Canadian Pension Giant Aims to Close Net-Zero Reality Gap

The Canada Pension Plan Investment Board has published a framework it says is intended to help corporate boards support their net zero commitments with reliable data and disclosures.

The C$523 billion ($389.4 billion) pension giant said many companies are struggling to back up their net-zero commitments. However, it said The Decarbonization Imperative shows companies and investors “how to close the gap between the willingness to pursue decarbonization and the clear, measurable action plans that will achieve their commitments.”

The report uses an abatement capacity assessment framework, which the pension fund said is a standardized template to identify, report, and abate all sources of greenhouse gas emissions within a company’s operations and supply chains.

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“Boards and executives have a duty to their companies to conduct emissions-reduction assessments and develop transition plans,” Richard Manley, CPPIB’s head of sustainable investing, said in a statement. “We are constantly seeking to identify and manage dynamic and emerging material business risks and opportunities and will allocate our capital to companies that can demonstrate an ability to credibly reduce emissions.”

The report also details what the pension fund deems a successful pilot of the framework with portfolio company Trafford Centre, one of the U.K.’s largest shopping malls. It said the pilot demonstrates that the benefits for companies of assessing and implementing transition plans “can be real and substantial.” It said the data revealed significant opportunities to cost-effectively reduce most of the shopping center’s emissions, with “a big chunk coming at a surprisingly low cost.” It also said the pilot “charted possible pathways to reducing the remaining emissions and achieving net-zero.” The pension fund added that is currently conducting several other pilots among a range of sectors.

As far as CPPIB’s own net-zero goals, it said it expects to achieve carbon neutrality for internal operations by the end of fiscal year 2023. It said it is conducting an abatement capacity assessment on its operations and will “monitor the breadth, quality and reliability of emissions data as this space continues to rapidly evolve.” [Source]

In addition to the framework, the report also provides other strategies for meeting net-zero goals, such as active ownership, developing “nature-based” technology solutions, using green bonds, and “enabling emissions reduction and business transformation in high-emitting sectors.”