Too many investors still see climate action as anti-profit, says Quebec pension fund boss

Too many investors are still seeing climate action as a restraint on profit, the president of one of Canada’s biggest pension plans told a room full of foreign government officials and private sector leaders Tuesday.

Michael Sabia, the president of Caisse de dépôt et placement du Québec, which manages $300 billion in assets, made the remarks at the opening of a meeting on the “new climate economy,” organized on the edges of the G7 environment ministerial in Halifax.

“Too many investors, even long-term oriented investors today, still see climate change as a constraint — something that forces them to make a choice, to compromise their returns, and therefore runs counter to their fiduciary obligations to their clients,” said Sabia.

“As long-term investors, collectively, we need to think differently, because addressing climate change is not only about what you stop doing — more importantly, it’s about what you start doing.”

Sabia didn’t name specific investors or governments at the meeting in a hotel conference room, but spoke about the trillions of dollars in economic gains that studies have shown will be available to nations that shift to a low-carbon economy.

Reporters were permitted to hear opening remarks from some speakers before they were ushered from the room.

Nicholas Stern, chair of the U.K.-based Grantham Research Institute on Climate Change and the Environment,was expected to prepare a briefing on the rest of the closed-door meeting for the environment ministers from the Group of Seven nations meeting on Wednesday.

The pension plan was among Canadian companies listed as some of the top investors in new coal power plants overseas, according to a December 2017 report by Friends of the Earth Canada and Germany's Urgewald. The federal government has been pushing to phase-out coal power worldwide.

Asked by National Observer after the meeting whether the group had discussed investments in coal power, Marc-André Blanchard, Canada’s ambassador to the United Nations, said “we discussed infrastructure in a very wide sense.”

“We discussed the necessity to build resilient infrastructure, low-carbon infrastructure, the fact that there are many opportunities in renewable energy," he said.

In June, La Caisse and Ontario Teachers' Pension Plan announced a partnership with the Canadian government and several financial services companies in G7 countries to come up with a unified approach to disclose climate-related risks, among other objectives.

The pension plan also produced a climate change strategy in 2017, committing to a 25 per cent decrease in carbon pollution per dollar invested by 2025, a 50 per cent increase in “low-carbon investments” by 2020 and to “factor climate change into all our investment activities and decisions.”

Three federal Canadian ministers will co-host their counterparts from France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union, this week for meetings on energy, oceans and fisheries, plastics and marine waste, and a just transition for workers in the fossil fuel industry.

Climate becoming ‘people’s issue’ says Caisse boss

Sabia has worked at high levels in both government and business, as a deputy secretary in the Privy Council Office and as president of Bell Canada International and chief financial officer at Canadian National Railway. He also said the pension plan has noticed that consumer attitudes and buying patterns are now changing.

“Climate change is becoming a popular issue, a people’s issue. We see this frequently — we see it in the companies we invest in,” he said. “How? Because their growing concern is to ensure that their brands are seen by the public to be on the right side of this defining issue.”

He said across industries as diverse as real estate, agriculture, transportation and electronics, there has been progress on reducing emissions, “but frankly, not enough.”

As an example of the scope he envisions, he said at least 50,000 megawatts of new wind power is being installed annually, the same as produced in a year by Hydro Quebec, which he said was the fourth-largest hydro producer in the world. Meanwhile, solar power’s price is five times lower than a decade ago, and in several countries, such as India and China, solar is cheaper than coal and gas plants.

Sabia also took aim at governments, although not naming any, noting that while some have introduced carbon pricing and reformed their tax code to address climate change, “obviously, in other countries, governments are going to need to demonstrate greater leadership on this issue.”

And he noted the urgency of climate change, compounded by “growing economic pressure on the middle class and the related issues of the rise of populism and trade protectionism around the world.”

“Climate change is real; it’s gone beyond the point of being a risk,” said Sabia.

“We see its impact every day — heat waves and drought in Europe this summer; record temperatures; 33 degrees Celsius north of the Arctic circle in Finland...in North America, pretty extreme weather events, deadly hurricanes, floods, wildfires.”

‘Governments alone cannot do it’: Canadian envoy

Blanchard, Canada’s ambassador, also gave opening remarks. He noted that Jamaica — one of the non-G7 countries, along with Marshall Islands, Norway and South Africa who sent representatives to the meeting — had worked with Canada to secure a crucial UN meeting.

Courtenay Rattray, Jamaican ambassador to the United Nations, “and the leadership of the entire Jamaican government,” helped Canada round up 60 countries for a discussion at the UN hosted by the secretary-general focusing on sustainable finance, said Blanchard.

“We’re here to show leadership and demonstrate a sense urgency through commitment,” he said. “Lots of capital is urgently needed. Governments alone cannot do it.”

In G7 economies, added Blanchard, the private sector controls most capital, so how it responds to the climate crisis can have a big impact.

“We need close partnership to ensure immediate action on disclosure, developing green financial products, building resilient infrastructure, and investing in sustainability," he said.