Analysis of HOOPP’s 2022 Real Estate Sustainability Report
Following the release of the Healthcare of Ontario Pension Plan’s (HOOPP) inaugural Climate Strategy in March 2023, HOOPP members will be glad to see their pension fund reporting back on its efforts to decarbonize its real estate assets. While HOOPP’s newly posted 2022 Real Estate Sustainability Report provides expanded disclosure of the fund’s approach to and challenges in real estate decarbonization, it also serves to highlight how little information HOOPP has made available regarding decarbonization of other asset classes.
HOOPP’s real estate portfolio, representing 20% of the value of the pension fund, saw a drop in absolute emissions between 2021 and 2022. HOOPP has committed to achieve a 50% reduction in the real estate portfolio’s absolute emissions by 2030 (using a 2019 baseline).
However, the per square foot emissions of the real estate portfolio remained unchanged, implying that achieved GHG reductions were the result of the sale of an asset(s). Given that information, the top line heading of HOOPP’s June 1 press release, “New awards acknowledge GHG emissions reductions within the portfolio,” appears not to tell the whole story. Still, HOOPP members will be glad to know that some buildings within the HOOPP portfolio are reducing gas and electricity consumption, developing decarbonization plans, and incorporating waste heat and heat pump systems.
HOOPP’s disclosures to date do not indicate what percent of HOOPP’s total carbon footprint is attributable to the real estate portfolio. As such, it is difficult to evaluate the degree to which HOOPP’s admirable efforts toward lowering the carbon emissions of its real estate assets can contribute toward HOOPP’s total portfolio commitment to achieve net-zero emissions by 2050 (including a commitment to reduce emissions intensity by approximately 30% below 2021 levels by 2030).
A rough calculation using HOOPP’s total real estate emissions (214,000 tCO2e for a $21 billion portfolio) indicates the emissions per million dollars within the real estate portfolio would be around 10.2 tCO2e/million dollars invested. This amount is significantly lower than the emissions per million dollars reported for HOOPP’s combined real estate, public equity, private equity, and infrastructure portfolios (39.2 tCO2e per million dollars invested as of December 31, 2022). This difference implies a significantly higher carbon intensity of HOOPP’s non-real-estate assets. It is concerning that HOOPP considers reducing greenhouse gas emissions in its real estate portfolio as “our greatest opportunity to contribute to the low carbon transition” (from the Net-zero Target section of the report).
HOOPP has not yet begun to report on detailed decarbonization efforts in its other portfolios. To date, HOOPP has never issued a sustainable investing report accounting for its efforts in the fund’s public equity, private equity, and infrastructure portfolios– asset classes that are also included in the fund’s calculated carbon footprint as of December 31, 2022. Based on information in media reports and HOOPP’s 2022 annual report, Shift estimates these asset classes represented 16% of assets under management (AUM) at the end of 2022, and may represent as much as 30% of HOOPP’s targeted asset mix. Beneficiaries would be relieved to see HOOPP account for its climate efforts and challenges for all assets with the detail with which it reports on its real estate portfolio, which represents just 20% of AUM and an undisclosed percentage of total portfolio emissions.