Friday, February 11, 2022

 

CPPIB commits to net-zero portfolio by 2050 but says no blanket divestment

TORONTO — The fund manager for the Canada Pension Plan has committed to make its portfolio net zero by 2050 but said it would not be making any blanket divestments.
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A flare stack lights the sky from an oil refinery in Edmonton on December 28, 2018. Canada Pension Plan Investment Board has committed to make its portfolio net zero by 2050 as it reports its net assets grew 1.6 per cent in its third quarter. THE CANADIAN PRESS/Jason Franson

TORONTO — The fund manager for the Canada Pension Plan has committed to make its portfolio net zero by 2050 but said it would not be making any blanket divestments. 

The Canada Pension Plan Investment Board, operating as CPP Investments, said Thursday it plans to achieve the goal while continuing to invest in the whole economy, and will push for an economic transition to a lower carbon economy as an active investor.

"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,” said chief executive John Graham in a statement. 

CPPIB said it has also committed to increasing its investments in green and transition assets from $67 billion to at least $130 billion by 2030, and aims to be carbon neutral in its operations by the end of fiscal 2023.

Advocacy group Shift Action for Pension Wealth & Planet Health said in a release that while the net-zero commitment comes as a relief, Canada's largest pension fund doesn't have a credible plan for achieving it. 

It said that many companies, in particular those in the fossil fuel industry, do not have a credible path to zero emissions and that holding those assets in the long-term is not in the best interest of CPP's beneficiaries.

CPPIB said in December that investing is critical to help decarbonize high emitting sectors like agriculture, chemicals, cement, conventional power, oil and gas, steel and heavy transportation.

It said at the time that decarbonizing those sectors was needed for emission reductions as well as to sustain economic growth, stability and a responsible energy transition. 

The strategy contrasts somewhat with the more aggressive stance taken by Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund manager, which committed last September to phase out investments in oil production by the end of 2022 as part of its updated climate strategy. 

In October, Dutch pension giant ABP said it would sell off all of its fossil fuel assets, worth some 15 billion euros, because it didn’t see enough opportunity to push those companies towards sustainable practices fast enough. The pension fund said it would instead work to influence companies that use fossil fuels such as utilities, the auto industry and aviation.

CPPIB also reported Thursday that it ended the Dec. 31 quarter with net assets of $550.4 billion, up from $541.5 billion at the end of the last quarter.

It says the $8.9-billion increase in net assets includes $13 billion in net income and $4.1 billion in net Canada Pension Plan outflows.

This report by The Canadian Press was first published Feb. 10, 2022.

Ian Bickis, The Canadian Press

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