According to Wai Leng Leong, head of Asia-Pacific at Caisse de Depot et Placement du Quebec, one of Canada’s largest pension funds, they have not been able to deploy the CAD 10 billion ($7.3 billion) allocated for energy transition investments, partially due to insufficient long-term plans and support from Asian governments. Leong explained during the FT Future of Asset Management Asia event in Singapore that while many governments in the region declare their need for energy transition, they expect complete accountability for 20-30 years. The process of phasing out polluting enterprises and replacing them with clean alternatives is lengthy and necessitates considerable government assistance in engaging the local population. Transition finance, which involves investing in heavy-polluters’ efforts to lower greenhouse gas emissions and enhance energy efficiency, has gained significance in the battle against global warming. To reach net-zero emissions by 2050 in Asia, more than $20 trillion will be required. Leong stated that CDPQ’s transition-finance package has already invested in a single project in Asia, and the organization has around 12% of its portfolio invested in low-carbon initiatives, placing it 26th on the World Benchmarking Alliance’s rating of 400 financial institutions committed to supporting a fair and sustainable economy. Besides, CDPQ is experimenting with contingent financing for firms that do not yet fulfill its ESG criteria. This entails offering partial financing for a venture, with further financing available upon meeting specific environmental, social, and governance criteria, such as carbon intensity, diversity and equality, and tax compliance. (Adds CDPQ comment in fifth paragraph.)
In addition to the sums dedicated to transition initiatives, CDPQ is exploring conditional investments in enterprises that fail to satisfy its ESG requirements. This implies providing portioned financing for a project, with the chance of obtaining additional capital if the company fulfills specific environmental, social, and governance benchmarks, such as carbon intensity, diversity and equality, and tax compliance. This information was disclosed by Wai Leng Leong, head of Asia-Pacific at Caisse de Depot et Placement du Quebec, during the FT Future of Asset Management Asia event in Singapore.
(Sources: “CDPQ’s Wai Leng Leong Says Asia Pension Capital Not Ready for Energy Transition,” Bloomberg, May 9, 2024; “CDPQ’s Wai Leng Leong Discusses Firm’s Asia Strategy,” Bloomberg, May 9, 2024; “CDPQ’s Wai Leng Leong Details Asia Transition Finance Plans,” Bloomberg, May 9, 2024.)
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