Approach
Our approach to sustainable investing is not one size fits all.
We invest in hundreds of companies in over 50 countries. These companies range from technology in India to renewable energy in the United Kingdom to real estate in Canada.
The companies we invest in, which we call portfolio companies, can partner with us for access to expertise, capital and connections – a benefit of our active ownership*. We support companies as they assess and manage the sustainability factors, such as human rights or climate change, that impact them the most.
This philosophy helps us create and scale value that is sustainable over the long term.
*when a company owner (like CPP Investments) proactively partners with the company’s board and management team to pursue long-term value creation and preservation.
The uniqueness of our approach
Sustainability can impact long-term investment returns. So, we make sustainable investing a part of the entire investment life cycle – from initial diligence until our point of exit.
Frequently Asked Questions
Sustainable investing to us is simply smart, long-term investing. Our mandate is to maximize returns without undue risk of loss while taking into consideration the factors that affect the funding of the Canada Pension Plan. Companies that effectively anticipate, manage and integrate sustainability-related factors are more likely to deliver strong investment returns over the long term.
Sustainability-related factors are non-financial factors that are directly relevant to a company’s business performance and long-term success. These factors include effective board governance, environmental track record, exposure to climate change impacts, health and safety practices, human rights policies, and appropriate data and cyber security.
We are guided by the following Climate Change Principles to inform our decision-making:
- Principle 1: Invest for a whole economy transition required by climate change.
- Principle 2: Evolve our strategy as transition pathways emerge and global standards for decarbonization materialize.
- Principle 3: Exert influence to create value and mitigate risk.
- Principle 4: Support a responsible transition based on our investment beliefs and expertise, where accelerating the global energy transition requires a sophisticated, long-term approach rather than a blanket divestment.
- Principle 5: Report on our actions, their impacts and our portfolio emissions.
Active ownership remains a crucial component of the transition to a low-carbon future, which is why we seek to support emissions reduction in our portfolio companies, instead of just divesting high-emitting companies.
Part of our net-zero commitment is to lower emissions in the world by helping to transform high-emitting sectors through our decarbonization investment approach. Additionally, in our annual Report on Sustainable Investing, we’ve disclosed our carbon footprint for our public equities’ portfolio since 2018 and all our holdings since 2020 which shows a reduction in our total carbon emissions and carbon footprint for non-government holdings in 2022 (which will fluctuate over time). We also achieved our goal of carbon neutral operations by fiscal 2023.
We have a target of investing at least $130 billion in green and transition assets by 2030. We are committed to setting credible, viable, and attainable climate goals, but we know that the path to net zero is difficult to predict across industries and geographies. As a global investor with holdings in nearly every sector, we must consider the scale of that complexity in our climate plans. We will only set targets when we have the confidence that they are feasible, achievable and aligned with our investment mandate. In the meantime, we will continue to publicly report on our operational and portfolio emissions.
We are committed to using our power as long-term investors to drive down greenhouse gas (GHG) emissions in the world, which is critical to mitigating climate change. We believe that the most effective way to lower GHG emissions is by working directly with high-emitting companies in our portfolio to plan and implement decarbonization action plans. Divesting from high-emitting industries won’t stop production of emissions, but it does mean losing our ability to engage with companies. Instead, tools such as our decarbonization investment approach and proxy voting efforts will help us more directly influence and achieve lower emissions, not just in our portfolio, but in the atmosphere.
We not only adhere to governing sustainability standards, but we also actively promote their adoption. We believe that by doing so we can help global ambitions to manage sustainability, while preserving value. We support sustainability-related reporting aligned with the standards developed by the International Sustainability Standards Board and their reference frameworks, including the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures. We also expect private companies to consider emerging initiatives like the ESG Data Convergence Initiative.
Equity, Diversity & Inclusion
We’re committed to being a fair, inclusive workplace with diverse talent. We have EDGE certification – an audit of our organization’s progress on ED&I. We signed the BlackNorth Pledge and have been recognized as a Catalyst Honours champion.
