Divesting from the oil sector has been a boon for La Caisse’s performance, as the Canadian pension giant says its energy investments have earned billions in value-add compared to the benchmark since the inception of its climate strategy.
The C$517 billion ($380 billion) fund had close to C$8.9 billion ($6.5 billion) in oil production and thermal coal mining companies in 2017 and by the end of 2023 it had completely divested from the two fossil fuel sectors. This included cutting out exposures to resource giants such as Suncor, Exxon and Canadian Natural Resources.
Meanwhile investments in renewable energy assets have surged from C$9 billion ($6.6 billion) in 2017 to C$27.4 billion ($20 billion) in 2025.
The outcome has been rewarding: looking at the aggregated return of its renewable and transition portfolios, as well as various other “future-oriented” energy investment strategies, it earned a 10 per cent return compared to 8 per cent from the MSCI ACWI Energy Index, representing almost C$4 billion ($2.9 billion) above the value of investing in oil companies, according to La Caisse’s 2025 sustainable investing report.
“[The performance] speaks for itself. There has been some criticism but so far… we have made more money by not investing in the oil sector than we would have if we did,” says Bertrand Millot, head of sustainability at La Caisse in an interview with Top1000funds.com.
Oil prices have soared on the back of geopolitical conflict in Iran and the Middle East which gave oil producers a share price boost. The S&P Global Oil Index, which tracks 120 of the world’s largest public oil and gas companies, is up 32 per cent in the year to date. But this won’t sway La Caisse from its long-term strategy, Millot says.
“Obviously there is volatility, and this year the oil sector has performed very well, but not for reasons related to oil [fundamentals] – rather related to geopolitical events,” he says.
But in comparison the consequence of not taking climate risk into account is greater, Millot says, adding that La Caisse believes asset prices should take into account their level of climate risks, and those which have not taken sufficient adaptation measures should be valued accordingly.
“We, on occasion, have not made – or missed out on – investments because we valued climate risk and reduced the price point when we bid for assets,” he says.
“These are topics that are very important. The key is understanding your vulnerabilities and having a plan to remedy them, not just within the boundaries of the corporation but also its value chain.
“The biggest risk lies in not taking climate into account because it will come back and bite you. Climate is changing – and that means that humanity will have to increase the fight for climate and companies need to be prepared. The less prepared companies are, the greater the chance they will be surprised – and a surprise in investment usually means it’s costly.”
Millot says La Caisse favours private markets for renewable energy exposures. He points to the example of Innergex, a Québec-based renewable power company which La Caisse took private with a syndicate of investors in a C$10 billion ($7.3 billion) deal last year. The fund believes Innergex was undervalued and exposed to the stock market cycle as a public company.
“If you look at the headline story, renewable projects are cancelled or out of favour in the US. This affects market sentiment and depress public valuations. But the reality is quite different on the ground and there’s plenty of things that are happening in private markets,” he says.
In its latest climate strategy, La Caisse has targeted C$400 billion ($294 billion) of investments in climate action by 2030, which will contribute to the ultimate goal of a net zero portfolio by 2050. This means all asset class teams invest with sustainability objectives at the front of their mind, Millot says.
To aid this goal, La Caisse developed an internal platform AgiR based on SASB standards, which is used for conducting sustainability analyses and monitoring portfolio company practices. The tool is integral throughout the screening and due diligence process.
Over half of La Caisse’s portfolio is invested in private assets so it couldn’t just purchase an analytics tool off the shelf, Millot says. But it also wanted to embed sustainability practices into the analytics.
La Caisse analyses sustainability through three lenses: how robust a company’s sustainability practices are compared to peers, whether its business model is transition-oriented, and what sustainability risks are present for the business.
This approach is important because, for example, a mining company faces more sustainability risks but may have excellent sustainability practices compared to say, a bank or an IT company, that face lower sustainability risks but may have inadequate practices Millot says.
“We separate the two, to avoid confusing the conversation. Otherwise, you end up with [the conclusion that] all mines are bad and all IT companies are good,” he says.
“We need to invest in best-in-class – or in companies knowing full well what their deficiencies may be, so that we can push to correct those deficiencies.”
La Caisse remains one of the most committed sustainable investors globally, and Millot says despite ESG headwinds around the world and particularly in the US, La Caisse will continue to disclose its climate ambitions and practices “loud and clear”.
“It’s very important for the future, and it’s very important for the performance of our investments going forward, that these [sustainability] factors are taken on board,” he says.
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