Mergers & Acquisitions names the 2021 PE Innovators in ESG, including, Canada Pension Plan Investment Board.
CPPIB’s long-term investment horizon is no excuse to put environmental commitments on the backburner. The 24-year-old pension fund, with about $419 billion in assets under management, doubled its renewable energy investment to $6.6 billion through June 2020 according to its most recent ESG guidance, and is committed to using its voice to advocate for progress at ownership companies.
“Boards and management teams have a clear responsibility to identify, manage and communicate the relevant impacts from the full range of ESG issues,” reads the Toronto-based fund’s most recent sustainability report. “While our investment horizon permits patience and allows us to work with businesses to better understand their approach to integrating material ESG factors into their strategy, inaction with respect to these factors is no longer a viable long-term strategy.”
That means pushing companies to publish data on ESG targets and progress rather than simply crafting policies. Where possible, the pension plan also attempts to align portfolio companies with comparable metric systems established by the Sustainability Accounting Standards Board and the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. And CPPIB is working with Carlyle and Calpers on the recently announced initiative to standardize on common metrics.
CPPIB’s own ESG framework screened 100 “major investments” for climate-related impacts, sending a message that another one of the market’s largest money managers increasingly factors environmental effects into investment decisions.