Canadian Pension Doubles Down on Green Investing With $400 Billion Pledge

Charles Emond, chief executive officer of La Caisse (formerly Caisse de Depot et Placement du Quebec). Photographer: Graham Hughes/Bloomberg Photo by Graham Hughes /Bloomberg

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(Bloomberg) — La Caisse, one of Canada’s largest institutional investors, is doubling down on its sustainable investing targets after meeting its goals for this year earlier than expected. 

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The pension fund, whose full name is Caisse de Depot et Placement du Quebec, pledged on Thursday to invest $400 billion by the end of the decade in companies committed to decarbonizing their operations and in climate solutions such as low-carbon technologies. 

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“We are reaffirming our sustainable investing convictions because they are at the heart of our fiduciary responsibility,” Charles Emond, president and chief executive officer of La Caisse, said in a statement. La Caisse is encouraging companies it invests in to adopt “clear and credible” decarbonization plans “with a view to long-term value creation and sound risk management for our depositors,” he said. 

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The decision comes amid a fraught political backdrop for sustainable investing. Canada Pension Plan Investment Board has dropped its pledge to achieve net zero emissions by 2050 and Royal Bank of Canada scrapped its sustainable finance commitments in April, just months after leaving the Net-Zero Banking Alliance. As recently as last week, BlackRock Inc., the world’s largest asset manager, said it will shut several US-based sustainable funds.

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Political support for fossil fuels in Canada means pension funds “will be challenged in their efforts to make smart investment decisions” that account for risks from oil and gas, Shift, a sustainable investment advocacy group, wrote in its quarterly pension report. 

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Bertrand Millot, the head of sustainability at La Caisse, said in an interview that its strategy is rooted in financial rather than altruistic motivations. 

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“We aren’t doing this to save the planet. We are doing this to make money. That is very, very important,” Millot said.

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La Caisse said in its statement that it will invest in companies that offer alternatives to fossil fuels, aim to reduce carbon in nature and seek to strengthen the protection of communities from climate change.

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There is reason to be bullish about the long-term value of the energy transition, according to Vinay Shandal, global head of sustainable investing at Boston Consulting Group. That’s because it isn’t only important from a climate perspective; it’s also a driver of energy security, industrial competitiveness and access to critical minerals, he said.

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La Caisse isn’t alone in Canada in sticking with sustainable investments: Ontario Teachers’ Pension Plan Board said it’s moving ahead with its long-term objective of achieving net zero emissions from its investment activities by 2050. Ontario Municipal Employees’ Retirement System said it’s committed to annual measuring and reporting on its path to net zero by 2050.