Canadian pension giant plans carbon-neutral internal operations by 2023

The C$523 billion ($392.2 billion) Canada Pension Plan Investment Board plans to achieve carbon neutrality for its internal operations by the end of 2023, according to its report. 2022 Sustainable Investing Report. In February, the pension fund pledged that its portfolio and operations will become net zero greenhouse gas emissions by 2050.

“Over the past year, a debate has emerged over the usefulness and integrity of the term ‘environmental, social, governance,'” CPPIB President and CEO John Graham said in the report. “For us, the ESG label is not what matters. What is really relevant is to assess, understand and address the broader factors that affect business growth, whether related to society, environment or stewardship.

The pension fund giant said it was conducting a curtailment capacity assessment of its operations to inform its approach in creating a standardized framework and model to measure organisations’ ability to curtail. or “reduce” their GHG emissions. It said it has already begun the process of obtaining carbon credits – which it describes as “high quality” and “verifiable” – to offset its operational emissions and help it achieve carbon neutrality.

The pension fund also said it invests in companies that demonstrate innovations and carbon-reducing practices that it believes will lead to better risk-adjusted returns. He said investment opportunities include, but are not limited to, energy systems, built space, industry, mobility, carbon markets and investments based on changing consumer preferences. .

“For the public companies in our portfolio, we make it clear how integrating sustainability factors should inform strategy and improve returns or reduce risk in the business,” said Richard Manley, Managing Director, Head of sustainable investing for CPPIB. “As a global investor, we proactively identify dynamic and emerging business risks and opportunities and seek solutions to reduce or capture their potential within portfolio companies and align incentives.”

In its report, the pension fund said it would double its investments in green and transition assets to at least C$130 billion by 2030, from C$66 billion as of March 31. He also said he had recently developed a methodology to measure his existing green and transitional assets. bridging assets.

“While we have referenced a number of international standards for guidance, our methodology does not strictly adhere to any of them as most are still evolving,” the report says. “In the absence of a widely accepted definition of green or transitional assets, we arrived at our definition by considering different frameworks and taxonomies, including the EU taxonomy.”

CPPIB said it considers an asset to be green when at least 95% of its revenue comes from green activities as defined by the International Capital Market Association. He also said he was adopting the higher end of the 75% to 95% range that the EU taxonomy uses to determine whether assets are “strongly aligned with the climate”.

Additionally, the pension fund considers an asset to be in transition if the company is in a high-emissions sector but is committed to achieving net zero “with a credible transition goal and plan, and provides significant contributions to global emission reductions”. Assets are eligible if they obtain certification from a credible third party, such as the Science Based Targets initiative for goal setting. And companies with substantial “green revenues” that fall below the 95% green asset threshold can be considered bridging assets if they provide a credible plan to increase their share of green revenues.

Related stories:

CPPIB aims for net zero by 2050

There’s a better way to manage placement teams, says CPPIB

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Tags: Canada Pension Plan Investment Board, carbon neutral, CPPIB, environmental, ESG, GHG, Governance, green investments, Greenhouse gas emissions, John Graham, Richard Manley, social, sustainable investing

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