Climate Pension Quarterly - Issue #7
This quarter turned up the heat on pension funds and climate.
At the beginning of 2023, Shift released our inaugural Canadian Pension Climate Report Card, which established a clear benchmark for evaluating Canadian funds on their approach to climate-related risk. The analysis found that as a whole, the pension sector is not yet on track to protect pensions from the worsening climate crisis or to align their portfolios with a safe climate future. The report was covered in the Toronto Star, Financial Post, National Observer and Canadian Press, as well as several other Canadian and international finance and responsible investing media outlets.
And toward the end of the quarter, CBC profiled pension fund beneficiaries calling on their pension funds to divest from fossil fuels and analyzed the overlapping directorships between Canada’s largest pension funds and fossil fuel companies.
Other big news from the first three months of 2023:
An analysis from Investors for Paris Compliance reviewed proxy voting patterns of Canadian investor members of Climate Action 100+ and found that pension fund beneficiaries cannot take their plans’ claims of climate engagement at face value.
The Canadian Pensions Dashboard for Responsible Investing found that, even with 2022’s banner year for oil and gas stocks, all Canadian pension funds’ public equities portfolios would have had a higher rate of return if they had divested from oil and gas ten years ago.
Canada’s Net-Zero Advisory Body recommended that the Canada Pension Plan Investment Board should have a formal net-zero mandate.
The Sustainable Finance Action Council released its Taxonomy Roadmap Report (see Shift’s statement in response) and the Office of the Superintendent of Financial Institutions issued new guidance for how banks, pension funds and insurers should disclose and manage climate-related financial risks (Shift’s statement).
The International Panel on Climate Change’s Sixth Assessment Report, communicating the expert consensus of the global scientific community, described the “multiple, feasible and effective options” to secure a livable future. What we do in the next few years will determine humanity’s fate for millennia, with critical implications for the decisions of governments and investors today.
This quarter also saw pension beneficiaries pressuring their funds to act in line with climate science:
In “Pensions worthless without a future” (Hamilton Spectator), beneficiaries of the Ontario Teachers’ Pension Plan (OTPP), Healthcare of Ontario Pension Plan (HOOPP), and OMERS wrote:
"As a teacher, a mental health practitioner and a municipal worker, we are disappointed and concerned that a recent report showed that our public pensions have not caught up with the seriousness of the climate crisis…
Beneficiaries like us have been calling on our pensions to safeguard our retirement from risky fossil fuel investments and to invest in climate safety. We don’t want our pension payments undermining the financial and environmental interests of health care workers, municipal employees, and teachers retiring 20 years from now. And we don’t want our retirement savings making the climate crisis worse."
In “Ties between pension fund directors and fossil fuels are 'incompatible' for some Canadians” (CBC News), British Columbia teacher Teri Burgess commented on her pension plans’ investments in fossil fuels:
"I don't know any colleague of mine in any school who wants to stand at the front of the room and say, 'Hey kids ... I'm going to continue to invest in something that I know is harming you.'"
Looking ahead, we’re turning our attention to shareholder season. With climate-related shareholder resolutions put forward at the Royal Bank of Canada (RBC) and TD Bank, Shift will be keeping a keen eye on how Canada’s pension funds vote. You can use Shift’s online tool to tell your pension manager to call on RBC and TD to develop credible science-based transition plans, end financing for fossil fuel expansion and respect Indigenous rights.
In this edition of the Climate Pension Quarterly, we review the latest climate announcements from pension funds, summarize news about their investments in fossil fuels and climate solutions, and take a deep dive on climate engagement. We’ve moved the full stories into a downloadable pdf, which you can access here.