2025, the Caisse has committed to reducing the carbon footprint of its entire portfolio by 25 per cent.
“Our strategy is based on a fundamental commitment,” said Michael Sabia, president and chief executive officer of the Caisse, in a press release. “From now on, climate change will factor in each and every investment decision we make across the breadth of our portfolio. 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.”
In acting on those commitments, the Caisse expects it will find opportunities to assist in the development of industries with low carbon footprints. As well, it plans to reduce its exposure to those assets with the highest carbon intensity, such as coal-related activities.
“In the wake of the Paris agreement and changing consumer choices and technology, we are already seeing markets undergoing rapid change,” said Sabia. “This new reality has prompted us to review the risk-return profile of several industries and companies. It will also create new attractive investment opportunities for our clients.”
Starting this year, the Caisse also plans to release data on the greenhouse gas emissions in its portfolio as part of its annual report. Methodology in measuring the carbon impact of its portfolio will align with international best practices, the release noted.