Canada Pension Board continues to invest in fossil fuel industry
TORONTO — The Canada Pension Plan Investment Board will keep investing in the fossil fuel industry even as it seeks to meet its sustainability target, CEO John Graham says, adding that the fund was "cautiously optimistic" about market returns given the Russia-ukraine war, the pandemic and supply chain issues.
Canada's biggest pension fund, known as CPP Investments, will not outright exit from energy companies on its path toward net-zero goals but instead will finance companies to help them transition towards netzero goals, Graham said.
"We will not pursue a path to blanket divestment. We will continue to invest in energy, oil and gas and hard to abate sectors with a view of being an engaged active investor," Graham said in an interview.
CPP, which had $539 billion under management as of the end of March, has set a goal of achieving net-zero greenhouse gas emissions by 2050 for its portfolio companies and its own operations.
Some $26 billion of CPP'S funds are in sustainable energy through private-equity investments.
CPP Investments manages pensions for 21 million Canadians.
It is closely watching inflationary trends, and Graham said the fund is betting on its diversified portfolio of investments to protect pensioners from volatile global markets.
CPP delivered a net return of 6.8 per cent in the last fiscal year and generated 11 per cent return in a decade. Investments in real assets such as infrastructure, real estate and equities has helped the firm gain a "natural protection" from inflationary pressures, Graham said.
CPP said it has no direct investments in Russia, just "passive, indirect" investments through public markets.
"They may have some exposure to Russia. But it's the management team and the board of directors of those companies that are working through what to do," Graham said.
Despite the Indian market delivering lower returns this fiscal year, Graham said CPP continues to be "constructive on investing in India."