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Canadian Pension Fund Eyes Assets With Net-Zero Road Map

Canada Pension Plan Investment Board expects its net-zero transition assets portfolio to double by 2030.

<div class="paragraphs"><p>John Graham,&nbsp;President, and Chief Executive Officer of CPPIB in Mumbai in April 2022 (Source: BloombergQuint)</p></div>
John Graham, President, and Chief Executive Officer of CPPIB in Mumbai in April 2022 (Source: BloombergQuint)

The Canada Pension Plan Investment Board expects its net-zero transition assets portfolio to double by 2030.

As the global economy moves towards carbon-neutral goals, it will present a "generational investment opportunity", John Graham, president and chief executive officer of CPPIB, told BloombergQuint during his maiden visit to India.

Canada's largest pension fund had invested $53 billion in transition assets as on Dec. 31. That's expected to double to more than $106 billion over the next eight years, he said.

The fund has set a target of net-zero emissions for its portfolio by 2050, by when it projects to have an asset base of $3 trillion, growing on the back of capital appreciation and contribution.

CPPIB has total assets worth $500 billion, 85% of which is invested outside Canada. That includes $15.50 billion in India. The fund did not disclose how much of its transition assets are in the country.

The fund considers an asset "to be in transition" if it has announced its commitment to net-zero emissions with a credible target and plan, and is making a meaningful contribution to global emissions reduction. An asset is "green" for the fund when at least 95% of the company's revenue can be classified as being derived from green activities classified by the International Capital Markets Association.

Market For Renewables

Graham expects a "real appetite for renewables". "We have created a sustainable energy group to invest across the entire energy spectrum and in the energy transition."

Part of the fund's team is focusing on technology innovation and has a mandate to invest in technologies and venture capital funds that facilitate the transition.

CPPIB has $13.9 billion invested in conventional energy, and nearly $6 billion in renewable assets, including ReNew Power Ventures Pvt. in India.

Graham terms India as "a target market" for sustainable energy. "We are investing in the best available renewable platform (ReNew Power)," he said.

Key India Investments

The fund has investment in roads, infrastructure, real estate, renewable assets, private and public equity in India, said Graham. The domestic infrastructure portfolio, he said, comprise "mature assets".

CPPIB holds major investments in IndoSpace, Phoenix Mills Ltd. and the National Infrastructure Investment Fund. In the tech space, it has invested in Byju's, Flipkart, and recently in VerSe Innovation Pvt. Other infra investments include Indinfravit Trust, NHAI InvIT and PGInvIT.

The fund is not fixated on short-term returns, said Graham. "We are long-term investors. For us, five to seven years is short term. We stay invested for generations and look at an investment horizon of 25 years."