CPP Investments' sustainability report reaffirms commitment to climate goals

Canada Pension Plan Investment Board, Toronto, reaffirmed its commitment to achieving net-zero greenhouse gas emissions in its portfolio by 2050 and reaching carbon neutrality in its internal operations by the end of fiscal year 2023 on March 31, the board said in its 2022 report on sustainable investing.

CPP Investments first established these climate targets in February of this year.

CPP Investments, which manages the assets of the C$523 billion ($394.3 billion) Canada Pension Plan, said in a news release Wednesday that as factors such as climate change are "increasingly and more directly impacting the strategic, operational and financial profile of companies around the world," the investment and asset management teams at CPP Investments "integrate material sustainability-related factors both before making investments and during the period we hold the asset, as well as when our portfolio companies prepare for listing."

"For public companies in our portfolio, we articulate clearly how integration of sustainability-related factors should inform strategy and enhance returns or reduce risks in the business," said Richard Manley, managing director-head of sustainable investing, in the news release.

With respect to progress on achieving its climate goals, CPP Investments said in the release that it is conducting an "abatement capacity assessment on our own operations to help inform our approach to reducing absolute (greenhouse gas) emissions over time."

CPP Investments added that it has "begun the process to procure high-quality, additional, verifiable and permanent carbon credits, as needed, to offset our operational emissions and achieve carbon neutrality."

In the sustainability report, CPP Investments noted that it expects to increase the C$66 billion investment in green and transition assets it had at the end of fiscal 2022 to at least $130 billion by end of fiscal 2030.

CPP Investments also said in the release that it will continue to invest in companies "across all industries that are driving and demonstrating carbon-reduction innovations and practices that we believe will lead to enhanced risk-adjusted returns."

According to the sustainability report, for the year ended June 30, CPP Investments actively consulted with boards of directors and management of public companies at 3,817 meetings across 52 countries. At these meetings, CPP Investments voted on 41,288 agenda items and voted against management in about 11.6% of cases.

Specifically on climate change issues, over the one-year period, CPP Investments voted against the reappointment of the chairman of the risk committee (or an appropriate equivalent committee) at 35 companies, which resulted in 65 votes against directors. In these cases, CPP Investments determined the board "failed to demonstrate adequate consideration of physical and transition-related impacts from climate change."