Building and maintaining our leadership in sustainable investing
The world is transforming. We’ve been observing it for several years now, from the adoption of artificial intelligence to geopolitical tensions and from economic upheavals to extreme weather events. Everything is changing at a breathtaking pace.
Is it possible to maintain a long-term view when the short term keeps us second-guessing? Absolutely. Especially for an investor like CDPQ, which is responsible for the retirement of over six million Quebecers.
Sustainable investing is and will continue to be debated on the international stage. All the while, investors are competing more than ever for transition assets, and they are strengthening their governance as well as diversity and inclusion practices. At CDPQ, we remain steadfast in our conviction that sustainability goes hand in hand with long-term returns. And I am proud to see how far we’ve come and everything our organization has achieved.
Fully playing our role
In 2017, when we announced our first climate targets, we were one of the first funds to adopt a pragmatic, ambitious approach that met an urgent global need. In 2021, we raised these targets. Two years later, we’re very close to reaching them, faster than expected owing to the proactive work of our teams on the ground.
These efforts also allowed us to announce new initiatives and to be one of the first institutional investors to completely exit oil production with the sale of our last stake in this sector. Because we believe it’s simply counterproductive to help increase the supply of this form of energy.
At the same time, we’re committed to supporting the transition, including in high-emitting sectors that are meeting the energy supply needs of communities around the world. We have a $10-billion envelope to invest in companies in these industries when they have a clear transition plan and specific targets to achieve. This is essential if we truly want to transition the economy.
At the same time, we continue to invest in low-carbon or low-intensity assets that are well positioned for the future. Taken together, they represent more than $330 billion—or close to 80%—of our total portfolio.
Beyond the environment, we have made progress in a number of areas, such as our strong commitment on international taxation, in line with the recommendations of the Organisation for Economic Co-operation and Development (OECD) and which, incidentally, earned us the first IJGlobal ESG Award for Governance in 2021, a major recognition in our industry. This commitment enables us to make better investment decisions, monitor companies whose tax practices fall short of our expectations, and continue to promote best practices at our portfolio companies. We want to ensure that they adopt the most responsible behaviour in their respective communities.
Evolving our approach
Sustainability criteria are crucial as a tool for measuring companies’ long-term performance and risks. We should take full advantage of them.
Now, once a target has been reached, there’s only one good option: to raise it even higher. Further evolve our approach. Determine what we can do differently, and even better. Where we can have an impact. Social issues, in particular, are one of our top priorities.
Constructive capital, which aims to combine performance and progress, is our investment philosophy. So it’s important to look at our portfolio from every angle. Do our portfolio companies have positive, neutral or even negative impacts? One of our roles is to work with them on identifying the best ways to integrate ESG factors. This involves taking the full measure of what we can do, and leveraging that to improve our total portfolio’s sustainability.
Committed teams
Our leadership in sustainable investing is recognized internationally. For example, we were ranked first in the world among pension funds in Global SWF’s 2023 GSR Scoreboard, which assesses the governance, sustainability and resilience practices of 200 pension funds worldwide.
This leadership on the world stage is due to the work of our people; their diverse talents and expertise propel us forward. I would like to thank them for their work—which is very demanding but well worth the effort.
More importantly, I want to emphasize that our convictions have indeed paid off in recent years, and I’m confident this will continue in the long term, for our depositors and future generations.
Charles Emond
President and Chief Executive Officer