Canada Pension Plan Investment Board, Toronto, has committed to achieving net-zero greenhouse gas emissions by 2050.
CPPIB, which manages the assets of the C$550.4 billion ($437.2 billion) Canada Pension Plan, also said it seeks to reach carbon neutrality in its internal operations by end of fiscal 2023, according to a news release issued on Thursday.
Among the ways the board will seek to achieve net-zero by 2050 will be continuing to "invest and exert our influence in the whole economy transition as active investors, rather than through blanket divestment," and by increasing its investment in "green and transition assets" to at least C$130 billion by 2030, up from C$67 billion as of Dec. 31, 2021, the release noted.
CPPIB considers an asset to be "green" if at least 95% of its revenue can be classified as being derived from "green activities," as classified by trade association International Capital Markets Association, and an asset to be "transition" if it has announced its commitment to achieving net-zero status with a "credible target" and is making "meaningful contributions to global emissions reduction," the release said.
CPPIB said it will build on its "decarbonization investment approach" which seeks "attractive returns from enabling emissions reduction and business transformation in high-emitting sectors," according to the release.
In a paper entitled "Investing In The Path To Net-Zero" issued alongside the news release, CPPIB noted it will adhere to its practice of "openness and transparency" while sharing information on its net-zero progress with stakeholders. However, in terms of the pension fund's carbon footprint, "we do not expect a linear decline in emissions, especially as we invest to help certain companies and industries transition."
"Our commitment to achieving net-zero by 2050 is aligned with how CPP Investments has been incorporating ESG considerations — in particular climate change — into our investment decisions for more than a decade," said Deborah Orida, senior managing director, global head of real assets and chief sustainability officer, in the release. "We believe the performance of our portfolio and the generation of long-term investment returns relies upon our ability to adapt to a global economy that is moving toward net-zero."
In December 2021, CPPIB said it would help companies in essential high-carbon industries in which it invests to reduce those emissions rather than divest.
Separately, CPPIB in another news release Thursday said the pension fund returned a net 2.4% for its fiscal third quarter ended Dec. 31. The fund delivered five-year and 10-year annualized net returns of 11.7% and 11.6%, respectively.
