Investing green, in a socially responsible way and in companies whose governance is irreproachable not only pays off, but it is also what will allow the leaders of the Caisse de dépôt et placement du Québec (CDPQ) to look at their descendants with the feeling of duty accomplished.
Caisse CEO Charles Emond gave a real lesson in sustainable portfolio management on Tuesday to some 500 guests gathered at the invitation of the Montreal Council on International Relations to discuss the global economy. “There are those who talk and there are those who do. The reality is that we decided to be on the side of those who acted. »
“We, 30 years from now, want to be able to look in the mirror when the new generation says to us, ‘Where were you, what were you doing when you could make a difference? Were you just on the edge of the sidelines hoping you would do as little as possible or were you trying to do something that was going to change things?” »
Charles Emond does not hide the fact that the Caisse’s international expansion, three-quarters of its 400 billion in assets are invested abroad, is largely based on its reputation. The CDPQ has also been named fund of the year among more than 400 pension funds around the world by Global SWF and number one in sustainable investment by the World Benchmark Alliance.
He also deplores the misunderstanding and even the hostility that the question of ESG (environmental, social, governance) criteria provokes in certain circles: “There is a polarization in relation to the concept of ESG. It is a bit overused, manipulated. There are no more shades. »
“In the United States, he says, there is about a little more than a third of the American states that have some kind of law, some anti-ESG legislation with regard to investment by public funds. . »
The result is that there are militant groups “who want to put everything in there, use it to push their agenda and on the other side, there are those who don’t want to touch it with a pole of 12 feet “.
However, this is a false debate for an institution like the CDPQ, which must instead link these criteria “to [its] fiduciary mandate, that is to say to obtain optimal returns for [its] customers and also to make sustainable economic development in Quebec”.
He argues that a link has been shown between whether companies that pay attention to these criteria have superior returns or manage their risks in a better way.
He points out that the environmental side puts off investors, who fear high costs and low returns – which he says is wrong – but often overlooks the social side, where a company that does not care about the safety of its product or who does not pay his fair share of taxes will see his reputation severely damaged in 2023. Also, poor governance will also lead to an erosion of trust over time. “People like binary things. One company is ESG, and the other is not ESG. There is nothing in between,” he argues, warning that nothing could be further from the truth.
“What we are trying to bring is an element of transformation,” he explains, pointing out that the Caisse has a transition fund of 10 billion. It is this money that allows him, for example, to buy a company in India that runs on coal at a low price, to finance its transition to increase its value exponentially.
“There is a way of doing what is good for the planet, good for society, at the same time as what is good for our customers and good for businesses. Is it demanding? Yes, it is demanding, but it can be done and we prove that it can be done,” he explained.
Following his speech, presented in the form of an interview led by CGI Vice-President Julie Godin, former Prime Minister Pierre Marc Johnson praised Charles Emond’s remarks, calling them “class of a master” for the audience who came to hear him.