Montreal - Quebec, February 14, 2022 - As the Caisse de dépôt et placement du Québec prepares to release its annual results, the Sortons la Caisse du carbone coalition is releasing for the fifth year in a row its analysis of the stock market performance of the CDPQ's top 50 oil and gas investments (n.b. report availablein French only) again showing losses in returns between 2011 and 2021 and pointing to the financial and climate risks of the Caisse's increased presence in the gas sector.
"In 2021, the Caisse took the historic step of announcing divestment from all companies in the oil extraction sector by the end of 2022, in addition to ceasing to invest in oil pipeline construction. This momentum, which is a flagship signal to other major investment funds, must continue. Unfortunately, this climate leadership is being tarnished by the Caisse's new investments in gas," said Sébastien Collard, author of the report and spokesperson for the Coalition.
Since 2011, Sortons la Caisse du carbone has been analyzing the performance of the 50 oil and gas companies in which the Caisse de dépôt et placement du Québec (CDPQ) holds its largest stock market investments. In 2021, for the second time in 11 years, this group of companies forming the so-called “Carbon 50” Index outperformed the stock market indices with which we compared it (Dow Jones and MSCI ACWI ex Fossil Fuels). The value of this index rebounded 31.4% in one year, after suffering a 31.6% loss in 2020. In 11 years, the Carbon 50's losses amount to -25.6%, while other stock indices have grown between 100 and 150% over the same period.
The Carbon 50 generated a return of $1.3 billion. This is only the fourth positive return in 11 years, and only the second year that this return has exceeded the other indices used in our studies. Since 2011, the average annual rate of return for the index has been -2.3%, while the cumulative return has reached -$3.5 billion.
When analyzing the return that would have been achieved if this money had been invested in other indices,we first notice that the Dow Jones (New York) return in 2021 was 18.7%. The MSCI ACWI ex Fossil Fuels index, in Canadian dollars, allows us to see the evolutionof the world stock market when companies invested in fossil fuels are excluded. Its return was 5.5% in 2021.
"Even with the return improvements in 2021, we must admit that, overall, we would have been richer without fossil fuels. From a climate point of view, the observation cannot be relativized: the window of time to avoid an unprecedented global catastrophe is closing, and the Caisse must immediately align itself with the IPCC target, which requires it to completely get out of fossil fuels and reduce its emissions everywhere else," adds sociologist Éric Pineault, a member of the Institut des sciences de l'environnement de l'UQAM and the study's reviewer.
The method used by Sortons la Caisse du carbone is identical to that of its previous reports. The CDPQ's 2010 to 2020 annual reports are used to calculate the Canadian dollar value of the shares of the 50 oil and gas companies in which—for each of these years—the CDPQ's market holding is the highest. The share value at the end of 2021 is based on the conversion of stock market data into Canadian dollars. The "neutral" scenario is used for the calculations, i.e., we assume that the Caisse, during the year, keeps the same number of shares as those held at the beginning of the year and does not make any sales or purchases during the year.
This year's report focuses on what the Sortons la Caisse du carbone coalition considers to be an economic and climate mistake: CDPQ's investments in gas. A decarbonized and prosperous economy is no longer a distant horizon, which is why the study offers a series of solutions for the gas distributor Énergir to ensure its long-term profitability by being part of the solution, which requires it to adopt a true climate plan that respects the requirements of science.
Sortons la Caisse du carbone considers that the Caisse must immediately divest all its investments in thegas sector and abandon the sophistry of transition energy. With a 2030 target of -30% compared to 2020, Energir's decarbonization plan does not meet the scientific requirements to limit warming to 1.5°C. The Caisse should therefore sell all of its assets in Énergir or demand an immediate turnaround in this company's climate plan.
The coalition Sortons la Caisse du carbone includes Greenpeace Canada, The Climate Reality Project Canada, CPAWS Quebec, the Association pour la voix étudiante au Québec (AVEQ), Justice climatique Montreal (JCM), Leap Montreal, Mobilisation environnement Ahuntsic Cartierville (MEAC), Eau Secours!, as well as other citizen groups and unions.