Profitable ambitions for our depositors
To achieve the best performance for our depositors, we must align our capital with strong business models that create value now and will do so in the future, while taking all stakeholders into account.
Our approach has not only been profitable, it also allows us to maintain an informed and responsible view of the risks our assets will face in the years to come, and what it will take to make them more resilient, particularly in terms of climate risks.
Strong ambitions, targets achieved
Let’s take a step back. In 2017, CDPQ launched its first climate strategy, which put the organization’s leadership at the forefront of sustainable investing worldwide. Four years later, we raised and expanded our ambitions, based on clear and measurable objectives.
Today, having achieved our targets faster than anticipated, I would like to congratulate our teams for the colossal work that has been accomplished.
We have reduced the carbon intensity of our portfolio by 69% and more than tripled our low-carbon assets, which now amount to $58 billion, compared to 2017, as well as closely supported portfolio companies as they transitioned to more sustainable business models and completed our exit from oil production. In doing so, we have taken decisive action to decarbonize our portfolio, which today has close to 80% of assets that are low-carbon or low-intensity.
These are major initiatives that were well executed. And above all, we should never lose sight of the fact that this strategy has enabled us to generate excellent performance for our depositors.
Our figures bear that out: over five years, the annualized return of our approach to the energy transition has reached nearly 12%, compared to the MSCI ACWI Energy index’s position of roughly 8%. Our return was stimulated by renewable assets, which generated performance that was twice as strong as that of the oil segment of the MSCI ACWI for the period.
In short, it is possible to perform well while benefiting the planet and future generations.
Achievements beyond climate
In addition to what has been achieved to address climate change, we have made progress on other issues, such as social aspects.
Our international taxation commitment, which is aligned with the recommendations of the Organisation for Economic Co-operation and Development (OECD), remains an important focus of our approach so that businesses adopt the most responsible behaviour in their own communities. We were one of the first investors in the world to make such a commitment, convinced that fair taxation promotes stronger economies.
In addition, we have also made advancements on representation. For example, 47% of our employees are women and 27% of our employees in Québec and Canada identify as members of visible or ethnic minorities or as Indigenous people. Beyond the statistics, what does this mean? It means that we can benefit from broader perspectives, a more varied range of experiences, and therefore richer reflections and deeper debates, to better fulfil our role and cover all the angles.
A more difficult environment going forward
It goes without saying that more difficult years lay ahead. Global geopolitical tensions could create upheavals, and even lead to lost ground, especially in the energy sector. Does that make us want to change course? No. Headwinds only test our convictions.
As such, we will need to continue finding the balance between ambition and pragmatism in our approach to take into account the current environment that companies are navigating.
Maintaining the long-term view
In rapidly shifting times that will force us to question some things, but above all to reaffirm our convictions, we are fortunate to count on teams of experts who inform our decisions and play an important role in our portfolio companies. This work is regularly celebrated. For a second straight year, CDPQ ranked at the top of the list of pension funds included in Global SWF’s GSR Scoreboard, an internationally recognized benchmark that assesses the governance practices of 200 sovereign wealth and pension funds worldwide.
We remain vigilant about the challenges ahead. But we always keep a long-term view in order to have assets that are well positioned for the future. This is the best way to fulfil our fiduciary duty to our depositors, both current and from the next generation, and to the pensions of more than six million Quebecers.
Charles Emond
President and Chief Executive Officer