Canada's second largest pension fund moves away from oil

09/29/2021 | 12:16pm

Canada's second-largest pension fund, Caisse de Dépôt et Placement du Quebec, announced on Tuesday that it would divest all of its oil production assets, valued at CAD3.9 billion ($3.08 billion), by the end of 2022 and reduce its carbon intensity by 60% by 2030. It added that this would make it the first institutional investor in Canada to exit oil production assets.

As part of a plan to achieve net zero emissions by 2050, the Montreal-based fund plans to hold C$54 billion in green assets by 2025 and devote C$10 billion to decarbonizing carbon-emitting sectors.

Pension funds around the world are under pressure to act on climate change, and several have announced divestments from fossil fuel companies this year. The new emissions targets for the C$390 billion fund follow the Ontario Teachers' Pension Plan Board's September 16 announcement of interim emissions reduction plans.

Oil production assets currently account for only 1% of the fund's portfolio, but the fund has said it wants to avoid contributing to the growth in global oil supply. It plans to boost the supply of renewable energy, sustainable transportation and real estate and invest in green hydrogen, batteries, transportation electrification and carbon capture.

The fund plans to move towards net zero emissions through investments in less carbon-intensive assets, carbon budgets for each investment team and bonuses linked to climate targets. "We believe this is in the best interests of our depositors, our portfolio companies and the communities in which we invest," said Charles Emond, president and CEO of the fund. The fund said it has exceeded its climate targets, reducing the carbon intensity of the portfolio by 38% since 2017.

The gas issue

"It is astonishing that it took until 2021 for a Canadian pension fund to finally recognize that protecting our retirement savings from a worsening climate crisis inevitably means moving away from exposure to the high-risk fossil fuel market," the pension activist group Shift said in a statement.

It added that if oil is too risky for the climate and Quebecers' pensions, "CDPQ's massive investments in fossil gas infrastructure mean it has yet to take this reality into account".

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