Canada Pension Plan Investment Board to Issue Green Bonds

The ESG-related securities will contribute to the fund’s $2.3 billion renewable energy investment plans.

Canada’s largest pension fund is about to issue its first green bond, which will provide additional funding for its eco-friendly energy investments.

Based in Toronto, the $356 billion Canada Pension Plan Investment Board ((CPPIB) is planning to invest more than $2.3 billion in the renewable energy sector, in line with the low-carbon initiative many institutional investors are participating in. The fund says it is the first pension program to issue this type of bond.

Green bonds support environmental, social, and governance (ESG) projects, such as climate change-related investments. ESG bonds are tax exempt and can also provide tax credits. To qualify for “green” status, the bonds must be verified by a third party, such as the Climate Bond Standard Board. The Canada pension plan is working with the Center for International Climate Research for second opinions on green bond qualifications.

Green bonds have been around since 2007, and have risen in popularity with the increase in environmental awareness campaigns.

The Canadian pension board will invest green bond proceeds into renewable energy, sustainable water and wastewater management, and green buildings (designed and constructed around preserving our natural environment).

The board invests on behalf of the Canada Pension Plan, which covers some 20 million contributing workers and beneficiaries.

Poul Winslow, the fund’s senior managing director and global head of capital markets and factor investing, called the green bond issuance “a logical next step to [the] CPPIB’s investment-focused approach to climate change,” adding that the capital raised will help support the fund and its future success.

All Canadian green bonds will be issued on a private placement basis. The investment board did not specify when it will begin the issuance of the bonds.

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