Quebec's Caisse de depot struggles to deploy $10 billion for energy transition

financialpost.com:

One of Canada’s biggest pension funds says it hasn’t been able to deploy the $10 billion it earmarked for energy transition investments, partly because it finds Asian governments’ long-term plans and support inadequate.

“Particularly in this part of the world, there are a lot of governments who are jumping and saying that, ‘We’ve got a lot of energy transition needs,’” said Wai Leng Leong, head of Asia-Pacific at Caisse de depot et placement du Quebec (CDPQ) at the FT Future of Asset Management Asia event in Singapore Wednesday. “But when we say energy transition, we want complete accountability and that has to be there for 20, 30 years.”

It takes a long time to wind down polluting businesses and replace them with clean alternatives, she said, which requires “a lot of government support in engaging the local community.”

Transition finance — investments in heavy-emitters’ plans to reduce their greenhouse gas emissions and become more energy efficient — has become increasingly important in the fight to slow global warming. In Asia, reaching net zero by 2050 would require more than US$20 trillion of investment.

Aside from the money targeting transition projects, CDPQ is experimenting with contingent investments in companies that don’t currently meet its ESG standards, Leong said.

That means providing fractional financing for a project, with more on offer if the firm meets targets for environmental, social and governance metrics. Some metrics CDPQ looks at include carbon intensity, diversity and inclusion, and tax compliance.