The pension giant's fossil fuel exit has outpaced the oil benchmark by 2 percent since 2017
Exiting fossil fuels has not cost La Caisse de dépôt et placement du Québec — it has paid.
The $517bn Canadian pension fund earned a 10 percent return on its renewable and transition portfolios combined, compared to 8 percent from the MSCI ACWI Energy Index, according to the fund's 2025 sustainable investing report.
The outperformance generated close to $4bn more than it would have earned by staying in oil.
“We have made more money by not investing in the oil sector than we would have if we did,” Bertrand Millot, head of sustainability at La Caisse, told Top1000funds.com in an interview, adding that the performance "speaks for itself."
The fund held close to $8.9bn in oil production and thermal coal mining companies in 2017, the report said, with positions in Suncor, Exxon, and Canadian Natural Resources.
By end of 2023, it had fully exited both sectors.
Renewable energy holdings grew from $9bn in 2017 to $27.4bn by 2025 over the same period.
The S&P Global Oil Index, which tracks 120 of the world's largest public oil and gas companies, is up 32 percent year to date, boosted by geopolitical tensions involving Iran and the Middle East.
Millot told Top1000funds.com the fund will not reverse course.
He acknowledged volatility and the oil sector's strong performance this year, but attributed it to geopolitical events rather than "oil fundamentals."
He argued that underpricing climate risk is the larger long-term threat.
La Caisse believes asset valuations should reflect climate exposure, and that companies without sufficient adaptation measures should be priced accordingly, he told Top1000funds.com.
The fund has occasionally bid less for assets, or passed on them entirely, because of that view.
“The biggest risk lies in not taking climate into account because it will come back and bite you,” Millot said. “The less prepared companies are, the greater the chance they will be surprised, and a surprise in investment usually means it’s costly.”
For renewable energy exposure specifically, Millot said the fund favours private markets over public ones.
He pointed to Innergex, a Québec-based renewable power company that La Caisse took private last year alongside a syndicate of investors in a $10bn deal, saying the fund believed the company was undervalued and overly exposed to market cycles as a public company.
Millot told Top1000funds.com that while cancelled renewable projects in the US have weighed on market sentiment and public valuations, private markets tell a different story, with activity continuing on the ground.
Looking ahead, the fund has targeted $400bn in climate-related investments by 2030 as part of a broader goal of reaching a net-zero portfolio by 2050, according to the 2025 report.
Millot said all asset class teams now build sustainability objectives into their investment processes.
To support that work, La Caisse developed an internal platform called AgiR, built on SASB standards, for sustainability analysis and portfolio monitoring, according to Top1000funds.com.
Millot said the fund built the tool in-house because more than half of its assets sit in private markets, making off-the-shelf analytics tools inadequate.
The platform evaluates companies across three dimensions, according to Millot: the strength of their sustainability practices relative to peers, whether their business model is transition-oriented, and what sustainability risks are specific to their business.
He said separating practice quality from risk exposure prevents overly broad conclusions.
Millot said La Caisse separates financial and sustainability analysis to avoid oversimplification.
“Otherwise, you end up with the conclusion that all mines are bad and all IT companies are good,” he said, adding the fund targets best-in-class companies or those whose deficiencies can be pushed to improve.
Despite mounting ESG headwinds in the US and elsewhere, Millot said La Caisse will keep disclosing its climate strategy publicly.
"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 said in the interview.
