CDPQ's 2023 Sustainable Investing Report

Today, CDPQ published its Sustainable Investing Report for the fiscal year ending December 31, 2023:

CDPQ actively contributes to advancing sustainable finance, and once again this year the report presents concrete actions taken to drive the organization’s impact. Following are some highlights.

Environment 

CDPQ is well on track to achieve the targets underpinning the climate strategy it adopted in 2021, including its goal of reaching a net-zero portfolio by 2050 with:

• $53 billion in low-carbon assets, including $15 billion in Québec, representing an overall increase of $35 billion in low-carbon assets since 2017.
• Over $330 billion in assets with a low-carbon footprint, representing nearly 80% of its total portfolio.
• A 59% reduction in the carbon intensity of the portfolio since 2017.
• $5 billion in transitional assets to decarbonize the highest emitting sectors.
• Completion of its exit from oil production and thermal coal mining.

Social

CDPQ acts on several fronts to build strong communities by focusing on inclusion and the integration of social factors in all its activities:

• Women represent 46% of CDPQ’s personnel, and it has a goal of reaching 47% by 2025.
• 26% of its Québec employees identify as members of one of the following groups: visible minorities, ethnic minorities or Indigenous peoples, reaching the target it set.
• 57% of its actively managed public companies count at least 30% women on their Boards, an increase of more than 39% in three years, and 30% of its nominee directors are women, thereby meeting the target it set.
• CDPQ is one of the only investors in the world to have made a commitment to encourage tax best practices at its portfolio companies, including compliance with a minimum tax rate of at least 15%, as recommended by the OECD and supported by the G20.

Governance

CDPQ employs solid governance practices. This is why it uses different levers of influence to promote the adoption of best practices by:

• Assisting several portfolio companies in integrating ESG factors into their processes, including 10 Québec companies.
• Holding 308 discussions to raise awareness on ESG factors among 129 of its portfolio companies and 81 of its external managers.
• Using its voting rights on 37,536 resolutions at 3,635 shareholder meetings to express its sustainability convictions.
• 278 technology risk analyses carried out by its teams to strengthen the resilience of its portfolio companies.

“At CDPQ, we remain steadfast in our conviction that sustainability goes hand in hand with long-term returns. And I am proud to see how far we’ve come and everything our organization has achieved. Now, once a target has been reached, there’s only one good option: to raise it even higher. Further evolve our approach. Determine what we can do differently, and even better. This involves taking the full measure of what we can do, and leveraging that to improve our overall portfolio’s sustainability. Our leadership is recognized at home and abroad, and this is due to the work of our people, their diverse talents and expertise propel us forward,” said Charles Emond, President and Chief Executive Officer of CDPQ.

“Today’s challenges are tremendous levers for value creation. This is why we have an optimistic approach, both here in Québec and internationally. We support our portfolio companies on a day-to-day basis to ensure that they implement solid transition plans and view this journey as a promising business opportunity. We believe that this is the path that leads to achieving our common goals,” said Marc André Blanchard, Executive Vice-President and Head of CDPQ Global and Global Head 
of Sustainability.

The 2023 Sustainable Investing Report is available online.

ABOUT CDPQ

At CDPQ, we invest constructively to generate sustainable returns over the long term. As a global investment group managing funds for public pension and insurance plans, we work alongside our partners to build enterprises that drive performance and progress. We are active in the major financial markets, private equity, infrastructure, real estate and private debt. As at December 31, 2023, CDPQ’s net assets totalled CAD 434 billion. For more information, visit cdpq.com, consult our LinkedIn or Instagram pages, or follow us on X.

CDPQ is a registered trademark owned by Caisse de dépôt et placement du Québec and licensed for use by its subsidiaries.

Take the time to go over CDPQ's 2023 Sustainable Investing Report here.

You can also download a PDF file of the report here.

Let's begin with CEO Charles Emond's message:

I note the following:

Sustainability criteria are crucial as a tool for measuring companies’ long-term performance and risks. We should take full advantage of them. 

Now, once a target has been reached, there’s only one good option: to raise it even higher. Further evolve our approach. Determine what we can do differently, and even better. Where we can have an impact. Social issues, in particular, are one of our top priorities.

Constructive capital, which aims to combine performance and progress, is our investment philosophy. So it’s important to look at our portfolio from every angle. Do our portfolio companies have positive, neutral or even negative impacts? One of our roles is to work with them on identifying the best ways to integrate ESG factors. This involves taking the full measure of what we can do, and leveraging that to improve our totalportfolio’s sustainability.

Next, let's read the message from Marc-André Blanchard, Executive Vice-President and Head of CDPQ Global and Global Head of Sustainability:

I note the following:

Today’s challenges are tremendous levers for value creation. This is why we have an optimistic approach, both here in Québec and internationally. We support our portfolio companies on a day-to-day basis to ensure that they implement solid transition plans and view this journey as a promising business opportunity. We believe that this is the path that leads to achieving our shared goals.

We see the financial ecosystem playing an essential role in advancing sustainability issues. This is why, once again this year, innovative partnerships have been central to our success. A case in point is our collaboration on major global initiatives. Together, we are moving forward on mobilizing private capital around concrete solutions to accelerate the transition. At major international forums and high-level gatherings such as the G20 and COP28, CDPQ’s leadership on these themes shines through.

To continue on this path, we can rely on our diversified teams, which continue to propose innovative solutions for meeting the challenges that lay ahead. Their wide-ranging expertise, openness to others and in-depth knowledge of the markets make me proud to be at their side, and give me confidence for the future.

I will also refer my readers to an interesting discussion I had with Marc-André Blanchard late last year which you can read here.

CDPQ has taken a leadership role on mobilizing capital to accelerate transition and on promoting uniform disclosure standards:

Now, I am going to recommend you read the entire report carefully here for the simple reason that it's comprehensive and CDPQ is known to be a global leader in sustainable investing.

Just a few of the things that caught my attention:

I also noted how CDPQ takes the social aspect of ESG within its organization very seriously:

CDPQ has done a wonderful job attracting, retaining and promoting women at all levels of the organization and it takes all aspects of diversity, equity and inclusion seriously.

I'm always pushing large Canadian Crown corporations (not just pensions) to do more to hire people with disabilities because they are by far the most disadvantaged group in our society and it's not only the right thing to do on moral grounds, it's the right thing to do on all grounds, period.

As far as ageism, it's a form of discrimination, and if you notice on the second chart above, almost 30% of the employees are 45-years-old or over (8% over 55).

You simply cannot put a price on experience and wisdom, especially at organizations entrusted to manage billions on pension assets.

It shocks and disgusts me when friends of mine over 50 say their expiration date has arrived and their organization prefers to fire them to replace them with cheaper, younger workers (you get what you pay for...and who is going to mentor these young leaders of tomorrow and what happens when a crisis hits and your organization lacks the experience to deal with it?).

My message to all pension fund managers is simple, you are managing billions of pension assets, make sure you lead by example as you represent millions of hard-working citizens from all backgrounds.

It is incumbent upon you to facilitate the work environment for everyone and make it truly inclusive so that everyone no matter their age, gender, colour of their skin, religion, ethnic background, sexual orientation and disability can fully participate and contribute to enrich your organization in many ways.

I emphasize this because I have seen way too much discrimination (all forms) at financial institutions and it really, really irks me.

Also, equally important to note that old white European males aren't all bad, some of us can offer diversity of thought which is sorely lacking.

Alright, enough rambling, once again take the time to go over CDPQ's 2023 Sustainable Investing Report here and download a PDF file of the report here.

I know other pension funds have also put out their Sustainable Investing Report and I do not spend time covering all of them not because they're not worth it, it's just time consuming and the field has exploded and many of these reports are way too long (in my humble opinion).

Like I said, I covered CDPQ's SIR today because they are considered leaders in this space and I know there are other excellent reports too at other Canadian pension funds (AIMCO, BCI, CPP Investments, OTPP and OMERS)

Below, Marc-André Blanchard, B20 Co-Chair, ECRE TF, EVP Head of CDPQ Global and Global Head of Sustainability, discusses why it's important to bring as many stakeholders together to tackle climate change.

Update: On Thursday, CDPQ released its Annual Report for the year ended December 31, 2023, titled Driving performance and progress (in French only - English available soon).

In addition to the financial results published on February 22, CDPQ presents an overview of its activities over the last year, which include:

• A presentation of CDPQ’s depositors and their respective net assets as at 
  December 31, 2023
• A detailed analysis of the overall return and different asset classes
• A risk management report
• A portrait of CDPQ’s activities in Québec, including its main achievement to support the growth of Québec’s economy, companies and entrepreneurship, as well as a summary of its investments in Québec
• A section on compliance activities
• Reports from the Board of Directors and its committees covering strategic orientations, audit, governance and ethics, investment and risk management, as well as human resources management and compensation for senior management and employees
• The Sustainable Development Report
• Our financial report and the organization’s consolidated financial statements
• Report on compliance with the Global Investment Performance Standards (GIPS).

The Annual Report Additional Information (in French only - English available soon) for the year ended December 31, 2023, is also published today.

The English version isn't available yet but it will soon be made available here.