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CDPQ to increase ‘impact investing’ focus

CIO Roland Lescure said the challenge in doing so has been finding ways to measure the actual environmental, social and governance (ESG) impacts of the companies his firm invests in.

Following the launch of a C$125 million ($91.7 million; €84.17 million) agri fund from Caisse de dépôt et placement du Québec, the pension investment manager’s CIO has stated his intention to boost the firm’s impact investing.

Roland Lescure said during The Economist Impact Investing Forum in New York on Wednesday that the challenge in doing so has been finding ways to measure the actual environmental, social and governance (ESG) impacts of the companies his firm invests in, sister publication Private Equity International reported.

“Companies have P/E ratios for valuations, for example, but what is the right ratio to measure the impact of companies?” Lescure said. “We hadn’t done enough of that measurement and are trying to do more of it now.”

While CDPQ is stepping up its impact investing focus, Lescure admitted that the firm has yet to establish a comprehensive framework to measure the long-term effects of impact investing. For example, CDPQ is striving to invest in companies with a certain number of women on company boards, but that the long-term effect of actually having a diverse board is difficult to determine, he said.

The statements come at a critical time following the launch of the Fonds agroalimentaire CDPQ vehicle, which targets an agri industry that regularly grapples with ESG concerns — particularly as they relate to its impacts on the environment. As Agri Investor reported, the fund will make investments between C$1 million and C$30 million on businesses and SMEs that improve farmers’ access to modern equipment.

PEI also recently reported that company executives with Big Path Capital, an impact-focused placement agent, estimate that a third of their clients use the Global Impact Investing Rating System — one of three systems which measure impact. Big Path co-founder and partner Shawn Lesser pointed specifically to agriculture and renewables as “big growth areas” for impact investing.