Exactly how the real economy’s transition pathways will evolve remains to be seen. This complex challenge requires us to be practical, adaptable and nimble as an investment manager. We are committed to doing our part in the best interests of helping to keep the CPP Fund secure and sustainable for generations to come.
FAQs
- In February 2022, we committed our portfolio to being net zero of greenhouse gas emissions across all scopes by 2050 and our internal operations to being carbon neutral by March 31, 2023. The actions we are taking to reach net zero by 2050 are outlined in detail in our 2022 Report on Sustainable Investing, and a progress report on these actions will be released in Spring 2023.
- In short, the key actions we take to address climate change and its impacts on our fund include:
- Investing in companies that are committed to a whole economy transition and that are advancing climate change solutions across every sector of the economy.
- Dedicating resources to understanding the risks and opportunities of climate change in relation to our assets to inform our decision-making.
- Engaging directly with our portfolio companies to advance the integration of climate risks and opportunities into their decision-making and business strategies.
- Net zero refers to reducing human-caused greenhouse gas emissions from the global economy to as close to zero as possible.Any remaining greenhouse gas emissions should then be addressed by removing an equivalent amount of emissions, using technology (e.g., carbon capture) or nature-based solutions (e.g., increasing forest cover).
- We anticipate that climate change and the energy evolution will create both opportunities and risks. Incorporating those opportunities and risks into our decision-making is critical in helping us keep the CPP Fund safe and secure. The performance of our portfolio will be influenced by how well it adapts alongside the global economy on the path to net zero.
- We believe stewarding the portfolio to net zero is in the best interests of contributors and beneficiaries of the Canada Pension Plan, and in line with our mandate of maximizing returns without undue risk of loss.
- The risks and opportunities brought about by climate change are leading factors influencing the long-term financial sustainability of the Fund.
- Navigating the risks and opportunities presented by the whole economy transition required by climate change will be a defining challenge of the 21st century.
- Our net-zero commitment will help secure the sustainability of the CPP Fund and help create retirement security for generations of Canadians to come.
- Our aim is to be a world-leading capital investor in the whole-economy transition to net zero by scaling climate solutions and progress across every sector. As part of this goal, we committed to the following four actions:
- We are walking our talk through our own commitment to achieve carbon neutrality in our operations by fiscal 2023.
- We are investing $130 billion by 2030 in Green and Transition assets to help scale climate solutions across various sectors of the economy.
- We are engaging directly with our portfolio companies, and using our voting rights, to help advance the transition to a net-zero world.
- We are advancing a unique decarbonization approach focused on select high-emitting companies to spur meaningful and necessary progress to net zero in the real economy, and in doing so extract the value presented by the transition.
- We group green and transition assets together because we see an inextricable relationship between advancing green solutions and supporting the transition of higher-emitting sectors.
- We also recognize that international frameworks and taxonomies for green and transitions assets are still evolving and that we may need to adapt and evolve our current definitions and methodologies based on a number of factors including regulatory developments, associated updates to international taxonomies and data availability.
- We anticipate oil and gas will continue to play an important supply as the world transitions to net zero. We continue to invest across the entire energy spectrum, from conventional energy such as oil and gas, to renewables like wind and solar power.
- We expect new innovations and technologies will support the decarbonization of the oil and gas sector over a decades-long transition.
- We invest and exert our influence in the whole economy transition as active investors, not through blanket divestment.
- Part of our net-zero commitment is to lower emissions in the real economy by helping transform high-emitting sectors.
- In 2021, we launched a new investment approach to identify, fund and support the decarbonization efforts of select high-emitting sectors.
- The urgent need for high-emitting sectors to participate in the whole economy transition presents a promising economic opportunity suited to long-term investors that can provide the partnership and strategic capital needed to help support low-carbon transitions.
- As an active and engaged owner, CPP Investments is constructive in our partnership with companies on their sustainability journeys.
- We believe that organizations that anticipate and manage sustainability-related risks and opportunities, and have board oversight of sustainability-related performance, are in the best position to drive enduring financial performance. This requires recognition that sustainability-related factors can directly impact a company’s profitability.
- As an owner, we monitor sustainability-related factors and actively engage with companies to promote improved management of sustainability-related factors, ultimately leading to enhanced long-term outcomes in the companies and assets in which we have a stake.
- We expect boards to ensure material sustainability-related issues are considered and integrated into the company’s strategy; and disclose the magnitude of these risks and opportunities, their potential impact on business outcomes and how the company plans to mitigate or capitalize on them over time.
- For more information on what we expect from our portfolio companies, please see our 2022 Report on Sustainable Investing.
- At this time, we have not set shorter-term targets because we believe our path to net zero will be non-linear. However, we have set a target to invest at least $130 billion in green and transition assets by 2030. Similarly, we expect to achieve carbon neutrality for our internal operations by end of fiscal 2023. We will be sharing an update on our progress to net zero in Spring 2023.
- We believe that by leveraging partnerships and collaborations, we can improve CPP Investments’ impact on matters that effect sustainability-related practices. Our collaborative sustainability-related efforts include but are not limited to: seeking to improve transparency and standards, conducting research; participating in regulatory consultations; promoting governance practices; and advocating for long-term thinking in the investment and corporate worlds. For a full list of our partnerships, please see our 2022 Report on Sustainable Investing.
- We are one of only two global pension fund managers represented on the Task Force on Climate-related Financial Disclosures (TCFD). Click here to view our reporting in accordance with the TCFD recommendations.
- We are represented in the SASB Investor Advisory Group of leading asset owners and asset managers in various markets who are committed to improving the quality and comparability of sustainability-related financial disclosures. Richard Manley, Managing Director, Head of Sustainable Investing, Global Leadership Team at CPP Investments is the Chair of the IIAG.1 CPP Investments co-leads the Investor Leadership Network’s Climate Change Advisory Committee, which is focused on speeding up the implementation of uniform and comparable climate-related disclosure under the Task Force on Climate-related Financial Disclosures (TCFD) Framework. The Investor Leadership Network (ILN) was created in 2018 during Canada’s G7 presidency to promote collaboration between large investors on sustainability and long-term growth.
- We are represented on the Transition Plan Taskforce, which is mandated by the U.K. government to develop a gold standard for transition plans.
1. SASB Standards Investor Advisory Group will transition to become the ISSB Investor Advisory Group (IIAG) in late 2022. Richard Manley, Managing Director, Head of Sustainable Investing, Global Leadership Team, will serve as Chair of the IIAG following this transition.