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September 29, 2021

Pension fund Caisse to exit $3.08bn oil assets in new climate strategy

By 2025, Caisse aims to allocate $7.9bn to decarbonise carbon-emitting sectors and hold $42.6bn worth of green assets.

By Archana Rani

Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) is planning to divest all $3.08bn (C$3.9bn) of its oil assets by the end of 2022.

The sale, which represents about 1% of its $308bn (C$390bn) portfolio, makes it the first Canadian institutional investor to exit oil production assets.

The move is part of the firm’s new plan to fight climate change. CDPQ had exceeded its climate targets since the implementation of its first climate strategy in 2017.

Caisse has set a target of reducing carbon intensity by 60% by 2030 from the 2017 baseline and achieve a net-zero portfolio by 2050, through investments in less carbon-intense assets.

By 2025, Caisse is planning to hold $42.6bn (C$54bn) worth of green assets such as renewable power plants and invest $7.9bn (C$10bn) towards decarbonising carbon-emitting sectors.

CDPQ intends to invest in green hydrogen, batteries, electrification of transport and carbon capture in addition to increase the supply of renewable energy, sustainable transportation, and real estate, according to Reuters.

CDPQ president and CEO Charles Emond said: “The climate situation affects everyone, and we can no longer address it with the same methods used a few years ago.

“We have to make important decisions on issues such as oil production and decarbonising sectors that are essential to our economies.

“With this new strategy, we are demonstrating our leadership as an investor and enter the next stage of climate investing. We believe this is in the interests of our depositors, our portfolio companies and the communities we invest in.”

The fund said it had exceeded its climate targets, reducing the portfolio’s carbon intensity by 38% since 2017.

However, the CDPQ’s plan has been criticised by Canada’s financial institutions Shift Action for Pension Wealth and Planet Health for holding onto its existing oil and gas pipelines. These assets make about 2% of CDPQ’s portfolio.

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