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Canada's second-largest pension fund says first to exit oil assets

FILE PHOTO: The Caisse de depot et placement du Quebec building is seen in Montreal

By Maiya Keidan

TORONTO (Reuters) -Canada's No. 2 pension fund, Caisse de depot et placement du Quebec, said Tuesday it will shed all of its oil production assets, valued at C$3.9 billion ($3.08 billion), by the end of 2022 and reduce carbon intensity by 60% by 2030.

It said it would be the first institutional investor in Canada to exit oil production assets.

As part of a plan to reach net-zero emissions by 2050, Montreal-based Caisse plans to hold green assets worth C$54 billion by 2025 and dedicate C$10 billion to decarbonize carbon-emitting sectors.

Pension funds globally are under pressure to act on climate change, with several announcing divestments from fossil fuel companies this year.

The new emissions targets for Caisse, which has C$390 billion in assets, follow the Ontario Teachers' Pension Plan Board (OTPP)'s Sept. 16 announcement of interim plans to cut emissions.

Oil production assets currently make up just 1% of Caisse's portfolio, but the fund said it wants to avoid contributing to growth in global oil supply.

It aims to boost the supply of renewable energy, sustainable transportation and real estate and invest in green hydrogen, batteries, electrification of transport and carbon capture.

Caisse plans to move toward net zero emissions through investments in less-carbon-intense assets, carbon budgets for each investment team and bonuses tied to climate targets.

"We believe this is in the interests of our depositors, our portfolio companies and the communities we invest in," Charles Emond, president and CEO of Caisse, said.

The fund said it had exceeded its climate targets, reducing the portfolio's carbon intensity by 38% since 2017.

"It is amazing that it took until 2021 for a Canadian pension fund to finally recognize that protecting our retirement savings from the worsening climate crisis inevitably requires abandoning market exposure to high-risk fossil fuels," pension activist group Shift said in a statement.

It added that if oil is too risky for the climate and Quebecers’ pensions, "CDPQ’s massive fossil gas infrastructure investments mean that it has not yet reckoned with this reality."

($1 = 1.2652 Canadian dollars)

(Reporting by Maiya Keidan;Editing by Bernadette Baum and Dan Grebler)