Climate Pension Quarterly - Issue #10
The international community agrees to transition off of fossil fuels, and Canada’s financial institutions need to catch up
In December, I travelled to COP28 in Dubai where, for the first time at a global climate conference, the international community formally recognized the need to transition away from fossil fuels. This was long overdue acceptance of what climate science has shown for decades, most recently from the authoritative International Energy Agency Net Zero Roadmap reports and the United Nations Environment Programme Production Gap report calling for an immediate shift of finance out of fossil fuels and a tripling of renewable energy by 2030. Given the challenge of having 198 countries to agree on anything, recognition of the need to rapidly transition away from fossil fuels is both significant and long overdue. Expect the urgency of this call to only accelerate in the coming years.
Acceptance of the urgent need for a fossil fuel phase-out is also long overdue for Canada’s financial sector and Canadian pension funds, who have been slow to grasp the requirement to end fossil fuel finance. Thankfully we are seeing signs of progress in our work. We have now seen partial fossil fuel exclusions from the Caisse de dépôt et placement du Québec, Ontario’s University Pension Plan, Investment Management Corporation of Ontario, Healthcare of Ontario Pension Plan and OMERS.
However, Canadians should be concerned by just how far offside the Canada Pension Plan Investment Board has become when it comes to the imperative to phase out fossil fuels. On the opening day of COP28, Canada’s $576-billion national pension fund manager put up a politically-charged LinkedIn post celebrating its oil and gas investments and bragging about its portfolio companies increasing fossil fuel production. The fund’s empty commitments to engaging with oil and gas companies greenwash the reality that none of them have credible or profitable climate transition strategies. This untenable position is financially risky for Canadians and bad for our climate.
Thankfully, we are seeing real leadership from key stakeholders of Canadian pensions. Last fall, the Registered Nurses’ Association of Ontario, representing more than 50,000 nurses, nurse practitioners and nursing students, sent a letter to the Healthcare of Ontario Pension Plan asking the health workers’ pension manager to phase out investment in coal, gas and oil by 2025. The letter captured the urgency needed to preserve climate stability and called on the fund to “engage its substantial financial and institutional power to help mobilize a quick transformation in the broader financial industry in Canada – from one that has funded the climate crisis, to one that funds the transition to a just, equitable and sustainable future.”
Canada’s pension funds should read the writing on the wall. The fossil fuel era is ending. Continuing to make and defend fossil fuel investments that serve to slow this transition is not in the best long-term interest of pension beneficiaries. Shift will keep working with Canadians to turn their pension fund managers into climate leaders.
Thank you for diving deep on pensions and climate with us. Learn more in this newsletter as we cover:
Canadian pension funds’ climate-related announcements, including a new Climate Stewardship Plan and Climate Transition Investment Framework from Ontario’s University Pension Plan, a climate strategy update from OPTrust, and a climate-focused ESG Report from the Investment Management Corporation of Ontario;
News about pension fund investments in climate solutions and fossil fuels, including a lengthy list of Canada Pension Plan Investment Board-owned companies undertaking fossil fuel expansion;
Updates on the controversial Coastal GasLink pipeline (co-owned by the Alberta Investment Management Corporation) and the beleaguered Thames Water (OMERS and the British Columbia Investment Management Corporation are owners)-- both putting Canadian pension funds’ “responsible investor” claims in jeopardy; and
Updates from around the world on how pensions are aligning with climate safety (including from the United Kingdom’s Wiltshire Pension Fund, whose Climate Report specifically named Canadian oil sands companies as unacceptable investments).
The full stories are in a downloadable pdf, which you can access here.
-Adam Scott, Director, Shift: Action for Pension Wealth and Planet Health