Climate Pension Quarterly - Issue #11
The climate emergency is here, but Canada’s pension funds
aren’t acting like it
Where I’m writing from in southern Ontario, it’s been the warmest winter in memory. Some neighbourhood ice rinks didn’t open at all, there was enough snow for tobogganing just once or twice, and crocuses started poking up before March. Indeed, data shows that February was the warmest month on record globally, and marked the ninth month in a row of record temperatures. Canada has just experienced its warmest winter on record.
Our world is changing. It shows in softer, easier-to-handle ways sometimes, like on fewer frigid winter days spent shoveling snow. But with ever-increasing frequency, our changing climate is bringing floods, fires, droughts, crop failures and hurricanes so strong that a new category 6 storm category has been proposed.
An article in Forbes this month spelled out in plain language why climate devastation matters for your retirement savings, too. Climate change drags down GDP, brings disruption to businesses and industries and increases insurance rates and inflation– all of which pose a threat to retirement portfolios. The climate crisis threatens the retirement that you’re working and saving for.
This is why we do the work we do at Shift, and why we see our second annual Canadian Pension Climate Report Card as so important for pension plan members and investment managers. The report was covered by Canadian Press, CBC, Corporate Knights, Yahoo!Finance, Canada’s National Observer, Wealth Professional, Pensions and Benefits Monitor and more.
Some of the key findings of the report include:
While the majority of Canada’s largest pension funds have climate plans in place, for the most part the ambition and urgency of these plans falls short.
Even Canada’s leading funds on climate fall behind international climate leaders, particularly when it comes to Canadian funds’ unwillingness to exclude new investments in fossil fuels.
The Canada Pension Plan Investment Board in particular is making statements that undermine the scientific imperative to phase out fossil fuels.
Canadian funds, with very few exceptions, are failing to publicly advocate for the laws and policies that could stave off the worst effects of the climate crisis and keep open a path to climate safety.
You can learn more about the report card and our findings by attending our upcoming webinar on April 4th.
Pension plan members are doing their part.
In the last few months, community groups have hosted webinars on pensions and climate, B.C. teachers have rallied to call for fossil fuel phase out, and the University of Toronto Faculty Association has demanded their pension fund divest from oil and gas.
Regulation is catching up too.
This month, the United States Securities and Exchange Commission caved to industry pressure and released (watered down) rules requiring scope 1 and 2 emissions disclosure (but not scope 3). Canada’s federal financial regulator, the Office of the Superintendent of Financial Institutions (OSFI), also took important first steps by updating its first-ever climate risk management guidelines. OSFI’s B-15 Guideline requires Canada’s banks, by the end of 2024, to disclose their scope 1, 2 and 3 emissions and their exposure to climate-related risks, including physical and transition risks, in line with international standards. And last year, California passed new climate disclosure laws that will come into effect in 2026, requiring companies to align more closely with stringent European Union standards, including disclosing scope 1, 2 and 3 emissions. Meanwhile, efforts to push state pension funds to divest their fossil fuel holdings are making progress in Oregon, California and New Jersey.
In this issue of the Climate Pension Quarterly, we cover announcements including a new “Climate Approach” from the Alberta Investment Management Corporation, OMERS’ 2023 Annual Report, and updated proxy voting guidelines from the Ontario Teachers’ Pension Plan and University Pension Plan. We also include our now-regular feature tracking the fossil fuel companies owned by the Canada Pension Plan Investment Board– companies which continue to expand oil and gas production and infrastructure despite our national pension manager’s commitment to net-zero emissions by 2050. Finally, you’ll find updates on climate engagement and fossil fuel divestment from pension funds at home and abroad, as well as tracking of Canadian pension fund investments including Scotia Gas Networks, Northvolt, Exolum, Puget Sound Energy, Thames Water, Énergir, Open Grid Europe, and more.
The full stories are in a downloadable pdf, which you can access below.
-Adam Scott, Executive Director, Shift