Climate strategy: A concrete and pragmatic approach to achieving carbon neutrality
, Stewardship investing
Opinion piece by Kim Thomassin, Executive Vice-President and Head of Investments in Québec and Stewardship Investing, published on October2, 2021 on lapresse.ca (in french) and in LaPresse+.
This week, CDPQ announced its new climate strategy. Four years after announcing our first strategy, we have raised our ambition. And we have chosen to take a concrete and pragmatic approach to advance toward carbon neutrality.
I am proud of the work our teams have accomplished in recent years. Work that was rigorous and prompted us to innovate and evolve our investment culture so that the climate is considered across the organization. Unique data systems have been developed to accurately estimate the carbon footprint of our assets. Carbon management measures through the application of carbon budgets (similar to managing a financial budget) have been applied to all our portfolios. Our variable compensation program has been adapted to integrate a climate factor. Our commitment to partners and companies has been structured so we can have deeper and more specific involvement with them.
Today, climate change is a priority for everyone at CDPQ. Together, this represents a true change inculture.
Today, climate change is a priority for everyone at CDPQ. Together, this represents a true change in culture. A change that drove us to surpass the targets we hadset.
So we had to think about what we could do to go even further. To go even faster. The status quo was not an option. It took a few months ofwork.
It was clear that raising our existing targets was fundamental. In2030, we will have reduced the carbon emissions of our invested dollars by60%.
But we couldn’t stop there, given the urgency of the situation. That brought us to consider two vital and complementary pillars of the transition. One, our willingness to pursue committed action in2017 and continue investing in green assets that would meet our energy, transportation and real estate needs. And two, our willingness to decarbonize the heaviest-emitting sectors that provide the raw materials necessary to build the infrastructure oftomorrow.
For green assets, the path was well travelled. In2017, we had $18billion in green assets. In2020, that number had already reached $36billion. In2025, we are aiming for $54billion. We have one of the largest portfolios of green assets in the world, and we want to expand it even more. In renewable energy production around the globe. In sustainable mobility in the world’s largest cities. In buildings that are certified to meet the needs of local and international communities.
We are in a climate crisis right now, so no challenge can be ignored. Especially that of decarbonizing the heaviest-emitting sectors.
That said, we are in a climate crisis right now, so no challenge can be ignored. Especially that of decarbonizing the heaviest-emitting sectors. This means companies that manufacture cement, steel, copper, lithium, structural plastics—to name a few—that are used in building infrastructure. Take the wind turbine: we need to weigh the clean energy it produces as well as the raw materials that went into making it. That’s the challenge we took into consideration when developing our strategy. And that’s why our new ambition also includes the creation of a $10-billion transition envelope that will be used to invest in companies that are critical to our economy but that must address the colossal challenge of lowering their carbon emissions.
We will work with the best of class, with those who have set objectives and have clear plans and with companies that are recognized by international climate certification organizations. We will contribute our capital and maintain our commitment to them to make sure their excellence is not the exception, but instead becomes therule.
Each pillar of our strategy must be seen as an opportunity to change things, concretely andpragmatically.
Lastly, each pillar of our strategy must be seen as an opportunity to change things, concretely and pragmatically. Investing to develop stronger companies in stronger communities. That’s what we call constructive capital.
When I joined CDPQ, this was a brand new idea. Over the years, it has matured within our organization. With our new climate strategy, it takes on its fullmeaning.