CPP Investments, the investment manager of the Canada Pension Plan, one of the largest pension funds in the world, with over C$550 billion in AUM, announced a series of new climate-related goals, including a target to reach net zero in its portfolio and operations across all scopes by 2050.
In a position paper outlining the strategy and actions the investment manager will take to achieve its new commitments, CPP Investments points out that the initiative of stewarding the portfolio to net zero is in the best interests of the pension plan’s contributors and beneficiaries, as portfolio performance will be influenced by the ability to adapt to the climate transition alongside the global economy, and navigate the emerging opportunities and risks.
John Graham, CPP Investments President & Chief Executive Officer, said:
“The impacts of climate change on the investment landscape are undeniable and have fundamentally transformed the nature of business risks and opportunities. As a capital provider and partner, and with our experience, expertise and financial resources, we recognize the valuable contribution we can make to this challenge. Committing our portfolio and operations to net zero by 2050 will help us manage the risks, capture the opportunities, and deliver on our public purpose – to help generations of Canadians build financial security in retirement.”
The position paper includes a series of commitments and actions planned by CPP Investments to reach net zero, including pursuing an active investment and engagement approach, evaluating portfolio companies’ climate change strategies, supporting carbon neutrality efforts, communicating expectations to company boards and exercising its voting rights. Rather than reaching its goals through blanket divestments for high-emitting sectors, CPP Investments aims to use its influence to encourage companies to develop viable transition strategies, and the company has recently introduced an investment approach to support companies that can create value by lowering emissions over time and profitable transition over the mid- to long-term.
Other commitments announced by CPP Investments as part of the initiative include achieving carbon neutrality in its internal operations by 2023, and increasing investments in green and transition assets at least $130 billion by 2030 from $67 billion today.
Deborah Orida, Global Head of Real Assets & Chief Sustainability Officer at CPP Investments, said:
“Our commitment to achieving net zero by 2050 is aligned with how CPP Investments has been incorporating ESG considerations – in particular climate change – into our investment decisions for more than a decade. We believe the performance of our portfolio and the generation of long-term investment returns relies upon our ability to adapt to a global economy that is moving toward net zero.”
Click here to access the CPP Investments position paper.