Investment heavyweight in Canada surrenders net-zero commitment
In a surprising move, CPP Investments, the Canadian pension fund managing the Canada Pension Plan, has withdrawn its commitment to achieve net-zero emissions by 2050, as stated in its annual report. The decision was made to prioritize investment decisions that align with its financial strategy over rigid climate targets.
The organization, which manages a whopping C$714 billion, believes that forcing alignment with such milestones could lead to investment decisions that are misaligned with their investment strategy. Despite this reversal, CPP Investments continues to view the transition to a lower-carbon economy as a significant investment opportunity.
CPP Investments' Chief Sustainability Officer, Richard Manley, acknowledges the complexities of achieving net-zero transitions and emphasizes the need for integrated sustainability approaches. The organization continues to engage with sustainable investing practices and hosts events like the Sustainable Energies Group (SEG) Leaders Summit to explore opportunities in this area.
The decision to abandon the net-zero commitment has been met with strong criticism from environmental campaigners, with Shift, a Canadian climate campaign group, being particularly vocal in their disapproval. The group argues that the decision was taken without consulting pension fund members or the wider public.
However, CPP Investments continues to expect investment due diligence processes to identify material sustainability factors, including those related to climate change. The organization's Annual Report and Accounts, released this week, make no mention of the change.
The fund claims that the change is due to recent legal developments in Canada, including increased pressure to adopt standardized emissions metrics and interim targets. The Canadian Office of the Superintendent of Financial Institutions (OSFI) is introducing more stringent reporting requirements for federally regulated financial institutions, including CPP Investments.
This move by CPP Investments comes at a time when the Task Force on Climate-related Financial Disclosures (TCFD) reporting is already mandatory for large institutional investors in the UK, Brazil, the European Union, Hong Kong, Japan, Singapore, and Switzerland. However, CPP Investments argues that these do not reflect the complexity of a global investment portfolio.
The reversal was first reported by Canadian climate campaign group Shift. This article has been amended on 22.05. to include a response from CPP Investments. Mark Carney, the former UN climate envoy, won the Canadian election a month before the announcement, suggesting a potential shift in public opinion towards a more progressive stance on climate policy.
CPP Investments, while reconsidering its net-zero emissions commitment by 2050, maintains an interest in the transition to a lower-carbon economy as an investment opportunity within the broader scope of its strategy. The organization, recognizing complexities in achieving net-zero transitions, views integrated sustainability approaches as essential and continues to engage with sustainable investing practices.
