Statement from Shift on OMERS’ net-zero by 2050 commitment
For Immediate Release: November 25, 2021
Statement from Shift Action for Pension Wealth & Planet Health on OMERS’ net-zero by 2050 commitment
Toronto, ON - Yesterday, OMERS became the fourth Canadian pension manager to commit to achieving net-zero emissions by 2050. We are pleased to see OMERS join the growing ranks of global asset owners and managers committing to update their investment strategies to ensure the retirement savings of Ontario municipal employees are invested in a safe climate future. The climate crisis represents an existential threat to the long-term health of pension funds and the planet. Unprecedented action is required to protect pensions and the planet now.
While we welcome this positive step, OMERS has a long way to go to transition its portfolio onto a zero emissions pathway. To date, OMERS has announced modest targets to reduce the emissions intensity of its portfolio, with a specific target for its real estate portfolio, but has not clarified short-term or mid-term targets for lowering the absolute emissions associated with its portfolio. OMERS remains invested in high risk oil, gas, coal and pipelines, and has not explained how such holdings can profitably transition to a zero emissions economy.
OMERS’ announcement comes on the heels of net-zero commitments by the Caisse de dépôt et placement du Québec, the Ontario Teachers’ Pension Plan, and the Investment Management Corporation of Ontario. It follows pressure from its own beneficiaries. In September, OMERS beneficiaries wrote to their pension fund requesting information on how the funds are meeting their legal fiduciary obligations to manage climate-related risk. Their letter was accompanied by a legal backgrounder explaining the fiduciary duty fund managers have to act decisively to address the climate crisis in the best long-term interest of their beneficiaries. Municipalities are also paying attention to their pension fund’s investments: Kingston City Council recently passed a motion calling for OMERS to divest from fossil fuels, following a 2020 motion from the City of Toronto asking OMERS to provide more details on its high-carbon investments and its approach to the climate crisis.
OMERS’ announcement must now be followed with a detailed plan for achieving its goal. Credible net-zero plans require:
aggressive interim targets for cutting absolute emissions from its portfolio by 2025 and 2030;
clear transition plans for held companies, including bans on lobbying against climate policies;
screens on investments in fossil fuel companies and a phase-out timeline for current holdings;
a clear link between executive compensation and achievement of interim goals;
transparent timelines for dramatically increasing investment in profitable climate solutions.
Background information on OMERS, its approach to climate risk, and fossil fuel investments
OMERS is the pension fund manager for over 525,000 active and retired Ontario municipal employees. As of June 30, 2021, OMERS has $114 billion in assets under management.
In February 2021, OMERS reported for the first time its carbon footprint, covering $80 billion of its then $109 billion portfolio, and announced a target to reduce the emissions intensity of its portfolio 20% by 2025, using a 2019 baseline. OMERS also has a target to reduce the emissions per square foot of its real estate portfolio, targeting a 30% reduction in emissions intensity by 2025, relative to a 2015 baseline.
As of December 31, 2020, OMERS reported that 4% of its $105 billion portfolio was invested in “energy” and 11% in utilities. OMERS does not provide details on whether these energy and utility holdings are in fossil fuels or zero-carbon energy, although it did state that it had $3.3 billion invested in clean energy at the end of 2019.
OMERS’ private equity holdings in fossil fuels include:
A 25 percent stake in Scotia Gas Networks, the second largest fossil gas pipeline network in the United Kingdom. SGN is engaged in pilot projects to feed green hydrogen through its pipelines, invest in district energy systems, and use sewage to create biomethane for heat and power, but has no credible explanation for how fossil gas networks are aligned with a net-zero future. In its 2020 annual report, SGN explicitly says one of its priorities is “keeping the gas flowing.”
A 24 percent stake in Puget Sound Energy (PSE), an electric and gas utility in Washington state. While PSE touts its commitment to clean energy and carbon-neutrality, in 2020, 35 percent of PSE’s electricity generation came from its stake in the Colstrip coal plant in Montana and another third from its nine gas-fired power plants. PSE has lobbied to block legislation by city councils to ban natural gas hook-ups in new buildings. In early 2021, PSE faced criticism for failing to align its long-term resource plan with Washington’s legislated requirement to transition to carbon neutrality by 2030 and 100 percent clean energy by 2045, due to PSE’s plan to build nearly 1,000 MW of new gas-fired power between 2026 and 2045.
Private equity stakes in BridgeTex, a Texas-based pipeline company that transports 440,000 barrels per day of crude oil; Midland Cogeneration Venture, one of the largest natural gas-fired electricity cogeneration facilities in the U.S.; and NET4GAS, which operates more than 3,800 km of fossil gas pipelines in the Czech Republic.
Based on regulatory filings with the United States Securities & Exchange Commission, as of September 30, 2021, OMERS held at least $887 million in shares in oil, gas and pipeline companies, including Canadian Natural Resources, Enbridge, Entergy, Fortis, and TC Energy.
Contact information:
Adam Scott, Director, Shift Action for Pension Wealth & Planet Health
416-347-3858
Shift Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.
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