Getting Real and Sustainable With CPP Investments' Deborah Orida

A month ago, Chief Investment Officer reported that Canada’s CPPIB taps Deborah Orida as its first Chief Sustainability Officer:

The C$519.6 billion ($417.2 billion) Canada Pension Plan Investment Board (CPPIB) has named Senior Managing Director and Global Head of Real Assets Deborah Orida as the pension giant’s first chief sustainability officer, effective immediately. In addition to taking on the newly created role, Orida will maintain her current position with the fund.

In her new role, Orida will lead the refinement and execution of CPPIB’s strategy to steer the fund through the economic transition in response to climate change.

“Climate change, which was only on the horizon when CPP Investments was established nearly 25 years ago, has become the defining issue of our time,” John Graham, CPPIB’s president and CEO, said in a statement. “Our enterprise-wide chief sustainability officer will be responsible for our approach to environmental, social, and governance (ESG) matters, particularly climate change, working closely with our chief investment officer.”

Orida has led the Real Assets department in making investments to support the transition to a net-zero emissions economy, including investing in more than $7 billion of renewables, 403 green buildings, and decarbonization technologies and services. The pension fund’s Sustainable Investing group, which is led by Richard Manley, will move from the Active Equities department to the Real Assets department.

“As a global institutional investor with a time horizon that spans generations, we must place equal focus on both the risks and investment opportunities associated with sustainability—and particularly climate,” Orida said. “I am looking forward to continuing our work with colleagues across CPP Investments to meet our goal of helping ensure a base for Canadians’ financial security in retirement for generations to come.”

Orida joined CPP Investments in 2009 after spending nine years at Goldman Sachs as a vice president. Prior to becoming CPPIB’s head of real assets, she was senior managing director and global head of active equities, and before that was CPPIB’s manager director, head of private equity Asia. During her tenure at CPPIB, she has also been managing director, head of relationship investments international, and senior portfolio manager, relationship investments. Orida holds an undergraduate degree in law and a bachelor’s from Queen’s University, Canada and a Master of Business Administration from The Wharton School, at the University of Pennsylvania.

In April, CPPIB announced it was combining two of its units to form a new investment group with approximately C$17.7 billion in assets under management (AUM) called the Sustainable Energy Group.  The Sustainable Energy Group has five key sub-sector strategies: power and renewables, energy midstream, commodities and alternative fuels, distributed energy and services, and innovation technology and services.

Layan Odeh of Bloomberg News also reported CPPIB names first sustainability chief in ESG push: 

Canada Pension Plan Investment Board named Deborah Orida chief sustainability officer, a new post for the $519.6 billion (US$421.24 billion) fund.

Orida will take the role immediately and continue as senior managing director and global head of real assets, Toronto-based CPP said in a statement Wednesday.

“We are focused on seizing the tremendous investment opportunities, as well as managing the risks, brought about by climate change,” Chief Executive Officer John Graham said in the statement.

Orida will be responsible for the fund’s approach to environmental, social and governance matters and work closely with the chief investment officer, Graham added.

As the leader of CPP’s real assets department, Orida has made key investments that support the economic transition, including more than $7 billion of renewables, 403 green buildings and decarbonization technologies and services, CPP said.

CPP is Canada’s largest pension fund with more than 20 million contributors and beneficiaries.

On Friday, I had a long chat with Deborah Orida (pronounced "O-ree-da"), Senior Managing Director, Global Head of Real Assets & Chief Sustainability Officer at CPP Investments.

Let me begin by thanking her for taking some time to talk to me and thanking Frank Switzer of the Communications and Public Affairs department for setting up the call and forwarding me material.

Truth be told, after my in-depth interview with Nathlie Palladitcheff last Thursday, I was psyched to talk to another very powerful lady managing Real Assets and leading responsible investment activities at Canada's largest and most important pension fund. 

Since the folks at Ivanhoé Cambridge were nice enough to share our taped conversation, I downloaded TapeACall App on my iPhone and told Deb I was going to record our conversation and of course, it didn't work (I have zero tech skills and will ask communications people from now on to tape and share recordings).

Luckily, I jotted down tons of notes and both Frank and Deb will come back to me if I need to add or remove anything. 

We started off by talking about her background. 

Deb told me she is born and raised in Toronto, studied law at Queen's University and then left to do her MBA at The Wharton School. She then joined Goldman Sachs where she worked for almost a decade as a vice president. 

As you can tell, she has the pedigree, she's very accomplished, very bright and truthfully, very nice and down to earth.

Anyway, prior to becoming CPPIB’s head of real assets, she was senior managing director and global head of active equities, and before that was CPPIB’s manager director, head of private equity Asia. During her tenure at CPPIB, she has also been managing director, head of relationship investments international, and senior portfolio manager, relationship investments.

All this experience is important and it explains why she was named CPP Investment's first chief sustainability officer.

Importantly, she understands all the moving parts at CPP Investments and has a holistic view of the organization. 

Deb told me: "It's a great testament to the organization's commitment to sustainable investing. With this new position, CPP Investments made a strategic decision to put sustainability at its core."

She is now working closely with Ed Cass, the CIO, and has three important teams reporting to her:

  1. Infrastructure headed up by Scott Lawrence (roughly $45 billion)
  2. Real Estate headed up by Peter Ballon (roughly $46 billion)
  3. Sustainable Energies Group headed up by Bruce Hogg (roughly $21 billion)

Also, as the new Chief Sustainability Officer, Deborah Orida will lead the further refinement and execution of a roadmap for CPP Investments to prudently navigate the Fund as the world economy transitions to address climate change, ensuring they maintain a global, cross-enterprise approach to sustainability as they pursue their mandate on behalf of 20 million Canadians:

“As a global institutional investor with a time horizon that spans generations, we must place equal focus on both the risks and investment opportunities associated with sustainability – and particularly climate,” said Orida. “Our organization has recognized the importance of, and challenge posed by, climate change for nearly 15 years and has been a leader in pressing the market for better standards in areas such as disclosure and investing in assets and companies for the economy transition.”

The Real Assets department that Orida leads has made significant investments that support the economy transition, including more than $7 billion of renewables, 403 green buildings and decarbonization technologies and services. Orida said, “I am looking forward to continuing our work with colleagues across CPP Investments to meet our goal of helping ensure a base for Canadians’ financial security in retirement for generations to come, so that the CPP Investments portfolio is well positioned for the change that lies ahead.”

Orida’s appointment is effective immediately. The Sustainable Investing group led by Richard Manley, Managing Director, Head of Sustainable Investing, will move from the Active Equities department to Real Assets and continue to have an enterprise-wide mandate.

Deb spoke highly about Richard Manley, Managing Director, Head of Sustainable Investing and he will play an instrumental role in setting and executing CPP Investments' responsible investing roadmap.

Prior to joining CPP Investments in the UK, Manley worked as a Managing Director and Partner at Goldman Sachs. 

A month ago, Manley posted this on Linkedin:

Could this be a future pillar of global climate reporting standards?

Engaging with companies, through their boards, to accelerate their transition to net zero is one of the most powerful ways institutional investors can support measurable change in decarbonizing the economy.

Today, we are announcing a proposal to collaboratively build and launch an open-source, standardized transition capacity assessment framework, with the aim of contributing a powerful new instrument to the global decarbonization toolkit.

For corporate boards and senior management, this would inform strategic decisions about how to prioritize decarbonization efforts, deliver their climate commitments, engage stakeholders, and secure access to capital. For investors, lenders and insurers, it will help manage risk and direct capital to funding the greatest carbon reduction impact.

We invite our peers in the investment community, corporate leaders, standard setters, and auditors to join us in unlocking the potential of this new approach.

You should all take the time to read this report on the future of climate change transition reporting here.

The full report is available here and Deb and I discussed it as well as the annual Report on Sustainable Investing, which outlines the organization’s approach to environmental, social and governance (ESG) factors and the Policy on Sustainable Investing which you can view here

In fact, in our discussion, Deb explicitly went over five Climate Change Principles outlined in the Policy on Sustainable Investing that informs their decision-making:

  •  Principle 1: Invest for a whole economy transition required by climate change. As a longterm investor with an investment horizon that spans multiple decades, our portfolio design and security selection must anticipate both the opportunities and risks presented by the whole economy transition required by climate change; not doing so would be imprudent. 
  • Principle 2: Evolve our strategy as transition pathways emerge and global standards for decarbonization materialize. We will seek to invest in the optimal transition. This pathway is not yet defined, but will be influenced by government policy, consumer preferences, financial markets and technology innovation. Our legislative objectives will guide our actions as the full picture emerges. 
  • Principle 3: Exert influence to create value and mitigate risk. We will leverage our comparative advantages as an engaged and constructive provider of long-term capital to seek to ensure our portfolio companies have developed robust transition strategies that support value creation, reduction of greenhouse gas (GHG) emissions and mitigation of climate risks. 
  • Principle 4: Support a responsible transition based on our investment beliefs and expertise. As we seek attractive risk adjusted returns, we will make investments in green assets and transition solutions, but we also stand ready to make investments in industries where supporting these businesses to transition generates superior returns. Accelerating the global energy transition requires a sophisticated, long-term approach rather than a blanket divestment. We are in a position to provide capital that advances decarbonization of the economy to support responsible transition. This includes the sectors and companies at the core of our economy. 
  • Principle 5: Report on our actions, their impacts and our portfolio emissions. We commit to disclose the actions we take to deliver upon these principles including the investments we make, the meaningful engagement we undertake and the evolution of our portfolio emissions. The global economy transition will be dynamic and not linear. We will provide reporting of GHG emissions from our portfolio and commit to evolving this reporting as relevant new metrics emerge.

Now, I'm not going to lie, I'm not a big believer in blanket divestment, sounds really cool, makes people feel good but as I told Deb " reality, all you're doing is transferring ESG risk to some fund that doesn't give a damn about ESG."

She agreed and reiterated what is stated in principle #4 above: "We don't believe in blanket divestment. We are in a position to provide capital that advances decarbonization of the economy to support responsible transition. This includes the sectors and companies at the core of our economy."

But another interesting topic was how they create value and mitigate risk. 

In an update in July 2020, CPP Investments discussed how the Policy on Sustainable Investing reinforces ESG role in long-term value creation:

Canada Pension Plan Investment Board (CPP Investments) has published an updated Policy on Sustainable Investing, reflecting its increased conviction in the importance of considering environmental, social and governance (ESG) risks and opportunities amid an increasingly competitive corporate operating environment.

Integrating ESG factors, including climate change, into investment analysis and asset management activities supports the organization’s clear legislative objective: to maximize long-term investment returns without undue risk of loss.

“ESG considerations are inextricably linked to our ability to successfully achieve our investment objectives,” said Richard Manley, Managing Director, Head of Sustainable Investing, CPP Investments. “Our Policy reflects the growing body of evidence showing that companies that integrate consideration of ESG-related business risks and opportunities are more likely to preserve and create long-term value.”

The new Policy on Sustainable Investing specifically outlines CPP Investments’ support for companies aligning their reporting with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD).

As an investor to whom boards are accountable, CPP Investments asks that companies report material ESG risks and opportunities relevant to their industries and business models, with a clear preference for this disclosure to focus on performance and targets. When issuers seek input, the organization now indicates its preference for companies to align their reporting with the SASB and TCFD standards.

The Policy also reiterates the importance of asset owners like CPP Investments engaging with the companies in their portfolios, noting employees, customers, suppliers, governments and the community at large have a vested interest in forward-thinking corporate conduct and long-term business performance.

“We believe active ownership through constructive engagement can enhance and sustain returns over time and significantly reduce investment risks,” Mr. Manley said. “As a supplier of patient, engaged and productive capital, we are able to work with companies to bring about change, helping them deliver enduring value-building growth.”

What I found fascinating through my discussion with Deb is how CPP Investments has a "portfolio value creation" (PVC)  team that incorporates ESG factors and uses data across public and private markets to add significant value to investments.

This team even works with PE partners when warranted and she gave me an example of the "science team" adding value.

But it's critically important to understand the Sustainable Investing team Richard Manley heads is working across public and private markets, and they play a critical role in incorporating ESG factors across the portfolios. 

Having experience as global head of active equities, and before that was CPPIB’s manager director, head of private equity Asia, allowed Deb to really see the portfolio from a larger perspective and this places her well to to the Chief Sustainability Officer. 

Deb also told me collaboration among peers is critical and they worked with Carlyle and CalPERS to get better ESG disclosure on the private markets side where data is fleeting. 

She also mentioned the organization's role in thought leadership and referred to the future of climate change transition

We then drilled down into the Real Assets portfolio.

First, here is the geographic breakdown of Real Assets at CPP Investments:

In Real Estate, roughly $46 billion of total assets, 30%  is now in logistics properties. "CPP Investments was first-mover in this space, allowing us to build a portfolio of great assets. 

On offices, she agreed there is uncertainty and working from home is part of the new hybrid reality.

But she said they own prime offices like St John's terminal which they own with Oxford Properties and sold to Google which was leasing it for $2.1 billion (see details here). 

She said activity in multifamily (13% of portfolio) is picking up nicely and cited the new joint venture with Greystar to develop and acquire purpose-built single-family rental communities in the United States:

CPP Investments and Greystar have allocated approximately US$840 million in equity to the joint venture. CPP Investments will own a 95% stake and Greystar will own the remaining 5%.

“We’re pleased to make our first investment in the sought-after single-family rental sector alongside our existing partner, Greystar,” said Peter Ballon, Managing Director, Global Head of Real Estate, CPP Investments. “Purpose-built single-family rental properties are becoming more desirable for a large and growing segment of renters in the U.S., particularly families or other renters looking for more space without sacrificing access to urban centres.”

The joint venture will develop and acquire professionally managed rental communities consisting of detached or semi-detached homes and townhomes with private garages and backyards. Each community will have onsite leasing and maintenance as well as other communal amenities in line with Greystar’s world class product that focuses on maximizing resident experience. The partnership will target development areas that are near employment hubs, transit and retail centers across the sunbelt, mountain west and west coast regions of the United States. Greystar will operate and manage the portfolio on behalf of the joint venture.

“At Greystar, we pride ourselves on our ability to drive innovation across the rental housing industry, while increasing supply at the same time,” said Bob Faith, Founder, Chairman, and CEO of Greystar. “This new wave of purpose-built, accessible rental communities is giving new options to renters who are seeking more space in a safe and professionally managed, quality home. We are expanding the rental experience by providing families with the option of single-family homes while maintaining the same exceptional experience and sense of community of multifamily rental homes.”

Apart from the "build-to-rent platform", she also said investments in life sciences and student housing properties are also very attractive here (less cyclical).

In Infrastructure, she said "there's a tremendous amount of capital" flowing into the space and this has bolstered many mega funds operating in the space (GIP, Brookfield, Blackstone, KKR, etc).

Still, despite the increased competition, CPP Investments acquired Ports America, the largest US terminal operator. 

She spoke of how CPP Investments just announced a US$300 million investment initially to support Octopus Energy Group’s global expansion.This partnership with Octopus is to support its Kraken technology platform to deploy smart energy across full energy supply chain. This will enable Octopus Energy Fan Club to add 30 more wind turbines for cleaner and cheaper energy for communities, drive technology development and expand more rapidly internationally.

Deb also cited the recent deal where CPP Investments and OTPP acted as anchor investors for recently launched Infrastructure Investment Trust (InvIT) of the National Highways Authority of India (NHAI), acquiring half the units in India's NHAI InvIt.

She told me there are many more opportunities in India and Brazil.

Interestingly, I brought up China and the importance of partnerships where she agreed stating you need "boots on the ground and solid partnerships" in all these countries to be a successful long-term investor. 

On China, specifically, she told me they have partnerships in real estate but have not done a direct infrastructure deal because geopolitical risks are a concern (basically the government can regulate away any competitive advantage). 

In terms of Canadian infrastructure I told her my contacts are frustrated with the slow pace of and small size of deals at the Canada Infrastructure Bank and she sidestepped that political landmine but the truth is since Michael Sabia departed that board, that organization has been dragging its feet!

[I want to see them partially subsidizing many HUGE deals on toll roads, airports and ports. I don't understand what they are doing at the CIB, focusing on very small deals that don't appeal to our large pensions.]

Instead, Deb told me she recently visited Wolf Infrastructure Inc. (Wolf), a Calgary-based company where in 2015, they signed an agreement to establish a midstream energy infrastructure vehicle focused on opportunities in Western Canada. 

Another question of mine she sidestepped is when will CPP Investments announce a date committing to net zero like Canada's other large pensions?

Deb told me to "stay tuned" and Frank agreed.  

Lastly, we talked about diversity & inclusion, a topic she holds dear to her heart.

She explained to me when she left Hong Kong to move back to Toronto, she was siting on a board of an education company and had to resign.

"The founder came to me frantic because he said I was the only woman on that board and offered unique perspectives which resonated with employees (mostly women) and stakeholders."

She added: "Luckily, I assured him that CPP Investments has many qualified women who can sit on that board and we were able to fill my seat."

She agreed with me that diversity & inclusion are critical to any organization.

On that note, I was emailed by HOOPP today to tell me they just appointed Lori Hall-Kimm as their Head of Global Private Equity:

The Healthcare of Ontario Pension Plan (HOOPP) is pleased to announce the appointment of Lori Hall-Kimm as its Head of Global Private Equity.

In her new role, Lori will work with the private equity team to develop the strategic and operational plan for private capital investments as well as oversee an $11 billion global portfolio across various industries and asset classes.

Lori brings 20 years of investment experience, including over 15 years in private equity. Most recently, she served as Managing Director, Direct Private Equity, for CPP Investments where she gained extensive experience investing in private markets globally. Prior to that, she worked on the Private Capital team at Ontario Teachers’ Pension Plan and in the Investment Banking Division at Goldman Sachs.

“We’re delighted that Lori has decided to join HOOPP and I look forward to working with her to build on HOOPP’s highly successful private equity portfolio,” said Michael Wissell, Chief Investment Officer, HOOPP. “This is a very important hire for HOOPP that further rounds out our already strong and dynamic investment team.”

Wissell added: “With this hire, HOOPP completes the senior management of HOOPP’s Private Markets group, a team that also includes Eric Plesman, Head of Global Real Estate, and Steve Smith, Managing Partner, Infrastructure.”

Lori holds an MBA from Columbia Business School and a Bachelor of Business Administration from York University. She officially joins HOOPP on January 24, 2022.

I'll be honest, I don't know Lori Hall-Kimm but someone I trust completely who actually worked with her at OTPP told me "she's amazing and will add depth and tons of experience at HOOPP."

He added: "From what I know, this wasn't a sham process where they knew who they were going to hire ahead of time, they took their time and interviewed highly qualified candidates and rightly chose Lori."

Moreover he said: "People will focus on the diversity card but the truth she's highly accomplished and is the best person for the job."

I told him I don't doubt it but there's nothing wrong with adding more diversity "because let's face it, HOOPP was up until now run by mostly old white men that were doing an outstanding job but the optics don't look good from a diversity standpoint." (I'm an old white man too, and I'm dreadfully boring, so don't take my comments to heart!).

Anyway, I wish Lori Hall-Kimm much success as she embarks on this new and exciting role heading up HOOPP's Global Private Equity. Jim Walker did great work running private markets at HOOPP for years and I wish him much success in his new venture. 

I also think Lori, Eric Plesman (Real Estate) and Steve Smith (Infrastructure) will complement HOOPP's new CIO Mike Wissell and they will all work well together bolstering the private markets portfolio at HOOPP.

I look forward to interviewing Lori, Eric, Steve and Mike all together in the new year when the time is right.

Let me once again thank Deborah Orida for taking the time to talk to me and I look forward to talking to her again in the future. 

Actually, I need to talk to Suyi Kim, Andrew Edgell, Frank Ieraci, Geoff Rubin and others there.

It isn't lost on me that I spoke with two of the most powerful women in Canada's pension landscape last week, Nathalie Palladitcheff and Deborah Orida. 

And I'm not going to lie to you, I enjoyed our conversations, these are two very knowledgeable, experienced and nice women who offer great perspective and unique insights.

Hope you enjoyed these conversations too.

As always, I will edit this comment as need to add or remove anything but I believe I captured the essence of our conversation.

Below, Deborah Orida, senior managing director and head of real assets of CPP Investments, joins BNN Bloomberg to discuss the pension's interest in renewables and clean energy as they create the Sustainable Energy Group. She says they are investing around the world and that they are well positioned for the consolidation in the conventional energy space (watch here if it doesn't load below).

And Connor Teskey, CEO Renewable Power & Co-Head of Transition Investing, Brookfield, discusses the Global Transition Fund and the role private funds will play in building a net-zero economy with Bloomberg TV’s Kailey Leinz. Take the time to watch this too and learn why Brookfield is a global leader in infrastructure investments and impact investing.