Canada’s Public Sector Pension Investment Board: A Commitment to Sustainability in 2024
Canada’s Public Sector Pension Investment Board (PSP Investments) has recently unveiled its 2024 Sustainability Report, showcasing significant strides in green asset investments and a robust commitment to climate strategy and sustainability integration. As one of the largest pension investment managers in Canada, PSP Investments is not only focused on delivering strong financial returns but is also increasingly prioritizing sustainability in its investment decisions.
Key Data Points from the Report
The 2024 fiscal year, which concluded on March 31, marked a notable period of growth for PSP Investments. The total portfolio value surged to $264.9 billion, reflecting an impressive 8.7% increase from the previous year. Over the past decade, PSP has achieved a net annualized return of 8.3%, resulting in a cumulative net portfolio income of $135.3 billion.
A standout feature of the report is the substantial increase in investments in green assets, which reached $64.9 billion—up from $48.9 billion in 2023. This impressive figure now represents 21.5% of PSP Investments’ total portfolio. Additionally, the report highlights $11.5 billion allocated to transition assets, which support the low-carbon transition and account for 3.8% of the overall portfolio. These investments are integral to PSP’s broader climate strategy, which aims to facilitate the transition to global net-zero emissions by 2050.
Sustainability Infrastructure and Research Expansion
PSP Investments has made remarkable progress in enhancing its sustainability capabilities through the integration of data and technology. The organization has adopted a “hub-and-spoke” operating model, which fosters collaboration between its Sustainability and Climate Innovation group and various asset teams. This approach ensures that sustainability considerations are woven into the investment process at every level.
A significant milestone in this endeavor is the launch of a sustainability research platform in 2024. This platform provides critical insights into the impact of sustainability on investment themes, equipping PSP with a competitive edge in identifying long-term risks and opportunities associated with climate change and other sustainability challenges. Herman Bril, Managing Director and Head of Sustainability and Climate Innovation at PSP, remarked, “It equips us with the knowledge to navigate the complex landscape of long-term investing and identify sustainability-related opportunities.”
Training and Engagement
Recognizing the importance of equipping its workforce with the necessary skills to address sustainability challenges, PSP has ramped up its focus on sustainability training. Over the past year, more than 300 employees have completed over 30 hours of instruction on various sustainability topics, including climate risk management, governance, and cybersecurity. This training is designed to empower teams to seamlessly integrate sustainability into their investment decision-making processes.
The report also emphasizes PSP’s commitment to active ownership, with the organization engaging with over 700 portfolio companies on sustainability issues. Furthermore, PSP has voted on more than 56,000 resolutions at shareholder meetings, demonstrating its dedication to promoting sustainable practices within its investment portfolio.
Looking Ahead
As PSP Investments moves into fiscal 2025, its sustainability strategy will continue to evolve, focusing on enhancing climate capabilities and expanding its data analytics infrastructure. The organization aims to deepen its analysis of sustainability risks and opportunities, thereby improving decision-making processes and ensuring alignment with long-term value creation.
Deborah K. Orida, President and CEO of PSP, underscored the significance of sustainability in the organization’s long-term investment horizon, stating, “Our mandate spans decades, and we are committed to ensuring that sustainability-related risks and opportunities are fully integrated into our investment strategy.”
PSP is on track to meet its 2026 climate-related targets and plans to revise its strategy in the upcoming fiscal year to adapt to evolving regulatory frameworks, technological advancements, and market conditions.
Conclusion
PSP Investments’ 2024 Sustainability Report reflects a robust commitment to integrating sustainability into its investment framework. With significant investments in green and transition assets, a focus on enhancing sustainability capabilities, and a proactive approach to training and engagement, PSP is positioning itself as a leader in sustainable investing. As the organization looks to the future, its dedication to sustainability will not only benefit its portfolio but also contribute to a more sustainable global economy.