2024 Canadian Pension Climate Report Card
OVERALL SCORE
B+
Caisse de dépôt et placement du Québec (CDPQ)
Climate Urgency
A
Climate Engagement
B-
Climate Integration
B+
Fossil Fuel Exclusions
B
Interim Targets
B
Paris-Aligned Target
A-
The 2024 Canadian Pension Climate Report Card analyses, assesses and ranks the progress made by eleven of Canada’s largest pension managers and two international pension managers in their approach to climate risk and investment decisions as they relate to the climate crisis. The report is based on publicly available information to December 31, 2024.
CDPQ is the investment manager for more than 48 client depositors, including public pension funds, insurance plans and other government funds. As of December 31, 2023, over 86% of CDPQ’s assets under management were pension funds, including the Quebec Pension Plan for 6.5 million contributors and beneficiaries.
Assets Under Management (AUM): $452 billion (June 30, 2024)
CDPQ was one of the first Canadian funds to move on climate, releasing its inaugural climate strategy in 2017 and making a net-zero commitment and co-founding the Net-Zero Asset Owner Alliance in 2019. In 2024, CDPQ reported that it was already closing in on its 2030 target to reduce emissions intensity, signalling that the time is ripe for the investment manager to make more ambitious commitments.
CDPQ broke ground in Canada in 2021 by announcing an investment exclusion on oil producers and a commitment to exit investments in oil production and oil pipeline construction by the end of 2022. CDPQ stated its goal was to avoid contributing to the growth in the global oil supply, in line with climate science. In 2024, the investment manager reported that it had completed its exit from oil production, oil refining and coal mining as of December 31, 2023. But CDPQ still holds stakes in gas and midstream oil as well as investments in private equity oil and gas funds such as Azimuth Corex and Azimuth Energy Partners III & IV.
CDPQ is showing leadership with its ‘transition envelope’—a 2021 commitment to invest $10 billion to decarbonize companies in high-emitting sectors. Other funds have made similar commitments but CDPQ stands out for transparent reporting on its decarbonization investments, including by articulating the investment and decarbonization theses and forecasting expected emissions reductions. In 2024, the fund reported that it was halfway to its $10 billion target and projected that its capital could help these companies reduce their collective footprint by 31% by 2030 and 85% by 2035.
CDPQ has demonstrated its willingness to escalate its climate engagements by voting against board members because of insufficient ambition on decarbonization. However, it has more work to do on engagement: it needs to set explicit targets and timebound milestones for public and private holdings, while setting more detailed climate expectations for external fund managers.
On climate integration, CDPQ was the first Canadian fund to disclose that it had linked staff compensation to the achievement of climate targets, and it no longer has any fossil fuel-entangled directors on its board. But it still needs to require scope 3 emissions disclosure from its portfolio companies, conduct credible climate scenario analyses and disclose the results, and implement formal requirements to ensure its board adds climate expertise and prevents future fossil fuel entanglements.
This year, CDPQ maintains its B+ score among the Canadian leaders. With other funds catching up, however, CDPQ must continue to refine its climate approach by addressing absolute and scope 3 emissions and expanding its coal and oil exclusions to include gas. Finally, CDPQ must show how it plans to use its majority stake in Énergir to transform the Québec gas utility’s business model in a credible and profitable way that aligns with the Paris Agreement goals. CDPQ’s investments in gas infrastructure, and its framing of gas as a transition fuel, are the Achilles’ heel of its climate strategy.
2024 UPDATES
CDPQ president and CEO Charles Emond continued to serve on the steering committee of the Net-Zero Asset Owner Alliance.
OVERVIEW
CDPQ has committed to reach net-zero emissions by 2050, set and achieved interim targets to reduce emissions intensity, demonstrated a commitment to real-world decarbonization through its $10 billion transition envelope, and is an active member of the Net-Zero Asset Owner Alliance, but it has not yet committed to reporting scope 3 emissions and does not have an explicit policy limiting the use of carbon offsets.
For a comparison of CDPQ’s targets with respect to other Canadian pension managers, see this report’s Table 1: Emissions Reduction Targets (total portfolio) and Table 2: Additional Climate-Related Targets.
DETAILS
Scope 3 emissions
CDPQ’s membership in the Net-Zero Asset Owner Alliance requires it to account for scope 3 emissions. An October 2023 progress report from the alliance said that “Financed (Scope 3) emissions are the most direct measure of a financial institution’s alignment with the Paris Agreement Article 2.1.c, given that the provision of capital is their core activity.”
But so far CDPQ has only reported its portfolio’s scope 1 and 2 emissions. It has highlighted the difficulty of calculating scope 3 emissions due to “inconsistent data quality and a low rate of disclosure by our companies and data suppliers.”
Netherlands-based ABP, one of the largest pension funds in the world, has acknowledged similar challenges. But ABP still includes scope 3 emissions in its commitments to reduce absolute emissions by 50 per cent by 2030 (from a 2019 baseline) and to achieve net-zero emissions across its entire investment portfolio by 2050.
Offsets
CDPQ’s membership in the Net-Zero Asset Owner Alliance also requires it to limit the use of carbon offsets. A September 2021 position paper from the Alliance said that “Asset owners should not use carbon credits to meet their decarbonization targets at portfolio level and should report any offsets separately,” and the Alliance has stated that members shall not use carbon removals for 2030 targets.
CDPQ should make its intentions clear by setting an explicit policy limiting the use of offsets to achieve its own targets and those of its portfolio companies.
2024 UPDATES
Did not set any new interim targets or strengthen existing targets.
Reported progress towards meeting existing interim targets:
Emissions intensity reduced by 59% below 2017 levels.
$5 billion invested in transition assets.
$53 billion invested in low-carbon assets.
OVERVIEW
CDPQ is well on track to meeting the interim targets it set in 2017 and raised in 2021, but it needs to maintain this momentum by setting more ambitious targets for 2030 and 2035 that address scope 3 emissions and absolute emissions.
For a comparison of CDPQ’s targets with respect to other Canadian pension managers, see this report’s Table 1: Emissions Reduction Targets (total portfolio) and Table 2: Additional Climate-Related Targets.
DETAILS
CDPQ is proud of its record as an early leader in setting and meeting ambitious interim targets. Now is the time to ratchet up its climate leadership and ambition with stronger 2030 and 2035 targets, in keeping with the message from president and CEO Charles Emond that “once a target has been reached, there’s only one good option: to raise it even higher.”
Emissions reduction
CDPQ had committed to reduce emissions intensity by 25% below 2017 levels by 2025, a commitment which it surpassed in 2021.
For 2030, CDPQ is targeting a 60% reduction from 2017 levels. CDPQ’s 2023 Sustainable Investing Report suggests the fund is on track to meet this target well ahead of schedule, having achieved a 59% reduction from 2017 levels by December 31, 2023. The report adds that this decrease in emissions intensity “is also associated with a sharp drop in the portfolio's absolute footprint.”
CDPQ should strengthen its emissions reduction commitments by setting targets for reducing absolute emissions and by incorporating scope 3 emission targets.
Investments in low-carbon assets
CDPQ has committed to reach $54 billion invested in ‘low-carbon’ assets by 2025.
CDPQ reported $53 billion invested as of December 31, 2023. CDPQ defines ‘low-carbon’ assets according to the Climate Bonds Initiative taxonomy, describing investments in real estate, renewable energy, transportation, energy storage, efficiency and green hydrogen that reduce the economy’s dependence on fossil fuels.
Investments in decarbonization
In its 2021 Climate Strategy, CDPQ committed to create a $10 billion transition envelope to decarbonize the heaviest carbon-emitting sectors.
The pension manager specified that this envelope would invest in “companies committed to a net-zero objective” and stated it would “target sectors essential to the transition but which still need to reduce their emissions”. In its 2022 Sustainable Investing Report, CDPQ stated that transition envelope investments were required to have a proven decarbonization strategy and implementation plan aligned with the Paris Agreement. CDPQ is targeting transition envelope investments in four heavy-emitting sectors: agriculture, electricity production, transportation and materials.
In 2024, CDPQ reported $5 billion in transition assets as of December 31, 2023, halfway to its $10 billion target. CDPQ stated that its capital could help these companies reduce their collective footprint by 31% by 2030 and 85% by 2035. CDPQ discloses the emissions associated with the transition envelope separately from those of the total portfolio, providing transparency into decarbonization progress.
CDPQ has not disclosed if its September 2024 agreement to acquire a stake in AES Ohio, an electrical utility with a generation mix including coal and gas, is a transition envelope investment. CDPQ must ensure that utilities in its transition envelope have a plan to phase out both coal and gas. (See more in Fossil Fuel Exclusions.)
AUM covered by a science-based decarbonization target
CDPQ has not yet set interim targets for reaching certain percentages of AUM with science-based decarbonization plans in place.
CDPQ did report, however, that by the end of 2023 it had $50 billion invested in assets that are aligned with the Paris Agreement, as defined by the Science Based Targets initiative (SBTi). This amount is an increase from the nearly $37 billion in SBTi-compliant investments the fund reported for the end of 2022, and is in addition to the $53 billion in low-carbon assets (mentioned above).
2024 UPDATES
CDPQ has continued to highlight the urgency of credible climate action by investors in its reports and at high-profile events.
OVERVIEW
At a time of political backlash against the Paris Agreement, climate action and sustainable investing, CDPQ executives have continued to speak publicly about institutional investors’ responsibility to influence the trajectory of the climate crisis.
DETAILS
CDPQ’s public messaging continues to acknowledge the urgency and existential nature of the climate crisis, embrace its agency in influencing the trajectory of the crisis, articulate that sustainability is at the heart of its priorities, and assert its leadership on climate-related matters. CDPQ should use its influence and credibility to encourage other major investors to take similar public positions.
Sample language
CDPQ’s Sustainable Development Action Plan 2023–2028 clearly articulates its determination to centre climate in its investment strategy:
“Sustainability is at the heart of our priorities, and we assert our leadership, especially in climate-related matters. We aim in particular to continue our contribution to decarbonizing the entire real economy and achieving a carbon neutral portfolio by 2050.“
In the same document, CDPQ’s president and CEO acknowledged that:
“As an investor in thousands of companies, a property owner and an infrastructure leader, we have significant influence on the business community and the communities where we do business.”
CDPQ’s global head of sustainability added that:
“As a global investment group, we have a critical role to play and a significant capacity to take action in the fight against climate change.”
CDPQ executives have also spoken about the opportunities inherent in the energy transition. Speaking to thousands of global institutional investors at the Principles for Responsible Investment conference in Toronto in October 2024, the investment manager’s head of sustainability said that “We are very happy to be out of the oil sector,” and that reinvesting in clean energy had generated an 18% annual return.
Despite such remarks, CDPQ has failed to publicly acknowledge the need for a rapid phaseout of gas along a Paris-aligned trajectory, and has concerningly attempted to frame gas as a transition fuel.
CDPQ should continue to use its influence and credibility to highlight the urgency of credible climate action and must communicate the imperative for gas phaseout.
2024 UPDATES
An analysis of climate-related shareholder resolutions indicates that CDPQ is generally voting in line with its climate guidelines.
Reported voting against the re-election of board members at nine companies because of insufficient ambition on decarbonization.
Reported sending letters to five portfolio companies encouraging them to join a methane reduction partnership.
Updated methodology for rating external managers to include an assessment on climate, although details are vague.
Signed on to the 2024 Global Investor Statement to Governments on the Climate Crisis.
OVERVIEW
CDPQ has signalled strong climate expectations for its portfolio companies through its own climate commitments and willingness to escalate and divest. And it has followed through on its guidelines for engaging with public companies by voting against board members who showed insufficient ambition on decarbonization and by voting in favour of climate-related shareholder resolutions. However, CDPQ’s engagement process could be strengthened with explicit targets for the success of its climate-related engagements, the addition of time-bound milestones for companies to achieve, and better direction for external managers.
DETAILS
Expectations and escalation
CDPQ’s investment exclusions on coal mining and oil production, and its willingness to use divestment as part of its engagement toolkit, send a strong signal to owned companies that the investment manager expects them to have a credible plan to transition to a net-zero economy. CDPQ’s proxy voting guidelines (see below) similarly set the expectation that owned companies disclose and manage climate risk such that CDPQ can align its portfolio with net-zero emissions by 2050.
CDPQ states it is “opposed to any kind of contribution by companies to political parties or similar actions” and that it encourages companies to disclose any lobbying activities, but it does not prohibit owned companies from directing capital expenditure toward fossil fuel expansion or lobbying against climate action. Nor does it set expectations for owned companies to tie executive compensation to the achievement of climate targets. CDPQ must strengthen its expectations on capital expenditure, lobbying and compensation in order to ensure its own companies are not undermining CDPQ’s climate commitments.
Proxy Voting Guidelines
CDPQ’s proxy voting guidelines, updated in April 2024, say that CDPQ will generally support proposals that call for disclosure aligned with the Task Force on Climate-Related Financial Disclosures (TCFD), the adoption of greenhouse gas reduction targets and accountability to achieve them, climate scenario analysis “when necessary”, and disclosure of lobbying activities, “especially with regard to climate lobbying carried out by companies and their professional associations.” The guidelines also state that CDPQ may vote against a committee or board chair “if it deems that no sufficient progress has been made on the climate front.”
CDPQ has followed through on this commitment, demonstrating a willingness to escalate its engagement when necessary. CDPQ reported that it voted against the re-election of specific board members at nine companies in 2023 because of insufficient ambition on decarbonization – targeting those board members responsible for sustainability and climate. The previous year, CDPQ voted against board members at 10 companies for this reason. CDPQ said in its 2023 Sustainable Investing Report that it selects these companies based on information disclosed by Climate Action 100+, explaining that “Each year, this group of investors identifies the largest GHG emitters that are not sufficiently ambitious in the fight against climate change. Our aim is to encourage the companies we have targeted to reform their practices and set more ambitious targets.”
According to a February 2024 Investors for Paris Compliance (I4PC) analysis of a selection of shareholder resolutions from 2023 that aligned with Climate Engagement Canada and Climate Action 100+ principles, CDPQ voted in favour of 16 and against two. CDPQ’s 89% rate of support in I4PC’s 2023 analysis was an encouraging increase from its 33% rate of support in I4PC’s 2022 analysis.
External managers
CDPQ’s Policy on Sustainable Investing details that it “expects external managers with whom it does business to factor ESG issues into their investment processes, particularly by complying with CDPQ’s approach to exclusions.” CDPQ had previously reported that its oil exclusion policy would be incorporated into any new external management agreement, and that existing external managers were encouraged to match CDPQ’s target of completing its exit from oil production by the end of 2022.
CDPQ reports that it updated its methodology for rating external managers in 2023. The new methodology includes a grid to assess their maturity according to various ESG factors including climate, but remains fairly vague.
CDPQ should establish timebound, results-based targets for engaging with external managers on Paris-alignment, and require that all new or renewed external management agreements adhere to a Paris-aligned investment strategy.
Collaborative engagement
CDPQ is a member of CA100+ and says that its engagement and shareholder voting activities with public companies “are aimed at demanding the implementation of concrete plans and the adoption of decarbonization targets aligned with the Paris Agreement.” As mentioned above, CDPQ has said it relied on information provided by CA100+ when selecting board members to vote against for lack of ambition on climate. But few other details of its CA100+ engagement are provided.
CDPQ is a signatory to the Oil & Gas Methane Partnership 2.0, a collaborative engagement campaign run by the United Nations Environment Programme that seeks to reduce methane emissions. For 2023, CDPQ reported sending letters to five portfolio companies “to encourage them to join this initiative and develop best practices in emission reduction.”
Policy engagement
In December 2024, CDPQ joined other major Canadian investment managers in affirming support for the Canadian Sustainability Standards Board’s proposed disclosure standards and urging the corporate sector not to delay implementation. CDPQ also joined more than 600 other institutional investors in signing on to the 2024 Global Investor Statement to Governments on the Climate Crisis, a call for climate policy implementation and a whole-of-government climate approach from all levels of government.
While these joint statements are a start, CDPQ must do more to use its influence to advocate that governments in Quebec, Canada and around the world develop and implement stringent and durable laws, policies and regulations that accelerate emissions reductions in line with the Paris Agreement.
2024 UPDATES
CDPQ no longer has any fossil fuel-entangled directors on its board, following the departure of Maria S. Jelescu Dreyfus in 2024.
Conducted its first analysis of how its portfolio assets in vulnerable countries would be affected by natural disasters and the resulting macroeconomic shocks.
OVERVIEW
CDPQ is a founding member of an accountable Paris-aligned investor group, provides significant disclosure of its holdings, has no known fossil fuel entanglements among its current board members, and has linked staff compensation with climate targets since 2018. CDPQ should push for scope 3 emissions disclosure from its portfolio companies, disclose the results of climate scenario analyses, and implement formal requirements regarding climate expertise and fossil fuel entanglements when selecting board members.
DETAILS
Accountable Paris-aligned membership
CDPQ is an active member of the Net-Zero Asset Owner Alliance. CDPQ president and CEO Charles Emond serves on the alliance’s steering committee and other CDPQ representatives serve on various working groups.
CDPQ, the Investment Management Corporation of Ontario and the University Pension Plan are the only Canadian investment managers in this report to be members of an accountable and credible Paris-aligned body.
Transparency and disclosure of holdings
CDPQ discloses its investments and their valuations in an “Additional Information” report that accompanies its annual report and financial statements. While the format means the information is difficult to use and interpret, CDPQ discloses significantly more information about its holdings than most other Canadian pension funds.
Transparency and disclosure of climate risk
Climate scenario analysis
CDPQ has not disclosed undertaking a 1.5°C degree climate scenario analysis on its portfolio, but provides in its Task Force on Climate-related Financial Disclosures (TCFD) above-average detail on how the fund is assessing physical risk and transition risk.
CDPQ’s 2023 Sustainable Investing Report (TCFD section) notes that the fund undertook a review of the transition risks of its entire investment portfolio in 2021, and continues to use a transition risk framework to evaluate risks both pre and post investment. The framework considers the company’s business model and exposure to transition risks; factors including regulatory or political action, technological innovations, market risks, lawsuit, and reputational risks; and assesses risk across a short, medium, and long term horizon. CDPQ reported that in the short-term its exposure to transition risk is low, with 96% of the portfolio considered “low sensitivity” or “favourable” to the transition as of December 31, 2023. CDPQ noted that its negative exposure to transition risk increases in the medium and long term horizons. The fund credits its exit from oil production, thermal coal mining and thermal coal generation for reducing the portfolio’s transition risk.
Also in its 2023 Sustainable Investing Report (TCFD section), CDPQ reported conducting its first ever analysis of how its portfolio assets in a vulnerable country might be affected by a climate-related natural disaster and the resulting macroeconomic shock. CDPQ did not disclose the results of this analysis.
CDPQ has used the Climanomics tool since co-developing it in 2020 and continues to use it to measure physical climate risks in financial terms.
Portfolio carbon footprint
CDPQ provides detailed disclosure of its GHG metrics, methodology and considerations in gathering and reporting data. In its 2023 Sustainable Investing Report (TCFD section), CDPQ disclosed the “carbon footprint calculation perimeter”, reported the absolute total portfolio footprint and the carbon intensity of the portfolio broken down by asset class, and reported separately on government bonds and on its transition envelope. CDPQ provided a data quality score and obtained limited third party assurance on a subset of metrics.
CDPQ is not yet including scope 3 financed emissions data in its calculations, noting that this data is “either unavailable or not sufficiently reliable”. In 2022, CDPQ analysed the scope 3 data from its portfolio companies and found “inconsistent data quality and a low rate of disclosure.”
Board climate expertise and/or fossil fuel entanglement
CDPQ has not disclosed any formal requirements for climate expertise on its board, nor placed any formal restrictions on board members with fossil fuel entanglements. Its 2023 Annual Report lists “Sustainability/ESG” as a specialty or expertise on its board skills matrix, reporting that five of 12 directors had this expertise as of December 31, 2023. This breakdown does not provide any useful information about climate risk expertise on the board, however, so CDPQ should report this expertise as a distinct category.
At present, none of CDPQ’s 14 board members have any known fossil fuel entanglements. Shift noted one fossil fuel-entangled director – Maria S. Jelescu Dreyfus – in 2023, when Dreyfus’ appointment was renewed for a second four-year term. But the CDPQ website indicates that Dreyfus was no longer a member of the CDPQ board as of December 31, 2024. Dreyfus joined the board of ExxonMobil on May 3, 2024.
Executive compensation and climate
CDPQ has linked the compensation of its executives and portfolio managers to achieving climate targets since 2018. It has had carbon budgets and annual carbon reduction targets in place for each of its portfolios since 2017. Portfolio managers continue to be required to incorporate carbon budgets into their investment decisions “on equal footing with their performance objectives. Their variable compensation depends on it.”
2024 UPDATES
Completed exit from oil production and refining, following earlier exit from coal mining.
Provided additional detail regarding exclusion on coal investments. However, CDPQ announced in September 2024 that it had agreed to acquire a stake in an electrical utility with 15% coal in its power generation mix, and did not explain how this acquisition could be aligned with net-zero.
Still no exclusions on gas.
OVERVIEW
CDPQ’s exclusions on and divestments from coal and oil make it a leader among Canadian pension funds, but its ongoing investments in gas and its misleading framing of gas as a transition fuel are the Achilles’ heel of its climate strategy.
For a comparison of CDPQ’s fossil fuel exclusions with respect to other Canadian pension managers, see this report’s Table 3: Fossil Fuel Exclusions. For a list of all of the disclosed fossil fuel investments held by Canadian pension funds analysed in this report, see this report's Table 4: Fossil Fuel Investments.
DETAILS
CDPQ excludes investment in new thermal coal projects, oil producers and oil pipelines, and has finalized its exit from coal mining and from the oil sector. Its 2023 Sustainable Investing Report clearly states its position on these two fossil fuels: “we no longer want to contribute to the supply of these two types of energy, which are not energies of the future.”
But CDPQ is also a major owner of gas infrastructure. The investment manager has not yet placed a formal exclusion on new investments in gas, although many gas producers would be covered by CDPQ’s oil exclusion due to being producers of both oil and gas.
Oil
CDPQ has announced the completion of its exit from oil production and oil refining as of the end of 2023, after narrowly missing its original end-of-2022 timeline because of a single $200 million investment. The 2023 Sustainable Investing Report charts CDPQ’s steady year-over-year divestment from its actively managed investments in oil production, from $8.5 billion in 2017 to a complete exit in 2023.
CDPQ’s exclusion on oil production covers extraction and refining, new operational or expansion projects, and companies in the sector. CDPQ also has an exclusion on any investments in or the financing of new oil pipelines, which extends to any related projects by public or private companies.
CDPQ does not, however, have an exclusion on new investments in existing oil pipelines, nor does it have a clear phase-out plan for such assets. CDPQ owns a 16.6% stake in Colonial Pipeline, which operates the United States’ largest pipeline for refined oil products. Media reports from 2024 suggest that CDPQ and its partners are looking to sell the company.
Coal
CDPQ had previously joined the Powering Past Coal Alliance (2021), announced the completion of its exit from coal mining (2022), and said it was “making clear demands on portfolio companies in the thermal coal-fired power generation sector to implement a concrete transition process.”
CDPQ’s 2023 Sustainable Investing Report highlighted its exclusions on any new investments in coal mining and coal-fired power generation (outside of its transition envelope). The report also declared CDPQ’s commitment to the Net-Zero Asset Owner Alliance’s position on coal, which requires members to withdraw—by 2030 in industrialized countries and by 2040 in emerging countries—from projects or companies that are not aligned with a 1.5°C decarbonization trajectory.
However, in September 2024, CDPQ acquired a 30% stake in AES Ohio, whose reported power generation mix for the first quarter of 2024 was 15% coal and 43% gas. CDPQ has not specified whether or not it considers this investment part of its “transition envelope.” CDPQ’s 2022 Sustainable Investing Report described an investment in AES Indiana as a transition investment, noting that the investment would allow the electricity provider to “replace coal-fired generation units with renewable energy by the end of 2023.” Concerningly, a Glasgow Financial Alliance for Net Zero (GFANZ) case study about CDPQ’s investment in AES Indiana explains that while the utility has a commitment to achieve net-zero emissions from electricity by 2040, its current plans involve swapping out coal-fired generation with gas.
CDPQ must disclose how its transition envelope investments are net-zero aligned. The fund has yet to disclose its commitment to decarbonize AES Ohio, and the Sortons la Caisse du carbone coalition has warned that the American utility is not on track to align with the objectives of the Paris Agreement.
Gas
CDPQ still has no exclusions on gas, and is a major owner of gas transmission and distribution infrastructure in Quebec, the United States and Brazil.
The investment manager owns an 80.9% stake in Quebec’s largest gas distributor, Énergir. This utility accounts for 15% of Quebec’s energy profile. CDPQ has said that the company “is well aware of the footprint it generates” and that “it has drawn up a concrete plan to limit and reduce its emissions, as well as those of its customers, by 2030.” But the Sortons la Caisse du carbone coalition has warned that Énergir’s decarbonization plan overestimates the emissions reduction potential of so-called “renewable” natural gas and relies on the expensive and unscalable use of hydrogen and carbon capture technologies. Shift reminded Canada’s major pensions about the serious climate impacts and stranded asset risks of their gas holdings in January 2025, publishing expert analysis showing why switching to hydrogen is not a viable pathway for transitioning gas infrastructure.
CDPQ must redouble its efforts to reorient Énergir’s business model, especially in light of the Quebec government’s plans to ban gas heating systems from non-industrial buildings by 2040 and Énergir’s struggles to deliver a sufficient proportion of “renewable” natural gas in its energy mix.
In the case of Énergir, CDPQ might claim to be fulfilling its dual mandate by taking on the difficult responsibility of stewarding a legacy Quebec energy provider on its narrow pathway to decarbonization. But CDPQ’s steadily increased ownership stake in Transportadora Associada de Gás S.A.—a 4,500-km gas pipeline network in Brazil—cannot be excused as a contribution to Quebec’s economic development.
Also concerning is the misleading framing of gas as a transition fuel that is “much less polluting than oil and coal” in CDPQ’s 2023 Sustainable Investing Report. Research has shown that the lifecycle greenhouse gas emissions of liquefied natural gas (LNG) can be significantly greater than those of coal, largely due to significant methane leakage during the production, transport and liquefaction of LNG. These emissions are systematically discounted in analyses produced by gas companies.
CDPQ’s support for gas fails to recognize that, with global demand for coal and oil already projected to decline in the near future, continued investment in gas is an obstacle, not a bridge, to a renewable future.
ESTIMATED INVESTMENTS IN FOSSIL FUELS
$22.4 billion
At minimum, CDPQ had $22.4 billion invested in fossil fuels as of December 31, 2023. According to the fund’s 2023 Sustainable Investing Report, 2.1% of the dollar value of CDPQ's portfolio carbon footprint, using a “calculation perimeter” of $422 billion, was invested in “energy” and 3.2% was invested in “non-renewable electricity” at the end of 2023.
This appears to be a decrease from December 31, 2022, when CDPQ reported 3% of its holdings invested in “energy” and 3% invested in “non-renewable electricity” for an estimated total of $24 billion in fossil fuel investments.
CDPQ’s known fossil fuel assets include:
A 16.6% ownership interest in Colonial Pipeline.
An 80.9% ownership stake in Énergir.
A 79.9% ownership stake in Southern Star Acquisition Corporation, which owns and operates the Southern Star Central Gas Pipeline.
A 50% stake in Transportadora Associada de Gás S.A.
Investments in private equity oil and gas funds such as Azimuth Corex and Azimuth Energy Partners III & IV.
Achieving global leadership
Achieve at least a 50% absolute reduction in financed emissions by 2030, taking into account both direct and indirect (scope 3) emissions.
Align climate strategy and sustainable investing policies with the recommendations for financial institutions from the United Nations' High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities.
Integrate into its pre-investment criteria the principles of the United Nations Declaration on the Rights of Indigenous Peoples and specify in proxy voting guidelines that the fund will vote in favour of proposals requiring companies to demonstrate the Free, Prior and Informed Consent of Indigenous Peoples for projects that affect their traditional lands and waters.
Build on climate leadership and biodiversity efforts by developing a policy of not investing or financing businesses linked to deforestation, and of eliminating agricultural commodity-driven deforestation from CDPQ’s investment and credit portfolios by 2025.
Overall
Publicly acknowledge the consensus science, including from the Intergovernmental Panel on Climate Change and the International Energy Agency, that limiting global temperature increase to 1.5°C requires an immediate end to the expansion of not just oil and coal but also gas, along with the rapid phase-out of existing infrastructure.
Paris-aligned target
Report scope 3 emissions and develop scope 3 targets.
In line with Net-Zero Asset Owner Alliance membership, place a public limit on the use of carbon offsets to achieve CDPQ’s reduction targets or the targets of its portfolio companies.
Interim targets
Set more ambitious interim targets for 2030 and 2035 that address scope 3 emissions and absolute emissions.
Communication of climate urgency
Continue to speak out publicly about institutional investors’ responsibility to influence the trajectory of the climate crisis, sharing lessons learned from CDPQ’s climate progress.
Climate engagement
Engage with owned companies to ensure they rapidly develop profitable and credible net-zero pathways. Set time-bound targets to measure the success of climate engagements and set a process for escalating to divestment in cases of non-compliance.
Set an expectation that owned companies:
tie executive compensation to the achievement of climate targets;
refrain from lobbying against climate action, directly or through industry associations; and
refrain from directing capital toward gas expansion.
Establish timebound, results-based targets for engaging with external fund managers on Paris-alignment.
Require that all new or renewed external fund manager contracts adhere to a Paris-aligned investment strategy.
Build on public advocacy for mandatory standardized climate risk disclosure and become a vocal proponent of stringent, ambitious, Paris-aligned climate and energy policies that provide certainty for companies and investors.
Climate integration
Measure and report scope 3 emissions data.
Disclose the results of a 1.5°C climate scenario analysis.
Require specific climate expertise on CDPQ’s board of directors, beyond generalized references to “Sustainable Investing/ESG” expertise.
Avoid climate-related conflicts of interest and refrain from (re-)appointing directors with concurrent fossil fuel directorships to CDPQ’s board of directors.
Establish a minimum time that must elapse between holding a fossil fuel directorship and joining the CDPQ board.
Fossil fuel exclusions
Divest from gas producers.
Exclude any new investments in oil pipelines, gas production and gas pipelines.
Release a timeline and plan for the managed phase-out of legacy oil pipeline investments and fossil gas assets, including demonstrating how CDPQ will use its majority stake in Quebec-based Énergir to transform the gas utility’s business model in a way that aligns with the Paris Agreement.
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