Quebec has been the leader in Canada, for recognizing the risks posed by climate change and including these risks in their investment decisions. The Caisse de Depots Quebec is the second largest pension plan in Canada, after the Canada Pension Plan (CPP). It has reduced the carbon footprint of its investment portfolio by 25%.
In their September 18, 2018 article entitled: “Too Many Investors Still See Climate Action as Anti-Profit, Says Quebec Pension Fund Boss” by Carl Meyer, National Observer reported that Michael Sabia, president of Caisse de depot et placement du Quebec, one of Canada’s largest pension funds, is claiming that too many investors are still seeing climate action as a restraint on profit when that’s not the case.
Sabia made these remarks to a room full of foreign government officials and private sector leaders on the eve of a meeting of G7 environment, oceans, and energy ministers in Halifax, during the opening of a meeting on the “new climate economy.”
He went on to say, “Too many investors, even long-term oriented investors today, still see climate change as a constraint–something that forces them to make a choice, to compromise their returns, and therefore runs counter to their fiduciary obligations to their clients.”
“As long-term investors, collectively, we need to think differently, because addressing climate change is not only about what you stop doing–more importantly, it’s about what you start doing.”
Sabia didn’t name specific investors or governments at the meeting, but spoke about the trillions of dollars in economic gains that studies have shown will be available to nations that shift to a low-carbon economy.
In a 2017 report Friends of the Earth Canada and Germany’s Urgewald listed Quebec’s Caisse de depot pension plan as one of the top investors in new coal power plants overseas. Meanwhile, our federal government has been pushing to phase-out coal power worldwide.
Asked by National Observer after the meeting whether the group had discussed investments in coal power, Marc-Andre Blanchard, Canada’s ambassador to the United Nations said “we discussed infrastructure in a very wide sense.”
“We discussed the necessity to build resilient infrastructure, low-carbon infrastructure, the fact that there are many opportunities in renewable energy,” he said.
In June, La Caisse and Ontario Teachers’ Pension Plan announced a partnership with the Canadian government and several financial services companies in G7 countries to come up with a unified approach to disclose climate-related risks, among other objectives.
The pension plan also produced a climate change strategy in 2017, committing to a 25 per cent decrease in carbon pollution per dollar invested by 2025, a 50 per cent increase in “low-carbon investments” by 2020 and to “factor climate change into all our investment activities and decisions.”
Michael Sabia has worked at high levels in both business and government–he once served as a deputy secretary in the Privy Council Office. He also said that consumer attitudes and buying patterns are now changing.
“Climate change is becoming a popular issue, a people’s issue. We see this frequently–we see it in the companies we invest in,” he said. “How? Because their growing concern is to ensure that their brands are seen by the public to be on the right side of this defining issue.”
He said across industries as diverse as real estate, agriculture, transportation and electronics, there has been progress on reducing emissions, “but frankly, not enough.”
As an example of the scope he envisions, he said at least 50,000 megawatts of new wind power is being installed annually, the same as produced in a year by Hydro Quebec, which he said was the fourth-largest hydro producer in the world. Meanwhile, solar power’s price is five times lower than a decade ago, and in several countries, such as India and China, solar is cheaper than coal and gas plants.
Sabia also took aim at governments, noting that while some have introduced carbon pricing and reformed their tax code to address climate change, “obviously, in other countries, governments are going to need to demonstrate greater leadership on this issue.”
And, he noted the urgency of climate change, compounded by “growing economic pressure on the middle class and the related issues of the rise of populism and trade protectionism around the world.”
“Climate change is real; it’s gone beyond the point of being a risk,” said Sabia.
“We see its impact every day–heat waves and drought in Europe this summer; record temperatures; 33 degrees Celcius north of the Arctic Circle in Finland…in North America, pretty extreme weather events, deadly hurricanes, floods, wildfires.”
Marc-Andre Blanchard, Canada’s UN ambassador, spoke to delegations from 60 countries for a discussion hosted by the UN secretary-general focusing on sustainable finance. According to Blanchard “In G7 economies the private sector controls most capital, so how it responds to the climate crisis can have a big impact.
“We need close partnership to ensure immediate action on disclosure, developing green financial products, building resilient infrastructure, and investing in sustainability”, he said.