CDPQ, Sarasin and SURA join Portfolio Decarbonization Coalition: Members now oversee more than US$800 billion in decarbonization strategies
12 December, 2017
In the latest demonstration of institutional investors’ commitment to taking action on climate change, asset owner La Caisse de dépôt et placement du Québec (CDPQ), as well as asset managers Sarasin and Partners and Latin America-based SURA Asset Management have today joined the United Nations’ Portfolio Decarbonization Coalition (PDC).
With the addition of these three large institutional investors, the Coalition now convenes 32 investors overseeing the gradual decarbonization of a total of more than USD 800 billion in assets under management (AUM). This has dramatically surpassed the Coalition’s original target of USD 100 billion by 2015 by a factor of 8.
By joining the Coalition, and pledging to manage their core investment portfolios to achieve decarbonisation, the three organizations are sending a strong signal on the importance of mitigating climate change to the world’s governments gathering in Paris for President Macron’s One Planet Summit.
“Investments with more carbon translate to higher risk, not just from potential carbon fees or pricing, but also from shifts in technology that can leave high carbon assets stranded,” said Erik Solheim, Head of UN Environment. UN Environment’s Finance Initiative is a co-founder of the Portfolio Decarbonization Coalition.
“The success of the Coalition is a clear signal to both governments and companies that climate change, and the strategies with which companies across sectors respond, are already firmly on the radar-screen of the world’s largest investors; and that they are there to stay,” said Solheim.
Portfolio decarbonization means investors systemically integrate carbon-related information, such as fossil-fuel-derived revenues, into portfolio design and capital allocation, signaling that climate change, and the corporate response to it, will be critical to shareholder value and investor interests going forward.
La Caisse de dépôt et placement du Québec has committed to, among other targets, a 25% reduction in the carbon footprint per dollar invested by 2025, for a total of USD 195 billion of assets under management (including all asset classes except sovereign debt), as well as an increase of 50%, so USD 8 billion, into low-carbon investments by 2020.
Michael Sabia, President and Chief Executive Officer of CDPQ said: ““Our strategy is based on our commitment that climate change will factor into each and every investment decision we make across the breadth of our portfolio. This is why we set a short-term target to increase our investments in low carbon assets by over $8 billion, and a medium-term target to reduce our carbon footprint by 25% per dollar invested. Moreover, our engagement with our portfolio companies will also be a key element of our plan: we strongly believe that information sharing and collaboration are necessary to develop credible standards that have a positive impact on markets.”
Co-founded by the United Nations Environment Finance Initiative (UNEP FI), the Fourth Swedish National Pension Fund, AP4, Europe’s largest asset manager, Amundi, and CDP, the non-profit global environmental disclosure platform, the Coalition was launched at UN Secretary-General Ban Ki Moon’s Climate Summit in September 2014.
“PDC and its investor members have come a long way since the climate agreement in Paris in December two years ago. What was then seen as odd and unique is now becoming mainstream,” said Mats Andersson, Chair of PDC, and former CEO of AP4.
“Not only will the Coalition continue to grow. It will also see existing investor members supporting each other as they deepen their efforts to align their portfolios with a low-carbon future. It is also about monitoring and publishing the progress made by investors. And the results, as presented in this year’s progress report, speak for themselves. For instance, from 2014 to 2016 Dutch investment giant ABP reduced the carbon footprint of its equities portfolio by 16%; in France FRR achieved in 2016 a portfolio carbon intensity that was 30% lower than benchmark; and in Australia, Local Government Super outperformed its benchmark, on carbon-efficiency, by 16%; the list goes on and on,” he added.
Other investor members of the PDC include major European funds such as France’s ERAFP (AUM $26.9 billion) and the world’s largest insurance company, Germany’s Allianz Group.
Download the latest progress report here.