REPORT: Political turmoil raises stakes for pension fund climate leadership
Political headwinds and worsening climate impacts test the resolve of Canada’s pension giants. Report card reveals which pension funds are stepping up.
Toronto, ON | Traditional territories of the Huron-Wendat, Anishnaabeg, Haudenosaunee, Chippewas and Mississaugas of the Credit First Nation.
Today, Shift released its annual Canadian Pension Climate Report Card, an independent benchmark for evaluating the quality, depth and credibility of climate policies for 11 of Canada’s largest pension managers, all of which have acknowledged the significant risks that climate change poses for their investments. These giants of the Canadian financial system, which collectively manage $2.4 trillion in retirement savings, can’t meet their long-term obligations to beneficiaries if we don’t stabilize the climate.
The third edition of Shift’s report card comes during a dangerous moment for the pension sector and the world. At the halfway point in this critical decade for climate action, we’re confronted with disturbing previews of the consequences of failure—droughts, storms, wildfires and floods—with societies, ecosystems and economies experiencing catastrophic harm. At the same time, growing political instability has unleashed another wave of reactionary governments and climate denial, threatening to roll back progress on reducing greenhouse gas emissions. This year’s report card reveals which Canadian pension funds are stepping up in the era of climate change, and which are falling behind.
“The climate crisis is subject to the laws of physics and not to four-year election cycles,” said Adam Scott, Executive Director of Shift. “Far from an excuse for slowing climate action, political backsliding only increases the urgent need for financial leadership to fill the void. Pension funds require a stable climate to fulfill their mandates and obligations.”
This year’s report card reveals Canada’s pension sector building overall momentum on climate, while also exposing a troubling divergence between leading and lagging institutions. Shift was pleased to see progress on building internal climate expertise, efforts to help portfolio companies decarbonize, and movement towards strengthening fossil fuel exclusions.
The Investment Management Corporation of Ontario (IMCO) joins Ontario’s University Pension Plan (UPP) and the Caisse de dépôt et placement du Québec (CDPQ) at the front of the Canadian pack, edging past another early leader—the Ontario Teachers’ Pension Plan (OTPP). Funds in the middle of the pack such as the Ontario Municipal Employees Retirement System (OMERS), Healthcare of Ontario Pension Plan (HOOPP) and OPSEU Pension Trust (OPTrust) have made important incremental progress. But others, such as the Public Sector Pension Investment Board (PSP) and the British Columbia Investment Management Corporation (BCI), have lagged behind, undermined by their ongoing refusal to commit their portfolios to net-zero emissions.
The Canada Pension Plan Investment Board (CPPIB) has seen its score drop in two categories in 2024 and is the only fund to see lower scores on any indicator two years in a row. Canada’s $675-billion national pension manager continued to undermine its climate credibility through its refusal to set interim emissions reduction targets, persistent greenwashing from its executives, its ongoing financing of high-risk fossil fuel expansion, and its fundamentally flawed decarbonization thesis for fossil fuel companies.
The Alberta Investment Management Corporation (AIMCo), already in last place in previous report cards, fell further behind due to blatant political interference in its governance, seemingly driven by fossil fuel interests. AIMCo becomes the first pension manager to receive an overall F in any of Shift’s report cards.
“As long-term investors with assets around the world, pension funds have no choice but to act as a bulwark against climate backsliding,” said Laura McGrath, Senior Manager at Shift. “In order to protect their members’ retirement security as the climate crisis worsens and the energy transition accelerates, pension funds have to be the adults in the room.”
“My retirement security, and that of my children, is dependent on a safe climate, healthy ecosystems and a stable financial system,” said Tylene Appel, a retired teacher from Provost, Alberta. “My provincial and national pension managers don’t seem to realize this. Even as devastating climate disasters strike Alberta year after year, both CPPIB and AIMCo continue to risk my retirement savings on oil and gas expansion. This has to stop, immediately.”
Read the full report and find detailed climate analyses of individual pension funds here.
For interview requests:
Adam Scott, Executive Director, Shift Action for Pension Wealth & Planet Health
adamscott@shiftaction.ca
416-347-3858
Shift Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis. Shift is a project of MakeWay Canada.
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