Climate Pension Quarterly - Issue #13

“The most challenging summer on record”

Canadians from coast to coast to coast have endured another summer of unnatural disasters driven by the continued burning of fossil fuels. The staggering emotional, cultural and health impacts are beyond measure, but we have early indications of the financial costs.

The Insurance Bureau of Canada says “four catastrophic summer events”—floods in southern Ontario and Quebec, the wildfire in Jasper, and the hailstorm in Calgary—led to “the most challenging summer on record” in terms of extreme weather events. Home, auto, and business insurers are reporting a total of 228,000 insurance claims so far for 2024, compared to 160,000 for all of 2023.

As the town of Jasper struggles to recover, workers in Ontario organize around heat stress, and Canada’s elders gear up for a Seniors Day of Climate Action, our national pension manager has decided to sink another two billion dollars into fossil fuels.

In a July 23 op-ed for TheFutureEconomy.ca, Shift's Patrick DeRochie wrote that the Canada Pension Plan Investment Board “appears torn between the uncompromising imperatives of consensus climate science and a Canadian financial sector and political culture that remain deeply and dangerously entangled with the fossil fuel economy."

“Asking them to stop is like asking Starbucks to stop selling coffee”

Despite our national pension manager’s apparently ideological commitment to financing fossil fuels, pension managers in other countries keep coming to the conclusion that engaging with these companies on climate is pointless.

The New York City Comptroller’s Office, which oversees the fourth largest pension system in the United States, has divested at least US$4 billion worth of fossil fuel investments as part of its ambitious net zero by 2040 target. The comptroller’s head of ESG, John Adler, told Net Zero Investor in August that “we will only consider divestment where we determine that engagement is futile.” But he added that major fossil fuel exploration companies don’t tend to have net zero plans: “Asking them to stop is like asking Starbucks to stop selling coffee. Oil is Exxon’s business. They don’t want to stop.”

In Europe, the Danish pension fund PFA, which manages roughly US$110 billion in assets, sold its US$170 million stake in Shell in June. PFA cited the oil giant's disappointing approach to renewables and the broader energy transition.

Major Canadian pension funds are struggling to acknowledge that engagement and divestment are complementary tools. In August, Shift posted an analysis of the British Columbia Investment Management Corporation’s “bizarre commitment to engaging ExxonMobil.” ExxonMobil’s core business model is incompatible with BCI’s climate commitments, and institutional investors have tried and failed to engage the oil giant on climate with little to show for it other than the company slapping its own shareholders with a lawsuit.

Some Canadian pension fund leaders are inching towards eliminating coal, oil and gas exposure, however. OMERS’ vice president of sustainable investing told Net Zero Investor in September that the pension manager has not invested in new privately-held oil and gas assets “in some years,” and that oil and gas divestment is “something we may consider” in the future, “based on what's happening in the market.”

OMERS no doubt has the physical risks of the climate crisis on its mind after this summer’s wildfires: the pension fund is the owner of the historic Jasper Park Lodge.

“I am angry that my pension fund spent billions of dollars of our retirement savings to buy a company that asks oil and gas producers to ‘find your next drilling location’.”

So wrote retired teacher Marilyn Ortwein following Shift’s August 15 analysis of the Ontario Teachers’ Pension Plan’s Heritage Royalty “carbon bomb”. Teachers are demanding answers from their pension manager about its role in leasing millions of acres of land for oil and gas production across Western Canada, Texas and Pennsylvania.

Members of the Healthcare of Ontario Pension Plan (HOOPP), concerned about the health impacts of fossil fuels and the climate crisis, are also raising objections to their pension fund’s oil and gas holdings. At a webinar this week, the Registered Nurses’ Association of Ontario’s CEO Dr. Doris Grinspun said:

“Our pension fund was a leader in divesting from tobacco with the rationale that ‘we don’t invest in companies that kill us.’ We call on HOOPP to apply the same argument to fossil fuel investments, which are responsible for millions of deaths worldwide and the destruction of our children’s future.”

Managers of the Canada Pension Plan will likely hear similar sentiments when they host public meetings this fall. Federal legislation requires our national pension manager to hold such meetings across Canada every two years, providing an opportunity to engage in person with the senior executives who manage our pension savings. The first meeting is scheduled for Thursday, October 10 in Ottawa.

From pension fund reports, to media mentions, to juicy and concerning updates about the companies our pension fund owns, we’ve got it covered in the full stories of this issue of the Climate Pension Quarterly.

-Kevin Philipupillai, Research Lead, Shift

p.s. Shift welcomed Cheryl Randall to the team last month as our digital campaign specialist. An Oxford University law graduate, Cheryl worked as a pensions lawyer in London before spending five years working as an expedition leader in the polar regions and seeing the impacts of climate change first hand. After moving to Canada she used engagement organizing tactics as climate change campaign organizer at Ecology Ottawa and most recently worked at the nexus of climate and economic justice as digital campaigns manager at Leadnow. At Shift, Cheryl is focused on using digital campaigns to enable sustainable finance to address the climate crisis. Welcome aboard, Cheryl!