CDPQ Releases 2024 Sustainable Investing Report, Exceeds Climate Targets
CDPQ published today its Sustainable Investing Report for the year ended December 31, 2024.
This report highlights CDPQ’s results in 2024, including exceeding its climate targets earlier than planned in its climate strategy enhanced in 2021. CDPQ has also made progress on several social and governance fronts over the past year.
With this report, CDPQ confirms that its long-term strategy for sustainable investing is beneficial for its global performance, enabling it to manage complex and growing risks and to seize the best opportunities to deploy its constructive capital in Québec and around the world.
“Sustainable investing is an integral part of our fiduciary duty. To achieve the best performance for our depositors, we must align our capital with strong business models that create value now and will do so in the future. I would like to congratulate our teams for the colossal work that has been accomplished, having reached our targets faster than anticipated,” said Charles Emond, President and Chief Executive Officer of CDPQ. “We will need to continue finding the balance between ambition and pragmatism in our approach to take into account the current environment that companies are navigating. But always with a long-term view in order to have assets that are well positioned for the future. This is the best way to fulfill our mandate for the pensions of more than six million Quebecers.”
“CDPQ’s leadership in sustainable investing, both in Québec and around the world, is real and recognized. This leadership position opens doors to the most innovative partners and facilitates access to excellent opportunities, ensuring our continued success in the coming years,” said Marc-André Blanchard, Executive Vice-President and Head of CDPQ Global and Global Head of Sustainability. “We continue to view sustainable investing as an expression of our constructive capital both to ensure the resilience of our portfolio and generate optimal long-term returns. The transition must be analyzed through both the prism of risk management and investment opportunities.”
Environment
Climate targets have been achieved through CDPQ’s investments in low-carbon or low-footprint assets, the decarbonization of its portfolio companies and engaging in proactive dialogue with portfolio companies:
- $58 billion in low-carbon assets, including $15.5 billion in Québec, representing an overall increase of $40 billion in low-carbon assets since 2017, thereby exceeding the target of $54 billion by 2025.
- A 69% decrease in our portfolio’s carbon intensity since 2017, exceeding the target of a 60% reduction by 2030.
- $330 billion in assets with a low-carbon footprint, or nearly 80% of its total portfolio.
- $6.2 billion in transition assets to decarbonize the highest-emitting sectors.
Social
CDPQ values openness and a variety of perspectives to enrich its decisions and enhance its performance, both internally and in the composition of portfolio company Boards of Directors and external managers. It also adheres to fair tax principles across its activities and analyzes each investment opportunity according to demanding criteria:
- 47% of its employees and 42% of its Board of Directors are women.
- 27% of its employees in Canada identify as members of one of the following groups: visible minorities, ethnic minorities or Indigenous people.
- 73% of its actively managed public companies had at least 30% women on their Boards of Directors, representing an increase of 78% over four years.
- 310 pre-investment opinions on tax practices were issued.
Governance
CDPQ positions governance at the heart of its practices and investments. It works on optimizing its governance practices and actively helps improve those of its portfolio companies and external managers. In 2024, its support and influence were expressed in different ways:
- 12 Québec companies supported with implementing sustainable business practices.
- Dialogue with 537 portfolio companies in which CDPQ is a shareholder.
- Using its voting rights on 34,857 resolutions at 3,326 shareholder meetings to express its sustainability convictions.
- 47% support for shareholder proposals on environmental issues.
The 2024 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, 2024, CDPQ’s net assets totalled CAD 473 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.
CDPQ's 2024 Sustainable Investment Report is available here.
Below you can read the message from CEO Charles Emond:
Profitable ambitions for our depositors
The debate around the topic of sustainability is not new, but the intensity around it was unprecedented in 2024. As a long-term investor, our vision is unequivocal: sustainable investing is an integral part of our fiduciary duty.
To achieve the best performance for our depositors, we must align our capital with strong business models that create value now and will do so in the future, while taking all stakeholders into account.
Our approach has not only been profitable, it also allows us to maintain an informed and responsible view of the risks our assets will face in the years to come, and what it will take to make them more resilient, particularly in terms of climate risks.
Strong ambitions, targets achieved
Let’s take a step back. In 2017, CDPQ launched its first climate strategy, which put the organization’s leadership at the forefront of sustainable investing worldwide. Four years later, we raised and expanded our ambitions, based on clear and measurable objectives.
Today, having achieved our targets faster than anticipated, I would like to congratulate our teams for the colossal work that has been accomplished.
We have reduced the carbon intensity of our portfolio by 69% and more than tripled our low-carbon assets, which now amount to $58 billion, compared to 2017, as well as closely supported portfolio companies as they transitioned to more sustainable business models and completed our exit from oil production. In doing so, we have taken decisive action to decarbonize our portfolio, which today has close to 80% of assets that are low-carbon or low-intensity.
These are major initiatives that were well executed. And above all, we should never lose sight of the fact that this strategy has enabled us to generate excellent performance for our depositors.
Our figures bear that out: over five years, the annualized return of our approach to the energy transition has reached nearly 12%, compared to the MSCI ACWI Energy index’s position of roughly 8%. Our return was stimulated by renewable assets, which generated performance that was twice as strong as that of the oil segment of the MSCI ACWI for the period.
In short, it is possible to perform well while benefiting the planet and future generations.
Achievements beyond climate
In addition to what has been achieved to address climate change, we have made progress on other issues, such as social aspects.
Our international taxation commitment, which is aligned with the recommendations of the Organisation for Economic Co-operation and Development (OECD), remains an important focus of our approach so that businesses adopt the most responsible behaviour in their own communities. We were one of the first investors in the world to make such a commitment, convinced that fair taxation promotes stronger economies.
In addition, we have also made advancements on representation. For example, 47% of our employees are women and 27% of our employees in Québec and Canada identify as members of visible or ethnic minorities or as Indigenous people. Beyond the statistics, what does this mean? It means that we can benefit from broader perspectives, a more varied range of experiences, and therefore richer reflections and deeper debates, to better fulfill our role and cover all the angles.
A more difficult environment going forward
It goes without saying that more difficult years lay ahead. Global geopolitical tensions could create upheavals, and even lead to lost ground, especially in the energy sector. Does that make us want to change course? No. Headwinds only test our convictions.
As such, we will need to continue finding the balance between ambition and pragmatism in our approach to take into account the current environment that companies are navigating.
There was also this message from Marc-André Blanchard, Executive Vice-President and Head of CDPQ Global and Global Head of Sustainability:
The deployment of our constructive capital is a source of long-term value creation.
Financial value, because we generate performance for our depositors; economic and strategic value, because we support companies and economies; and, lastly, sustainable value, because we seek to align the return on our investments with positive impacts on society and the environment.
We analyze the current transition through two prisms: risk management and investment opportunities. On the one hand, physical climate risks, as well as those related to sustainability, are crucial for a long-term investor like CDPQ. Extreme climate events, whose strength and frequency considerably disrupt local and global economies, cannot be ignored. We therefore favour sustainable business models and the development of resilience. On the other hand, the transition and the accelerating decarbonization of the economy are generating investment opportunities that are significant, promising and profitable.
It is therefore important for us to support our portfolio companies by leveraging sustainability to protect and create value through targeted interventions that strengthen the strategic positioning of our companies, particularly in Québec.
We are pleased to present our achievements in this report. CDPQ’s leadership in sustainable investing, both in Québec and around the world, is real and recognized. For the members of our organization, it is a source of immense pride. Our leadership position also opens doors to the most innovative partners and facilitates access to excellent opportunities, ensuring our continued success in the years to come.
We continue to view sustainable investing as an expression of our constructive capital in order to remain well positioned in the transition to ensure the resilience of our portfolio and generate optimal long-term returns.
Alright, I've pretty much stopped covering these sustainable investment reports at Canada's Maple Eight because I personally believe they should be part of the annual report given how important this activity remains at Canada's large pension funds.
Admittedly, it's not my favourite topic and it's not because I'm anti responsible/ sustainable investing, it just doesn't interest me that much and I find all these large pension funds try to show how committed they are and I get it, it matters to their members.
I'm more focused on investments and I look at everything like clean energy stocks which have been hammered by Trump's tariffs, including First Solar, a US company:
So nowadays I'm focusing all my attention on markets and what is getting destroyed as policy uncertainty reigns in the US.
Still, CDPQ's Sustainable Investing Report is worth discussing for a lot of reasons.
First,CDPQ is an internationally recognized leader in this area and it has a bit of a different approach than its peers.
They also sent me a media alert earlier today and I think it's worth noting a few things.
Let me first go back to September 2021 when CDPQ first announced its climate strategy:
Caisse de dépôt et placement du Québec (CDPQ), a global investment group, announced today its ambitious new plan to fight climate change. Since implementing the organization’s first climate strategy in 2017, CDPQ has surpassed its targets and is now looking to build on this experience to intensify its efforts in achieving a net-zero portfolio by 2050.
Leveraging the expertise its teams have acquired over the past several years, CDPQ is basing its new climate strategy on four vital and complementary pillars to meet the transition’s major challenges.
Two of these pillars build upon the organization’s accomplishments since 2017 while increasing its ambition:
- 1. Hold $54 billion in green assets by 2025 to actively contribute to a more sustainable economy.
- 2. Achieve a 60% reduction in the carbon intensity of the total portfolio by 2030.
Two new pillars have been added to move CDPQ’s climate action into the next stage:
- 3. Create a $10-billion transition envelope to decarbonize the main industrial carbon-emitting sectors.
- 4. Complete our exit from oil production by the end of 2022.
As a long-term investor, CDPQ designed this strategy with a distinctive approach that will deliver its depositors the return they need while helping meet the enormous challenges of climate change.
Keep those four pillars in mind and the targets they set four years ago.
What is worth noting is they reported $58 billion in low-carbon assets, including $15.5 billion in Québec, exceeding the $54 billion target by this year.
More interestingly, they exited out of oil and gas producers at the end of 2022 (pillar #4) and I noted this in Charles Emond's message:
These are major initiatives that were well executed. And above all, we should never lose sight of the fact that this strategy has enabled us to generate excellent performance for our depositors.
Our figures bear that out: over five years, the annualized return of our approach to the energy transition has reached nearly 12%, compared to the MSCI ACWI Energy index’s position of roughly 8%. Our return was stimulated by renewable assets, which generated performance that was twice as strong as that of the oil segment of the MSCI ACWI for the period.
I must admit, I am surprised their energy transition portfolio returned 12% beating out the 8% return of the MSCI ACWI Energy index, but keep in mind they have made a killing in renewable energy projects and other investments in that portfolio.
And it continues. Freschia Gonzales of Benefits and Pension Monitor reports CDPQ grows its infrastructure footprint with Verene's acquisition of Brazilian transmission assets:
Verene Energia, a power transmission platform owned by global investment group CDPQ, has agreed to acquire Equatorial Transmissão S.A., the transmission business unit of Equatorial S.A.
The deal includes seven power transmission lines totalling 2,430 km, commissioned between 2019 and 2021, across four Brazilian states in the North, Northeast, and Southeast regions.
The concession period for these assets extends until 2047.
The transaction, valued at up to $1.263bn, represents CDPQ's fourth investment in Latin America’s power transmission sector since 2022.
According to Yahoo Finance, this strategic acquisition positions Verene as a growing player in Brazil’s transmission infrastructure.
Emmanuel Jaclot, CDPQ's executive vice-president and head of Infrastructure, said the new acquisition by their platform Verene reflects CDPQ's continued interest in investing in Brazil, which he called “a key market for us.”
Jaclot said that the country’s power transmission sector offers “a stable and predictable regulatory framework that is attractive to our clients.”
He added that Verene now operates over 4,000 km of high-voltage lines and is gaining scale to support Brazil's decarbonization goals.
According to Reuters, Equatorial Energia stated that the sale concludes a profitable cycle of capital allocation in the transmission segment and enables the company to pursue new strategic directions.
The proceeds are expected to support debt reduction, finance new projects, and potentially fund shareholder distributions.
The agreement follows Verene Energia’s earlier acquisition of a 124-km transmission line in Pará, Brazil, in July 2024, according to a CDPQ press release.
That deal, worth up to $210m, was CDPQ’s third transmission investment in the region within two years.
Financial close for the current transaction is expected by December 2025, subject to customary closing conditions and approvals from Brazil’s Agência Nacional de Energia Elétrica (ANEEL) and the Conselho Administrativo de Defesa Econômica (CADE).
Electricity transmission is a huge area where Canada's large pension funds are investing all over the world. It ties in to increased demand from data centres to the electrification of everything and it's part of decarbonizing economies.
Anyway, take the time to read the 2024 Sustainable Investing Report here.
As Charles notes above, a more difficult environment lies ahead but they will keep their long term focus on sustainable investing and delivering the requisite returns:
It goes without saying that more difficult years lay ahead. Global geopolitical tensions could create upheavals, and even lead to lost ground, especially in the energy sector. Does that make us want to change course? No. Headwinds only test our convictions.
Below, the US clean energy industry remaining heavily dependent on foreign imports, CNBC’s Pippa Stevens reports on the tariff impact that’s sending solar stocks tumbling.
Next, Aswath Damodaran, NYU Stern School of Business professor of finance, joins CNBC's 'Closing Bell' to discuss market outlooks, how the market's tariff reaction compares to previous financial crisis, and more.
Third, Josh Brown, CEO of Ritholtz Wealth Management, joins CNBC's "Halftime Report" to explain why he believes today's positive move is a bear market bounce and how investors should navigate it.
Fourth, Tom Lee, Fundstrat co-founder and managing partner and Fundstrat Capital CIO, joins 'Squawk Box' to discuss the fallout from President Trump's sweeping new global tariffs, what he got wrong about Trump's tax policy, impact on the markets, what the administration's endgame is with tariffs, and more.
Fifth, former Treasury Secretary Lawrence Summers warned that the US is now likely headed toward a recession, and two million jobs could be lost due to President Donald Trump's tariffs. Summers, a Harvard University professor and paid contributor to Bloomberg TV, says he expects markets to head lower. He speaks on Bloomberg Television’s Wall Street Week with David Westin.
Sixth, Paul Krugman, Nobel-prize winning economist and long time NY Times columnist, discusses tariffs, trade wars, and his take on political influence in the markets. He speaks with Bloomberg's Tom Keene and Paul Sweeney.
Lastly, Bridgewater founder Ray Dalio joins 'Squawk Box' to discuss the fallout from President Trump's sweeping new tariffs, impact on markets and businesses, bringing manufacturing back to the US, state of US-China trade relations, importance of a diversified portfolio, and more.
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