Caisse de depot et placement du Quebec says it will sell its remaining oil production investments by the end of next year as part of its climate strategy.
The Quebec investment manager says its remaining assets in the sector make up one percent of its portfolio, or about $3.9 billion based on the size of its net assets as of June 30.
CDPQ made the announcement as it released its new plan to fight climate change.
As part of the plan, the investment fund says it will create a $10-billion transition envelope that will help support companies in the heaviest emitting sectors to reduce their carbon intensity.
CDPQ also says it plans to hold $54 billion in green assets by 2025 and reduce its portfolio’s carbon intensity by 60% by 2030 compared with 2017.
“With this new strategy, we are demonstrating our leadership as investors and taking the next step in climate investing,” Caisse CEO Charles Emond said in a statement.
“It is in the best interests of our depositors, our portfolio companies and the communities in which we invest.”
The pension fund manager’s move would position it as a climate leader among Canada’s major financial institutions, said Shift Action for Pension Wealth and Planet Health, a charitable initiative that encourages pension funds to engage on the climate crisis.
“It is amazing that it took until 2021 for a Canadian pension fund to finally recognize that protecting our retirement savings from the worsening climate crisis inevitably requires abandoning market exposure to high-risk fossil fuels,” it said in a news release.
Shift said investments in natural gas are also too risky for the climate and Quebec pensions, and should also be phased out. To limit global warming, it said natural gas must also be kept in the ground and oil and gas production must be reduced by an average of 3% per year starting immediately.
“The CDPQ’s massive fossil gas infrastructure investments mean that it has not yet reckoned with this reality.”
Shift said the Caisse’s commitment to cut its carbon emissions intensity are eclipsed in Canada only by a pledge from the Ontario Teachers’ Pension Plan Board.
Earlier this month, Teachers’ pension fund manager said it aimed to slash the carbon emissions intensity of its investments by 45% by 2025 and by two-thirds by 2030, compared against its 2019 baseline.
However, Shift said Teachers’ has not yet explained how its 2030 goal is possible without excluding fossil fuels from its portfolio.
“The CDPQ’s progress stands in stark contrast to the Canada Pension Plan, whose CEO said earlier this year that the Canada Pension Plan has no plans to institute a blanket screen on oil and gas during his tenure.”