Engaging in a just energy transition

The Fonds announced its commitment in September 2018 to achieve a 25% reduction in the carbon footprint of its securities in publicly traded companies by 2025. After one year, the Fonds has made substantial progress. Carbon intensity fell from 71 to 61 tonnes of CO2 equivalent per million dollars invested.

 

This 14% decrease, largely attributable to its decision to integrate $1.4 billion of its assets into the MSCI World Low Carbon ESG Target Screened Index. This integration led to the sale of securities of several companies with high carbon emissions while promoting the purchase of securities of companies with superior environmental, social and governance (ESG) practices

 

This represents a 14% reduction, due in part to its decision to include $1.4 billion of its assets in the MSCI World Low Carbon ESG Target Screened Index. This integration led to the sale of several carbon-intensive companies while encouraging the purchase of companies with superior environmental, social and governance (ESG) practices. 

 

In addition to collaborating on the development of this new index, which takes into account both the carbon content of the companies included in the index as well as environmental, social and governance (ESG) aspects, the Fonds was the first investor in the world to adopt it. The combination of these two dimensions, carbon intensity and ESG considerations, attests to the Fonds’ ambition to act within a global sustainable development perspective.

 

The Fonds aims to continue its efforts to reduce the carbon intensity content of its investments in listed companies over the next few years.

ENCOURAGE ENERGY EFFICIENCY

During the year, seeking as always to offer added value to our partner companies, we developed a coaching approach to support them in improving their energy efficiency. Jointly designed with subject matter experts, the approach makes it possible to conduct an audit of the company's activities and processes to identify opportunities for improving energy efficiency. The Fonds’ investment teams will be able to offer partner companies the opportunity to conduct such an audit at no cost. The partner companies will then have the choice of whether or not to proceed with any of the recommendations resulting from the audit. If necessary, the Fonds will be able to support them in two ways: by informing them of the subsidy programs available to them and by offering them the financial support needed to implement the selected projects.

 

QUÉBEC-WIDE TOUR FOR A JUST ENERGY TRANSITION

 

In addition to the initiatives set out in its action plan, during the year the Fonds partnered with the FTQ and the Institut de recherche en économie contemporaine (IRÉC) to conduct a Quebec-wide tour on the theme of just energy transition. Held as a series of reflection and training days and open to anyone interested in the economic development of their region, these meetings provided a chance to take stock of the impacts and opportunities arising from a transition to a low-carbon economy.

 

INCREASE OUR IMPACT THROUGH INVESTMENTS IN CLEAN TECHNOLOGY FUNDS

 

The transition to a low-carbon economy, which is already underway and will accelerate in the coming years, will provide investment opportunities that the Fonds aims to seize. Over the past year, the Fonds committed close to $20 million to Cycle Capital IV, L.P. and Spring Lane Capital Canada Fund I, L.P., whose primary objective is to target innovative clean technology companies and support them in developing and marketing their technologies. More specifically, these funds support Canadian companies whose products or services are consistent with a low-carbon economy.

In its action plan, the Fonds pledged to cease financing hydrocarbon exploration and extraction projects in Québec and to assume a leadership role in the just energy transition.

 

INTERNATIONAL INVESTMENT STATEMENT ON A JUST ENERGY TRANSITION

 

To assume its leadership role, the Fonds also joined the first group of investors that signed an international statement on a just energy transition. This initiative from the London School of Economics and the Harvard Kennedy School involves over 100 investors with approximately US$5 trillion in assets under management. The Fonds was the only Canadian organization to serve on the advisory committee whose work led to the preparation of a guide for investor action and the drafting of the statement itself. The guide was also produced in partnership with Principles for Responsible Investment (PRI), of which the Fonds has been a member since 2011, as well as the International Trade Union Confederation (ITUC).

 

GROW OUR GREEN BOND INVESTMENTS

 

In keeping with its commitment to grow the proportion of green bonds in its bond portfolio, the Fonds has increased its investments in government, institutional and corporate green bonds. Over the last year, the green bond proportion doubled from 5.0% to 9.9% of the Fonds’ bond portfolio to stand at approximately $342 million as at May 31, 2019.

 

THE FONDS CONTINUES ITS SHAREHOLDER ENGAGEMENT WITH PORTFOLIO COMPANIES

 

For the first time in its history, the Fonds submitted a shareholder proposal at the 2019 annual general meeting of a Canadian oil and gas company, requesting that it set GHG emissions reduction targets that are aligned with the Paris Agreement objective of limiting global warming to 2°C above pre-industrial levels. The proposal was strongly supported by shareholders, with 10.6% of votes in favour of it, significant support rate for a first-time proposal.