CDPQ at Climate Week 2024 to mobilize the financial ecosystem in the era of climate transition

At a time when sustainability continues to face short-term considerations, taking concrete actions to mitigate the impacts of climate change and find sustainable adaptation and transition solutions is more necessary than ever. The financial sector—with institutional investors at the forefront—has a major role to play. In fact, the financing needs are immense: as Marc-André Blanchard, Executive Vice-President and Head of CDPQ Global and Global Head of Sustainability, often reminds, “Some USD 6.5 trillion will need to be spent on the energy transition alone over the next 10 to 15 years.” Private capital mobilization and deployment is therefore a necessity to meet this challenge, as public actors are not in a position to respond to the transition challenges alone.

Promoting the development of blended finance

CDPQ is committed, alongside its peers and partners, to spurring and promoting innovative partnerships between diverse sources of capital to adopt solutions for sustainable growth. Blended finance is a strong complementary axis built on collaboration between public authorities, institutional investors and venture capital. Developing such an ecosystem of partners to execute climate transition projects would facilitate the creation of large-scale investable projects, which are currently lacking, to attract institutional investors to become more involved, particularly in emerging markets where financing needs are considerable. According to figures from the World Economic Forum, emerging economies will need $2 trillion annually by 2030 to meet carbon neutrality targets.

During this edition of Climate Week, the Sustainable Markets Initiative (SMI) and the Réseau de leadership d’investisseurs (RLI), of which CDPQ is an active member, jointly published a report¹ with the ambition to accelerate the deployment of blended finance globally and unlock its full potential. Illustrated with examples of successful projects—including the REM—it highlights the measures needed to reduce risks and barriers to the development of blended finance solutions and foster innovative partnerships between diverse sources of capital. While interest in blended finance is growing, the road is still long: the total volume of transactions executed is only USD 213 billion. This figure is still far from what is needed to achieve the objectives of the Paris Agreement in terms of sustainability and carbon neutrality.

Promoting decarbonization policies

Among other key initiatives, CDPQ contributed to the publication of a report by the Glasgow Financial Alliance for Net-Zero (GFANZ) that highlights the need to step up financing for transitioning and decarbonizing the real economy. CDPQ’s investment in AES Indiana was highlighted as one of the best practice cases in this report: through this investment, the company gradually reduced its dependence on coal-fired power generation from 80% in 2014 to 35% in 2023 by relying on renewable energy sources. During the various conferences in which it took part, CDPQ recalled that one of the main challenges lies in the absence of decarbonization policies in certain sectors, such as cement, steel, copper or agricultural raw materials. It called for the creation of industry-specific working groups and the introduction of incentive frameworks similar to those established for renewable energy around 20 years ago, with clearer targets, industry by industry, as well as safeguards to reduce investment risks and standard and fair rules for a level playing field.

Celebrating ambitious initiatives

Beyond the issues of mobilization and influence, this Climate Week was an opportunity to highlight organizations that work on a daily basis for the climate and decarbonization. One such organization, the Net-Zero Asset Owner Alliance (NZAOA), celebrated its fifth anniversary. “We were at the genesis of this project and we really co-built this alliance in 2019, which has since seen many international investors join,” explained Bertrand Millot, Head of Sustainability, CDPQ. “We are therefore particularly proud of the success of this alliance, which continues to play a major role in the fight against climate change.”

Alongside the Resilient Cities Network, CDPQ also inaugurated the working group on financing urban resilience. All its members are committed to building a deep understanding and partnerships to enable cities to increase their investments in resilience by developing case studies, documenting best practices and creating opportunities for capacity building and sharing for cities. So many initiatives and partnerships will need an unwavering foundation of trust between the various stakeholders to achieve their objectives.

¹ This report is available in English only.