Will Canada’s pensions vote for climate transparency from Suncor and Enbridge?

Pension funds and climate engagement

For years now, Canada’s pension plans have told their beneficiaries that their active ownership of companies holds the key to solving the climate crisis and protecting pensions from climate-related financial risks. This year’s Annual General Meeting (AGM) season is an opportunity for them to prove it through their votes on climate-related resolutions brought by shareholders of two of Canada’s biggest climate polluters– Enbridge and Suncor.

Enbridge is Canada’s largest fossil fuel pipeline company, while Suncor is one of Canada’s largest tar sands producers. Shareholders, including some of Canada’s largest pension plans, will vote on these resolutions at the banks’ upcoming AGMs (Enbridge on May 3rd and Suncor on May 9th).

As companies whose fundamental business model depends on extracting, refining, transporting and burning fossil fuels, Suncor and Enbridge do not have credible or profitable pathways to decarbonisation other than phase-out.

But any pension fund that claims to take climate engagement seriously should at minimum be demanding that these companies produce an honest accounting of their emissions and spending plans to cut pollution.

For pensions that continue to hold Enbridge and Suncor shares, these resolutions are a test. Are our pension funds serious enough about decarbonization to vote for resolutions that could put the credibility of fossil fuel company decarbonization plans into question?

You can help by sending a letter to your pension asking them to vote on these resolutions

Canada’s largest public pension funds hold nearly $1.8 billion combined in shares of Enbridge and Suncor, giving them significant power to support these calls for transparency. This vital information would help investors understand the growing climate-related financial risks that these companies pose to investment portfolios– including your pension fund.

The Ontario Teachers’ Pension Plan’s (OTPP) Vice Chair, Investments, sits on Enbridge’s board, and a Director of the Alberta Investment Management Corporation (AIMCo), sits on the board of Suncor. This gives the OTPP and AIMCo key insight into these companies’ governance and business plans.

Beneficiaries have yet to see adequate evidence that their pension funds are meaningfully engaging with the companies they own on protecting the climate or transforming the business model of fossil fuel companies. A lack of transparency often makes it hard to know that engagement is actually happening, and what the impact or value of that engagement actually is. Many of Canada’s largest pension funds fail to properly disclose their exact engagement expectations, follow through on their own proxy voting guidelines, or meaningfully report the results of their efforts to plan members. Looking at the available voting records of Canadian pensions on climate-related votes in the past reveals a surprisingly weak track record.

A recent report from shareholder advocacy group Investors for Paris Compliance examining the proxy voting records of Climate Action 100+ signatories, which includes many major Canadian institutional investors, reveals that Canadian pension funds are often voting against climate-related shareholder resolutions. For example, the OTPP voted against 69% of North American climate-related shareholder resolutions brought forward in 2022, a trend which appears to contradict the OTPP’s own proxy voting guidelines on climate change.

It’s important to note that voting on shareholder resolutions is only one small piece of a meaningful engagement strategy, but the willingness of pensions to support climate resolutions is revealing. If a pension votes ‘no’ on a resolution calling for a credible climate plan or greater transparency on climate-related financial risks, it’s hard to imagine they will apply more pressure behind closed doors to do the same.

Voting ‘yes’ on these upcoming resolutions is the least our pensions can do to demonstrate that they take their active ownership responsibilities seriously.

You can send a letter to your pension asking them to vote in support of these resolutions:

Below is a summary of some of the upcoming climate-related shareholder votes. Rest assured, we at Shift will be tracking how your pension managers vote.

Upcoming Climate-related Shareholder Votes

Enbridge (May 3rd)

Investors for Paris Compliance submitted a proposal requesting that Enbridge annually disclose all of its scope 3 emissions using accepted definitions and in absolute terms.

Suncor (May 9th)

Investors for Paris Compliance submitted a proposal requesting that Suncor produce a report, at reasonable cost and omitting proprietary information, outlining how its capital expenditure plans align with its 2030 emissions reductions target and its 2050 net zero pledge.