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Bertrand Villon
Managing Director - Private Equity Direct Investments
Caisse de Dépôt et Placement du Québec (CDPQ)

17 November 2022

How has the CDPQ managed to stay ahead of 2030 and 2050 green targets? 

We started literally the day after COP 21, the Paris Agreement in December 2015. Climate is something that presents huge investment opportunities, and also significant risks. CDPQ needed to have a view, a policy as to how to invest practically in it. In October 2017, we came up with our first policy and set targets to do green investments and reduce the footprint by 2025. Importantly, we attached bonuses to achieving these targets internally for everybody. When you start linking compensation to achieving climate targets, you have people's attention. The result is we have exceeded both our green investment and intensity reduction targets. 

In the end, for any company whether a finance organisation or a manufacturing one it is not just about doing things for the planet. All companies have a duty to make financial returns. Doing the right thing for the planet by reducing their footprint should help companies position themselves to be competitive in the future and deliver product, services and investment returns that are attractive to their clients.  To achieve this. Everyone needs to be on board within the company, not just senior management. 

How is the creation of intangibles impacting markets and investor profile mentalities?

This is a very important aspect – and I think there has been a bit of erosion when it comes to investing in bricks and mortar. Solutions are not companies, there is no quick fix or virtual solution to this. The vast majority of what we need has to be built. Politicians say we need to put renewables on the planet, but we need to make the windmills and solar panels. It all does not boil down to somebody typing a code on a computer system. It is very real and we are grappling with the evolving mentalities around it. If there is one thing that is certain, is that there is no shortage of money to finance the transition, but there is a shortage of policy and ambition.  Governments must convert their lofty net-zero announcement to actionable policies by companies and investors on the ground. 

What is your vision for the CDPQ in the next few years?

CDPQ is here for the long term. As a pension plan, we are not here to do a quick deal and walk away from it shortly thereafter. We are here to deploy the capital and make it generate a return in a sustainable way over decades, in a way that works for us as a financial entity, for our depositors as the beneficiaries of the CDPQ and the planet.  We have an ambitious plan to invest in Europe, as a very important part of the world and a large economy. There are very significant investment needs to be completed in order to reduce reliance on fossil fuels, for example.

And a final message for the International Newsweek readership?

We invest heavily in renewables, and make all sorts of green investments, but need government to tell us where they want this type of infrastructure. 

 

It is not for investors to design the future energy infrastructure of a country. We need government policy to work in tandem with the private sector, which is not yet happening. Finance cannot solve it alone. 

 

What we saw with Ukraine and Russia is exhibit number one; a crisis in supply. Countries are scrambling because there is no alternative to fossil fuels today. Germany, for example, is making energy processes that were not initially considered environmentally friendly, green. Governments are changing their protocols out of necessity. It is paramount that alternative to fossil fuels be developed at scale, in order to be able to cut back on oil first, and gas afterwards. We need policy to develop renewables and the grid that goes along with them. Ministries of the Environment are often working in some sort of silo – when these climate change issues need to be spread within every ministry, from finance to industry, and they each need a climate change group. 

The consumer needs to move as well – because if they do –  industry will follow. We also need obligatory climate change classes and awareness to be built into educational systems. Essentially, we all need to work together. Companies need to work together, from the marketing to the supply, to the floor shop, to human resources. This is going to take time, and we need to accelerate the pace, but we will get there. 

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