The Public Sector Pension Investment Board is committing to using its capital and influence to support a transition to net-zero emissions by 2050, according to its inaugural climate strategy report.
The strategy also includes commitments to curbing the intensity of its portfolio’s greenhouse gas emissions by at least 20 per cent, increase its investments in green assets to $70 billion and increase its holdings in transitional assets to $7.5 billion, while reducing its exposure to carbon intensive assets by 50 per cent — all by 2026. It also intends to obtain reliable carbon disclosures for 80 per cent of its portfolio within the same period.
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The report also included PSP Investments’ green asset taxonomy, an internal classification system used to assess the firm’s exposure to climate-relevant investments across its portfolio. It’s intended to help measure and manage exposure to green, transitional and carbon-intensive assets.
In a press release, Neil Cunningham, president and chief executive officer of PSP Investments, said the strategy will allow the organization to position its portfolio to benefit from the energy transition. “Research shows that corporations that are actively managed and plan for climate change can secure a higher return on investment as compared with companies that do not. By executing its climate strategy, I believe that PSP Investments can support the transition to global net-zero emissions by investing for a better tomorrow.”
According to a statement from Shift Action for Pension Wealth and Planet Health, PSP Investments’ climate strategy would be improved by using clearer language. “The strategy’s commitments and implementation plans are lacking in clarity, but it’s clear that [PSP Investments] is listening to the growing concerns of beneficiaries and beginning to recognize the scale and urgency of the climate crisis,” wrote Adam Scott, the organization’s director, and Patrick DeRochie, its senior manager, both authors of the statement.
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According to the statement, the language used in pledging net-zero portfolio emissions by 2050 wasn’t necessarily aligned with the Canadian government’s Paris Agreement obligations. “When clearly stated, such commitments should signal an important change in expectations for investment markets. We are hopeful that [PSP Investments] will further clarify this commitment and soon become the seventh major Canadian pension fund to make a net-zero emissions by 2050 pledge.”
The statement noted the commitment to reduce the emissions’ intensity was less ambitious than those set out by other Canadian public sector defined benefit plans. In 2019, the Ontario Teachers’ Pension Plan committed to cutting its portfolio’s carbon footprint by 45 per cent while, in 2017, the Caisse de dépôt et placement du Québec announced it would reduce its portfolio’s footprint by 60 per cent by 2030.
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