Article Climate change

Investing in the energy transition

Perspectives Montréal,
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Opinion piece by Kim Thomassin, Executive Vice-President and Head of Investments in Québec and Stewardship Investing, published on August 16, 2020 on lapresse.ca and in La Presse+.

We are in the midst of a health and economic crisis without precedent in modern history. To overcome this challenge, governments, investors and companies must continue to work together. But we can’t let this crisis distract us from the global challenge that is having serious consequences year after year: climate change. The extreme temperatures we are seeing are triggering dramatic changes, for communities, economies and biodiversity around the world.

At CDPQ, we took a clear position a little over two years ago. Climate change is a critical issue for the planet and our communities. It also poses a growing risk to our companies and represents an opportunity to invest in profitable assets that are promising for the future.

We publicly set targets for CDPQ. We established a clear action plan for our teams. We even added carbon reduction criteria to our compensation. Very few investors have taken that step.

These measures have quickly delivered results. We reduced our carbon emissions by 20% per dollar we invest. We increased our total low-carbon assets to $34 billion. We are one of the largest institutional investors in renewable energy, with companies operating solar and wind farms in Québec, the United States, Mexico, Spain, France, the United Kingdom and India. At the same time, we reduced the value of our exposure to the oil-producing sector by 30%.

Continuing down this path

We will keep looking for assets that make tangible contributions to the energy transition. Whether in transportation, real estate or energy production. We will work with our portfolio companies to improve their carbon footprint; this improvement will be a major condition to our long-term commitment to these companies. We will continue reducing our exposure to oil production in the near future.

Our ultimate goal? To have a carbon-neutral portfolio by 2050. We believe this is what we must do for our depositors, our companies and our planet. We want to use the money entrusted to us as constructive capital.

We will not act alone to address this worldwide challenge. CDPQ is actively involved in several climate change initiatives. For example, through the Investor Leadership Network, we and our Canadian and international peers support factoring climate change into investing. In addition, with the UN and 26 international partners in the Net-Zero Alliance, we work to recruit even more investors, thereby broadening our influence on companies and further advancing best practices to address the climate crisis.

Do we still have work to do? Absolutely. We must continue to invest and generate the returns our depositors need, while working to energize the Québec economy at a critical time for our companies. And climate change will continue to be central to our strategy, here and around the world.

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