CDPQ Raises Low Carbon Asset Target to C$32 Billion in 2020

Canada’s C$309.5 billion ($230.2 billion) pension fund Caisse de dépôt et placement du Québec (CDPQ) added C$10 billion in low-carbon assets in 2018, and raised its target for 2020 to C$32 billion, according to its second Stewardship Investing Report, which provides an update on its environmental, social, and governance (ESG) initiatives.

“In 2018, we acted on several fronts to meet our objectives, because we understand that our financial performance will only be as sustainable as the world we invest in,” Michael Sabia, CEO of CDPQ, said in a release.  “We reduced the carbon intensity of our portfolio by 10%. Our progress is solid, underscoring our goal to make a constructive and concrete contribution to the fight against climate change.”

According to the report, CDPQ performed more than 250 analyses of companies and assets representing all of its new investments in 2018, as well as investments being monitored to determine whether there have been any changes in the quality of their ESG practices.

“These detailed analyses provide an overview of issues specific to each company’s industry and the measures implemented to manage them,” said the report.

It said the ESG analyses are submitted to portfolio managers and investment committees who consider them in their decisions, and in their negotiations with the company for the investment.

“Many give rise to more extensive follow-ups and discussions with companies to encourage them to improve their practices,” said the report. “Our teams also perform follow-ups to ensure that our portfolio companies are managing ESG criteria properly, thereby allowing la Caisse to play its role as a long-term investor in an effective and responsible manner.”

The fund said it also regularly discusses its ESG expectations, in particular governance matters, at annual meetings of the companies in which it invests. The proposals voted on in 2018 related to various topics, especially governance and compensation, such as the election of directors, executive compensation and disclosure of political contributions, and government relations activities.

The report said that in recent years, CDPQ has increased its engagement as a share­holder, and in 2018 alone, it addressed 771 ESG-related topics with companies in its portfolio, which is a 62% increase from the previous year.

The fund said tackling climate change has become its priority among ESG issues as “the impacts of climate change are becoming more obvious than ever around the world, with negative human, environmental, and economic consequences.”

In addition to climate change, CDPQ has targeted four focal areas: governance, expanding opportunities for women in business, promoting sound practices and transparency in international tax, and engaging on social issues.

“We also encourage the election of board members with different skills and experience, as well as the inclusion of women, since they are still underrepresented in the boardroom,” said the report. “In our view, having a variety of perspectives provides for better decisions.”

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