Canada’s CDPQ bets on Australian farmland in decarbonisation drive
The $304-billion Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) has partnered with the Clean Energy Finance Corporation (CEFC) to establish a new sustainable agricultural platform in Australia.
The $100-million (A$150-million) investment from Canada’s second largest pension fund in Wilga Farming will bring in substantial new capital and spearhead the effort to decarbonise Australian farms, while also boosting farm production at the same time.
With an additional $35-million (A$50 million) investment from the CEFC, an Australian government-owned green bank, the new platform will be managed by Gunn Agri Partners, an established, mid-market sustainable agriculture manager with a strong commitment to improved sustainability across production systems and landscapes.
CDPQ
The importance of enhancing sustainability in Australia's farming sector cannot be overstated. Agriculture is a major contributor to greenhouse gas emissions, water scarcity, and biodiversity loss. By investing in sustainable practices, CDPQ aims to address these environmental challenges and help future-proof the industry.
“Through this partnership as part of our Sustainable Land Management strategy, we are reaffirming our commitment to investing alongside organisations that are truly moving the needle on sustainability in the agricultural sector by contributing to its decarbonisation,” said Emmanuel Jaclot, executive vice-president and head of infrastructure at CDPQ in a statement.
Established in 2020 within its Infrastructure portfolio, CDPQ’s Sustainable Land Management initiative seeks to invest in land-focused assets with long-term positive environmental impact and the highest ESG standards, demonstrating strong alignment with the CEFC’s aspirations around sustainability.
ACCELERATING DECARBONISATION
“This is a unique collaboration in Australia, bringing the firepower of international capital to accelerate decarbonisation of Australian agriculture,” Heechung Sung, head of natural capital at CEFC, told AsianInvestor.
Australia's agriculture sector is grappling with emissions and sustainability challenges that require immediate attention and investment, she said.
CEFC
“The sector is uniquely exposed to climate extremes, and with methane emissions and fertiliser use [as] main contributors to its carbon footprint, agriculture is considered ‘hard to abate’ because it cannot make substantial emissions reductions through energy transition alone,” said Sung
“As such, without action, agriculture’s share of GHG emissions will increase.”
Australia has ambitious new renewable energy targets and emissions reduction goals, aiming for 82% renewable energy generation and an emissions reduction target of 43% below 2005 levels by 2030, and net-zero emissions by 2050.
CEFC’s minority stake in Gunn Agri Partners helps better align its future strategies with a decarbonisation outcome that the manager can deploy.
It also gives Australia’s green bank a seat at the table when those discussions are taking place and serves as a statement of intent that demonstrates that the CEFC is standing behind the sector, said Sung
“We are signalling to the market that sustainable farming can generate attractive returns whilst at the same time, address climate change through emissions-reducing technologies and practices,“ she said.
The sector also has enormous potential to help better sequester carbon, which not only enhances the landscape but contributes to its performance.
“Through this investment, we hope to showcase and share how more sustainable farming practices and landscape management can help deliver better yields, capital protection that smaller landholders are able to utilise.”