2024 Canadian Pension Climate Report Card
OVERALL SCORE
C-
Canada Pension Plan Investment Board (CPPIB)
Climate Urgency
C-
Climate Engagement
B-
Climate Integration
C+
Fossil Fuel Exclusions
F
Interim Targets
F
Paris-Aligned Target
C-
The 2024 Canadian Pension Climate Report Card analyses, assesses and ranks the progress made by eleven of Canada’s largest pension managers and two international pension managers in their approach to climate risk and investment decisions as they relate to the climate crisis. The report is based on publicly available information to December 31, 2024.
The Canada Pension Plan Investment Board (CPP Investments, or CPPIB) is a Crown corporation and the manager of the Canada Pension Plan (CPP). Nearly all working and retired Canadian citizens outside of Quebec are members of the CPP. CPPIB manages one of the largest investment funds in the world, on behalf of over 22 million Canadians.
Assets Under Management (AUM): $675.1 billion (September 30, 2024)
CPPIB’s overall score remains a C- in 2024, placing it toward the bottom of the pack of Canadian pension funds on its approach to the climate crisis. CPPIB is the only pension manager to see lower scores on any indicator two years in a row. Its score moved from a C in 2023 to a C- in 2024 for both Paris-Aligned Target and Communication of Climate Urgency.
Despite having a growing team of smart, dedicated sustainability staff with the most sophisticated climate risk analysis tools at their fingertips, CPPIB appears less credible year over year when it comes to climate. CPPIB continues to refuse to set interim emissions reduction targets, which are necessary to ensure that investment and asset management decisions are on track to align with the fund’s net-zero by 2050 commitment and global climate targets. CPPIB claims to support reducing emissions in the real economy, yet finances new fossil fuel expansion and provides no evidence that its growing portfolio of oil and gas assets have profitable, science-aligned decarbonization pathways. See our special section CPPIB’s fundamentally flawed decarbonization thesis for fossil fuels for more detailed analysis.
CPPIB’s greenwashing and contradictory actions are all the more problematic in light of the fund’s apparent sophistication on many elements of managing climate-related risk. Its Decarbonization Investment Approach and Abatement Capacity Assessment Framework appear to be promising tools to help its portfolio companies decarbonize. But details on how exactly these tools are being deployed are lacking. CPPIB’s significant fossil fuel assets cannot be credibly or profitably decarbonized without a plan for the phase-out of oil and gas production and the early retirement of infrastructure.
CPPIB is unacceptably opaque about how its climate strategy is practically applied. CPPIB weakened its relatively strong proxy voting guidelines at the end of 2024, ignored requests to release audio, video and written recordings of its public meetings, and neglected to provide meaningful answers to climate-related questions submitted to the public meetings by over 7,000 Canadians. In November, the House of Commons Standing Committee on Environment and Sustainable Development formally called for enhanced transparency and disclosure from CPPIB.
2024 UPDATES
Continued to refuse to set interim emissions reduction targets.
Still no membership in a credible and accountable Paris-aligned investor body.
Invested in fossil fuel expansion while claiming to pursue “decarbonization” of fossil fuel assets through a fundamentally flawed approach.
OVERVIEW
CPPIB’s score in this category fell from a C in 2023 to a C- in 2024. The pension manager undermined the credibility of its net-zero commitment by directly financing fossil fuel expansion and acquiring new oil and gas assets, under the pretense of a fundamentally flawed decarbonization thesis for fossil fuels.
For a comparison of CPPIB’s climate targets, or lack thereof, with respect to other Canadian pension managers, see this report’s Table 1: Emissions Reduction Targets (total portfolio).
DETAILS
CPPIB remains the only Canadian pension manager whose net-zero by 2050 commitment, announced in February 2022, explicitly includes scope 3 emissions. But it is impossible for CPPIB to assess progress against this commitment or be held accountable, as the pension manager has thus far failed to set interim emissions reduction targets. Despite including scope 3 emissions in its net-zero commitment, CPPIB has yet to even report its scope 3 financed emissions.
CPPIB recognizes the need to decarbonize the real economy and not just its portfolio. The pension manager acknowledges that its financial performance will be influenced by how well its assets adapt to the global transition to net-zero, and intends to fulfill its net-zero commitment in accordance with its “Climate Change Principles”, which include investing for a whole economy transition, evolving its strategy as transition pathways emerge, exerting influence, supporting a “responsible transition”, and reporting on its actions, their impacts and emissions.
A fundamentally flawed decarbonization thesis for fossil fuels
CPPIB’s net-zero target appears to be based on a fundamentally flawed approach to decarbonizing fossil fuels, which it continually repeats without evidence in its public communications. This undermines the credibility of CPPIB’s net-zero commitment, leading to a lowered score in this category in 2024.
CPPIB consistently states its intention to “focus on absolute emissions” and “reduce climate risk in the real economy.” But CPPIB and its portfolio companies continue to finance the expansion and prolongation of fossil fuel use while failing to acknowledge that the only decarbonization pathway for fossil fuel assets is the phasing out of production and early retirement of infrastructure.
Read our special section, “CPPIB’s fundamentally flawed decarbonization thesis for fossil fuels”, here.
Offsets
CPPIB has not yet placed any limits on the use of carbon offsets to count toward its own or its portfolio companies’ emissions reduction commitments. Although CPPIB acknowledges that “the ultimate global goal is to eliminate or replace industrial processes that release carbon into the atmosphere,” it refers to carbon credits as “innovative tools” that “pull greenhouse gases out of the atmosphere or keep emissions from being released” and “help meet the urgent need to reduce global carbon emissions, and voluntary or compliance targets.”
CPPIB did not report any new investments in carbon credits in 2024, but made investments in carbon credits in 2021, included the purchase of offsets as an emissions abatement option for companies in its Abatement Capacity Assessment Framework, and purchased carbon credits from the Canadian Darkwoods Forest Carbon Project to offset its operational emissions in FY 2024.
Authoritative international standards bodies for credible net-zero plans emphasize the need to prioritize urgent and deep reduction of emissions across an entity’s value chain and require increasingly stringent rules for the use of carbon credits. The United Nations High Level Expert Group on Net-Zero Emissions Commitments of Non-State Entities (UNHLEG) says that even high-integrity carbon credits cannot be counted toward a non-state actor’s interim emissions reductions, while the Science Based Targets initiative (SBTi) says that “The use of carbon credits must not be counted as emission reductions toward the progress of companies’ near- or long-term science-based targets. This means that companies cannot purchase carbon credits as a substitute for emission reductions.”
No membership in a credible and accountable Paris-aligned investor body
CPPIB has also avoided accountability for achieving its net-zero commitment by choosing not to join a credible and accountable Paris-aligned investor body, such as the Net-Zero Asset Owner Alliance or the Paris Aligned Asset Owners, and by not committing to follow the recommendations of the UNHLEG.
2024 UPDATES
CPPIB continues to refuse to set interim emissions reduction targets.
CPPIB spokespeople provided flimsy excuses for this decision.
Total portfolio carbon emissions for CPPIB’s non-government holdings increased from 21.5 million tonnes to 23.2 million tonnes between March 2023 and March 2024, while emissions per million-dollars-invested decreased slightly.
Adjusted its methodology for calculating “green and transition assets”, leading to a revision of its FY 2023 figure downward from $79 billion (14% of AUM) to $76 billion, increasing to $83 billion in FY 2024 (13% of AUM).
OVERVIEW
CPPIB remains one of the few Canadian pension funds analyzed in this report that has yet to set interim emissions reduction targets, once again refusing to follow best practice in 2024.
For a comparison of CPPIB’s climate targets, or lack thereof, with respect to other Canadian pension managers, see this report’s Table 1: Emissions Reduction Targets (total portfolio) and Table 2: Additional Climate-Related Targets.
DETAILS
Refusal to set interim emissions reduction targets
In spite of CPPIB’s 2022 commitment to align its portfolio and operations with net-zero, its executives have since refused to establish interim emissions reduction targets, citing a litany of excuses. Communications around this ongoing failure in 2024 demonstrated a troubling lack of understanding of the science behind such goals, and the practical realities of deploying investor strategies for achieving them. In repeated efforts to defend their refusal to set interim goals, fund executives continually cast doubt over their intention to actually achieve their net-zero commitment.
Excuse #1 - Emerging market investments can't hit net-zero by 2050 goals.
In interviews for a Harvard Business School study of CPPIB’s net-zero commitment, a CPPIB executive suggested that the pension manager expected to increase its exposure to higher-polluting emerging markets and high-emitting assets with the goal of enabling decarbonization. Chief Sustainability Officer (CSO) Richard Manley suggested that one of the reasons CPPIB did not set interim targets was due to the fund’s “allocation to emerging markets where net-zero was forecast by 2060-2070,” which “indicated that our portfolio emissions would rise in the near-term.” He said that setting interim targets could “effectively constrain portfolio design.”
In reality, there is no reason why CPPIB’s emerging market investments can’t align with its net-zero by 2050 commitment. Financing the transition of companies in developing countries and aligning emerging markets with safe net-zero emissions pathways is a requirement for long-term global climate safety. It should be obvious that, by definition, CPPIB’s net-zero commitment constrains some of its portfolio design (without negatively impacting risk-adjusted returns), as it requires the pension manager to allocate capital only to activities with credible transition pathways. Adjusting investment strategies and portfolio design is necessary to achieve net-zero by 2050 and stabilize global temperatures at safe levels.
Excuse #2 - Emissions might rise in the short-term.
CPPIB says that its emissions may fluctuate in the near- or short-term as its AUM grows, it acquires new high-carbon assets, and its emissions reduction efforts with portfolio companies take time to demonstrate impact. Temporary increases in portfolio emissions may well be necessary and unavoidable under specific circumstances, as pension funds work to deploy capital to help high-carbon, hard-to-abate companies and industries profitably decarbonize. Such increases can be accommodated alongside interim targets. Other pension funds, such as the Ontario Teachers’ Pension Plan (OTPP), OMERS and Caisse de dépôt et placement du Québec (CDPQ), have acknowledged the challenge of rising emissions in the short-term by creating specific transition asset portfolios, the emissions of which are accounted for separately from their broader portfolio’s interim emissions reduction targets. By doing the same, CPPIB could establish needed accountability for achieving its net-zero commitment while providing transparency on which of its holdings it considers to be “transition assets” that could be credibly and profitably stewarded through decarbonization.
Excuse #3 - Fund managers think required action to achieve climate targets is ‘political’.
In the same Harvard Business School study, CPPIB Global Head of Public Affairs and Communications Michel Leduc gave a third excuse for failing to set interim targets: “we were not prepared to sell assets for public policy reasons. We don’t make policy, we make returns.” This illogical argument is troubling, suggesting that CPPIB views its climate goals as political, rather than as a scientific and financial imperative aligned with its core mandate. Such spin demonstrates a failure to understand that achieving the fund’s net-zero by 2050 goal is essential to meeting CPPIB’s legal mandate to maximize risk-adjusted returns over the long-term.
Scientists have demonstrated the critical importance of immediate emissions reductions and rapid climate action this decade in order to achieve Paris Agreement goals and avert the worst impacts of climate change. Late action leads to far higher cumulative emissions, causing significantly worse climate impacts. Financial experts have similarly warned that early action is required to limit fund exposure to stranded asset risks, as well as long-term physical and macroeconomic climate impacts.
Interim emissions reduction targets are accountability tools which help investors link their long-term commitments and strategy to their internal decision-making. They would not, as Leduc has claimed in public meetings, force CPPIB to “have a fire sale” if companies aren’t on track for long-term targets. CPPIB’s reliance on such flimsy rationale for avoiding best practice and accountability is concerning.
Regardless of its lack of emissions reduction targets, CPPIB reported that its total portfolio emissions for non-government holdings increased from 21.5 million tonnes (carbon dioxide equivalent, or CO2e) in March 2023 to 23.2 million tonnes CO2e in March 2024, while emissions per million-dollars-invested decreased slightly.
Green and transition assets
CPPIB has committed to invest $130 billion in “green and transition assets” by 2030.
CPPIB gives clear high-level definitions for differentiating “green” from “transition” using revenue thresholds, asset types and decarbonization targets validated by the International Capital Markets Association, Climate Bonds Initiative and SBTi. But CPPIB continues to obfuscate which particular assets it considers to be “green” versus “transition”, despite repeated requests for disclosure. This confusion is further exemplified by CPPIB’s so-called “Sustainable Energies” portfolio, which includes renewable energy, energy efficiency and conservation, and agriculture companies alongside oil and gas producers, pipeline companies, gas-fired power producers and carbon capture utilization and storage (CCUS) infrastructure for oil and gas.
Without transparent disclosure from CPPIB, Shift can only attempt to deduce what the fund categorizes as “transition” in its FY 2024 report and other disclosures. Based on the composition of CPPIB’s “Sustainable Energies”, Active Equities, Real Assets, Credit Investments and Private Equity portfolios and CPPIB’s October 2024 disclosure that 3.5% of the fund is invested in fossil fuels, Shift infers that CPPIB may count a significant amount of its fossil fuel utility, power generation and infrastructure assets as “transition assets.” (See Estimated Investments in Fossil Fuels in Fossil Fuel Exclusions section.)
Assuming credible application of the criteria for “green and transition assets”, this $130 billion target would still appear low in ambition, in proportion to CPPIB’s projected AUM in 2030. CPPIB’s investments in green and transition assets represented 14% of AUM ($79 billion) as of March 31, 2023 and 13% of the portfolio ($83 billion) as of March 31, 2024. With CPPIB’s AUM projected to be $991 billion in 2030, its target of $130 billion investment in green and transition assets would amount to just 13% of AUM in 2030 – the same as the current proportion.
CPPIB reports that the year-over-year increase from the (revised figure of) $76 billion in FY 2023 to $83 billion in FY 2024 is due to new investments in “green and transition assets”, increased valuations of existing eligible assets, and existing assets becoming eligible by taking actions such as getting certified by the SBTi.
Other climate targets
CPPIB does not have targets for the proportion of AUM covered by a credible science-based decarbonization plan, nor does it have targets for successful climate engagement of owned companies.
CPPIB has no disclosed targets for improving portfolio emissions reporting. The investment manager reported that approximately 47% of its portfolio emissions were directly reported by portfolio companies in FY 2024.
2024 UPDATES
There continues to be a significant and widening gap between the urgent scientific imperative of reducing emissions along science-aligned pathways and communications from CPPIB executives that downplay the systemic, existential nature of the climate crisis while misrepresenting the role of fossil fuels in the energy transition.
OVERVIEW
After seeing its score slip from a B in 2022 to a C in 2023, CPPIB’s score in this category has been further lowered to C- in 2024. This is the only instance of a pension fund receiving a lower score in any category for two years in a row in Shift’s report cards, and it reflects CPPIB’s passive approach to the climate crisis, failure to recognize the necessity of a stable climate to fulfill its mandate, refusal to acknowledge double materiality, and fundamentally flawed investment thesis on decarbonizing fossil fuels.
DETAILS
Even as the impacts of climate change affect the lives and livelihoods of more Canadians, and the risks of a warming world escalate, CPPIB continues to downplay its role and influence in driving decarbonization, while greenwashing the transition-alignment of its portfolio.
There were moments in 2024 when CPPIB acknowledged the urgent, systemic, existential nature of the climate crisis. For example, at CPPIB’s public meeting in Vancouver in November, Global Head of Public Affairs and Communications Michel Leduc said:
“we completely agree with (concerned Canadians) that climate change risk is an existential threat… it is the single biggest investment risk that we face… we’re very well aware, whether it’s physical risks within the portfolio, whether it’s stranded assets, these are all major threats to our portfolio, and it’s one that we are extremely preoccupied with.”
CPPIB downplays its role in driving the energy transition
Yet CPPIB’s acknowledgement of climate risks focuses mainly on the external threats to its portfolio, not the impact its own investment decisions have on the climate. This passive “single materiality” framing rings hollow, given the fund’s status as the largest investor in Canada and one of the largest investment funds on earth.
In its 2024 annual reporting, CPPIB adopts a non-urgent tone that downplays the critical role a $675-billion investment manager must play in the energy transition. There is no mention of climate change in the President’s Message. Similarly, in a November 2024 op-ed addressed to “gen Z” Canadians, CPPIB’s president and CEO John Graham promised that the CPP will be there for young Canadians, nodded at climate change as a “risk”, but did not mention the catastrophic damages already impacting their lives. Graham’s reassurances would be cold comfort to the young Canadians whose homes burned to the ground in Jasper, Alberta’s wildfires, who lost loved ones in an atmospheric river that left four dead in British Columbia’s Lower Mainland, or who experienced a humanitarian emergency after the Mackenzie River was too dry to ship supplies to Norman Wells, Northwest Territories.
Other references to climate change in CPPIB’s Annual Report 2024 treat it as just another investment risk. CPPIB seems to assume that this risk either can be managed by traditional monitoring, reporting, asset allocation and portfolio diversification strategies, or else will be taken care of by governments, companies, consumers and other investors:
“Climate change represents both a significant risk and investment opportunity for the Fund as the economy transitions in line with sovereign climate commitments. We believe that the performance of the Fund will be influenced by how well our portfolio companies and the portfolio adapt alongside the global economy on the path to net zero. As such, and in alignment with our mandate to maximize returns without undue risk of loss, we have committed our portfolio and our operations to being net zero of greenhouse gas (GHG) emissions across all scopes by 2050. Our commitment is made on the basis and with the expectation that the global community will continue to advance towards the goal of achieving net-zero GHG emissions by that date.”
– CPPIB Annual Report 2023
Such language frames CPPIB’s role as a passive one, where success or failure of Paris Agreement goals has little connection to the fund’s own investment strategy. Rather, CPPIB states that these advances – presumably to be made by others – will include:
“the acceleration and fulfilment of commitments made by governments, technological progress, corporate delivery of their targets, changes in consumer and corporate behaviour, and development of global carbon markets and reporting standards. All of these advancements will be necessary to help us meet our commitment.”
Failure to acknowledge necessity of climate stability for CPPIB’s investment returns
Unlike leading Canadian and international pension funds, CPPIB does not directly acknowledge that climate stability is necessary to fulfill its mandate. This passive approach to systemic climate risks continues in spite of CPPIB’s own scenario analysis showing that the fund’s market value could potentially drop by 15% in a given year during the next 30 years, largely driven by physical risks, if global decarbonization efforts are less successful. The pension manager also neglects to acknowledge double materiality (meaning that the climate impacts the fund, but also that the fund’s investment and asset management decisions impact the climate). CPPIB should, alongside similarly-sized international investors, acknowledge the fund’s agency in shaping the trajectory of the global energy transition.
CPPIB’s views on the role of oil and gas in the energy transition
Even as CPPIB speaks to the need to manage climate risks and invest in opportunities, it continues its tendency (as documented in Shift’s previous report cards) to inaccurately assert the role and ingenuity of fossil fuel companies in the energy transition and decarbonization of the global economy. In their public communications, CPPIB executives continue to tout a vague but important role for oil and gas in the energy transition, without explaining what that role is or how it’s aligned with science-based net-zero emissions pathways:
“It’s a tricky balancing act: rapidly decarbonizing the global energy supply while ensuring access to affordable and secure energy for everyone. Achieving it will depend on the integration of a variety of technologies, including hydroelectric, wind, solar, geothermal and hydrogen power. Conventional energy providers also have an important role to play.”
– CPP Investments Insights Institute
Credible decarbonization pathways are complex and must acknowledge a degree of uncertainty about the future. However, with the energy transition now unfolding rapidly at a global scale, expert analysis is increasingly converging around existing data showing what credible transition pathways for “conventional energy providers” (i.e. fossil fuel companies) look like, assuming science-based Paris-aligned targets are met. Global “net-zero” energy outlooks, such as those published annually by the IEA, state that net-zero means that no new conventional oil and gas projects, oil or gas field developments, coal mines, mine extensions or unabated coal plants are needed, and that demand for coal, oil and gas will peak this decade and begin to rapidly decline. This calls into question CPPIB’s claims about the role of the oil and gas industry in the energy transition.
“Calls for divestment from fossil fuel companies have grown in recent years. Proponents say this approach would force a more rapid transition to a low-carbon economy. We believe supporting the comprehensive decarbonization of the real economy requires a different approach—one that supports capital market participants in financing their emissions reductions and investing in more efficient solutions. And we believe that blanket divestment from oil and gas is a bet against human ingenuity and could impact access to affordable, reliable energy in some markets. Moreover, shedding high emitters rather than working with them leaves the reduction or abatement of their carbon footprint to others, some of whom may not share the same mindset as it relates to the whole economy transition.”
– CPP Investments Insights Institute
During CPPIB’s virtual public meeting held in November 2024, when asked “If you have a mandate to invest without undue risk of loss… how come you invest in fossil fuel companies who are actively contributing to the largest risk of loss that Canada has ever faced: climate change? What do you say to Canadians who lost their homes to forest fires caused by climate change?”, CPPIB CEO John Graham said “we need to continue to support the oil and gas industry” adding that “divesting is a short on human ingenuity.”
These comments misinterpret global best practices being developed for energy transitions for oil and gas producers, which would require carefully-managed phase-downs of production over time. They also misinterpret the fiduciary responsibility of CPPIB through the energy transition. Not all sectors have credible and profitable decarbonization pathways. Sectoral decarbonization of oil and gas supply chains cannot change the reality that use (combustion) of these products must be phased out rapidly. Accepting exceptional stranded asset risk and the substantial undue risk of loss associated with continued long-term capital allocation to this sector is not aligned with CPPIB's mandate. Put another way, CPPIB is essentially telling Canadians they intend to keep betting against the global energy transition, using our retirement savings to ante up.
CPPIB’s communications downplay the urgency and severity of the climate crisis by cloaking the fund’s approach in the boilerplate language of affordability, energy security and technological change, whilst continuing to directly finance the expansion and prolongation of fossil fuel use. These statements read to observers as a politically-motivated defence of an industry facing terminal decline, not the words of a prudent, impartial investment manager.
2024 UPDATES
Applied the Decarbonization Investment Approach to 15 portfolio companies.
Published a CPP Investments Insights Institute article summarizing a Harvard Business School paper on CPPIB’s net-zero commitment that includes a case study of CPPIB’s 2023 purchase of Aera Energy.
Continued communication of strong climate-related expectations to portfolio companies, with a soft expectation that companies should align compensation with climate targets.
Strengthened climate-related proxy voting guidelines in February 2024, and then weakened them in November 2024.
Increased proxy votes against corporate directors for deficiencies in board climate risk oversight.
Advocated for international standards for climate-related disclosures in 2024, but little evidence of advocacy for other Paris-aligned climate policy.
OVERVIEW
CPPIB has strong internal tools and processes in place – including clear climate-related expectations for companies, an escalatory engagement program, relatively strong proxy voting guidelines, its Decarbonization Investment Approach and Abatement Capacity Assessment Framework, and a big team of dedicated climate risk experts – but CPPIB’s privately-owned fossil fuel portfolio companies fail to live up to the pension manager’s own climate expectations, revealing a fundamentally flawed investment thesis for decarbonization.
DETAILS
Expectations and escalation
CPPIB lays out relatively strong climate-related expectations and engages with companies through its board representation and shareholder voting rights.
Portfolio companies
CPPIB asks portfolio companies to integrate climate risks and opportunities into their strategy and operations, disclose climate reporting aligned with International Sustainability Standards Board (ISSB) standards, have a credible transition plan, and disclose an appropriate governance structure for monitoring climate risks and opportunities. CPPIB also expects portfolio companies to follow its Proxy Voting Principles and Guidelines (see below) and mentions that companies should consider aligning compensation with sustainability-related factors. But CPPIB falls short of requiring companies to tie compensation to climate targets.
Despite these relatively strong expectations, it is unclear if CPPIB’s privately-owned portfolio companies are meeting these expectations, particularly those in the fossil fuel sector. Importantly, it is not clear what CPPIB means by “credible transition plan”, or what actions it would take if it deems a company’s transition plan to be inadequate. This has critical implications for CPPIB’s decarbonization investment thesis – that it intends to continue buying and investing in fossil fuel companies so as to use its ownership and influence to “decarbonize” them – as there appears to be little evidence that CPPIB portfolio fossil fuel companies are aligned with this thesis.
CPPIB continued to apply its “Decarbonization Investment Approach” (DIA) in FY 2024, in particular to portfolio companies “spanning the energy and natural resources, real estate, and financial services sectors.” CPPIB reported “partnering with over 15 portfolio companies with large absolute emissions and/or high emissions intensity to help them reduce emissions from their operations, while deepening our understanding of sector-specific decarbonization levers.”
Examples of Decarbonization Investment Approach
CPPIB provided four brief examples on its Sustainable Investing - Influence webpage of companies that underwent an assessment using the DIA – an industrial real estate developer, an energy-as-a-service company, a hotel and theme park operator, and the 407 exchange toll road. All case studies demonstrate the value of the DIA through its role in identifying and implementing measures to move the companies toward climate resiliency, electrification, electric vehicles, renewable energy, energy efficiency and conservation, lower scope 1 and 2 carbon emissions and associated cost savings.
However, CPPIB does not provide a specific example of the DIA being used for a fossil fuel company. CPPIB did publish a CPP Investments Insights Institute article which includes discussion of the fund’s decision to buy a 49% stake in oil and gas producer Aera Energy in 2023. The article references a Harvard Business School paper on CPPIB’s net-zero commitment, with the Aera purchase as a case study. But the case study instills little confidence that CPPIB understands that a credible climate plan for a fossil fuel company means phasing out production and retiring assets early. (See special section CPPIB’s fundamentally flawed decarbonization thesis for fossil fuels).
Similarly, in November 2024, CPPIB CEO John Graham highlighted Wolf Midstream as an example of a portfolio company that was transitioning and decarbonizing, neglecting to mention that CPPIB committed $1 billion in 2024 for Wolf to increase natural gas liquids production capacity on its pipeline system.
Proxy Voting Guidelines
CPPIB updated its Proxy Voting Principles and Guidelines in February 2024 (compared to its 2023 guidelines) and then weakened them in November 2024. As covered in Shift’s 2023 Report Card, CPPIB’s February 2023 guidelines were relatively strong compared to other Canadian pension funds. But they ended 2024 weaker than the previous year. CSO Richard Manley makes it clear in CPPIB’s 2024 Proxy Voting Report that “they are guidelines, not rigid rules, and we will respond to specific matters on a company-by-company basis.”
Strengthened Proxy Voting Guidelines in February 2024
The update from February 2023 to February 2024 of the Proxy Voting Principles and Guidelines saw CPPIB:
Strengthen its standards by specifying its support for alignment of corporate climate and sustainability reporting with ISSB standards;
Mention its support for companies using the Transition Plan Taskforce recommendations as an approach to communicating their transition plan;
Add stronger language to specify that “in determining there has been a board failure (to demonstrate adequate oversight with respect to the assessment of physical and transition-related impacts from climate change)”, it would begin to consider whether boards have “credible and actionable plans achieving climate related commitments made by the company.”
In its 2024 Proxy Voting Report, CPPIB says that it expects company boards and executives “to determine the transition strategy that is appropriate for the company considering the current and future outlook for regulation, supplier / customer demands, technology costs and, where applicable, economic incentives provided by carbon prices / taxes and, the physical risk to their operations and value chains. While we do not prescribe what this strategy should look like, we expect the board to ensure it is in place.”
Jurisdictional loophole added to Proxy Voting Guidelines February 2024
However, CPPIB also added new language in February 2024 related to the jurisdiction where companies are listed, incorporated and operating. As part of its expectations for boards and executives to integrate climate risks and opportunities into their strategy, operations and disclosure, CPPIB added that: “This includes integrating consideration of government-level climate commitments, which we view as forward policy guidance to issuers, into company-level climate related transition planning. If a government has articulated a commitment to comprehensively decarbonize its economy, we expect the board and executive to consider how strategy will be aligned with this stated intent.”
In determining where there has been a board failure on oversight of climate risk, CPPIB specified in February 2024 that:
For companies listed, incorporated or operating in markets where the government has committed to a Nationally Determined Contribution (NDC) under the Paris Agreement, we will define this failure as no reported scope 1 and scope 2 GHG emissions.
CPPIB’s changes related to government climate commitments are curious. On one hand, the February 2024 guidelines rightly set an expectation that companies in a jurisdiction with a binding target under the Paris Agreement should be considering the financial implications of that jurisdiction achieving its target. On the other hand, the guidelines could have the effect of permitting climate risk oversight board failures at companies in jurisdictions that aren’t party to the Paris Agreement. This is particularly worrisome for companies in the U.S., where President Donald Trump signed an Executive Order on January 20, 2025 to withdraw the U.S. from the Paris Agreement. Paris Agreement withdrawal is effective one year after notification is given. This means that, by early 2026, CPPIB’s Proxy Voting Principles and Guidelines would have a loophole for companies listed, incorporated or operating in the U.S. that do not report scope 1 and 2 emissions. It is not clear why CPPIB would choose to add this loophole to its guidelines, given its obvious potential to expose the fund to increased climate-related financial risks and undermine its own climate commitments. As of March 31, 2024, 42% of CPPIB assets were allocated in the U.S. Among CPPIB’s privately-owned portfolio companies, this includes the largest oil and gas producers in both California and Ohio.
Weakening Proxy Voting Guidelines in November 2024
CPPIB made further changes to its Proxy Voting Principles and Guidelines in November 2024. These mostly include small, inconsequential revisions. However, CPPIB also weakened its Proxy Voting Principles and Guidelines in November 2024 by changing “will vote against” in the following section to “will consider voting against”:
"Where boards have failed to demonstrate adequate oversight with respect to the assessment of material physical and transition-related impacts from climate change, we will vote against (February 2024) will consider voting against the reappointment of accountable board members including the chair of the committee responsible for oversight of climate change risk, the chair of the Risk Committee, or other appropriate board member(s) up for re-election, provided there are no extenuating circumstances” (strikethrough and emphasis added).
As the hottest year on record came to an end, it is concerning that CPPIB found it important to give itself more wiggle room to allow for corporate boards of companies it owns to weaken oversight of climate risks. The change came just two years after CEO John Graham was touting in the Financial Post CPPIB’s willingness to vote against directors for climate deficiencies.
Proxy voting record
CPPIB reports its proxy votes in real time and published a 2024 Proxy Voting Report sometime in the second half of 2024. CPPIB reported that its updated guidelines led to a substantial increase in the number of climate-related engagements with portfolio companies compared to previous years. Between June 30, 2023 and June 30, 2024, CPPIB voted against 322 directors at 181 companies for deficiencies in climate-related oversight, an increase from voting against 26 directors in the previous year. During this reporting period, CPPIB also held 70 climate-related engagements with portfolio companies, leading to 59 companies making “commitments and improvements” on climate-related disclosures and decarbonization plans. CPPIB also supported 21 climate-related shareholder proposals that “sought deeper (climate) disclosures.”
While it is encouraging to see CPPIB following through on the climate-related expectations it has set for companies with a growing number of proxy votes, an analysis by Investors for Paris Compliance of CPPIB’s 2024 votes on 17 key climate-related shareholder proposals at fossil fuel companies, banks, insurers and other large companies showed that CPPIB supported just five of them. This suggests that CPPIB may not be consistently following its own Proxy Voting Principles and Guidelines and may explain why CPPIB changed the guidelines in 2024 from “will vote against” to “will consider voting against.” In one instance in 2024, CPPIB voted against a shareholder proposal at Enbridge’s annual general meeting that called for full disclosure of the company’s scope 3 emissions. The vote against the proposal contradicts CPPIB’s guideline in support of ISSB climate-related disclosure standards, which clearly include 15 categories for scope 3 emissions that would include emissions from the oil and gas flowing through Enbridge pipelines. CPPIB reported in FY 2024 that the quality and coverage of scope 3 emissions data from portfolio companies “is not yet sufficient”. Given this acknowledgment, it is inconsistent that the CPPIB would vote against a proposal calling for improved scope 3 disclosure of a data point that is material to Enbridge’s long-term value creation.
External managers and general partners
It is unclear what, if any, direction CPPIB gives to its general partners and external managers on oversight of climate-related risk at owned companies. CPPIB’s recent Sustainable Investing reports allude to a sustainability-related due diligence questionnaire completed by general partners and external managers which includes questions related to climate change. But no information is provided regarding what these questions are or what guidance CPPIB subsequently provides to these partners. CPPIB did not provide any update on this area in 2024.
Collaborative engagement
CPPIB is not a member of Climate Action 100+ or Climate Engagement Canada. While the fund is a member or contributor to various bodies (e.g. ESG Data Convergence Initiative, Investor Leadership Network), it is not clear if CPPIB is collaborating with other institutional investors on targeted climate-related engagement of high-carbon companies.
Policy engagement
There is little evidence that CPPIB is involved in constructive climate policy engagement beyond advocating for disclosure standards, where the fund has exerted considerable effort.
Leading Canadian pension managers have consistently signed on to joint investor statements calling for stronger government climate policies and regulations. For example, the Investment Management Corporation of Ontario (IMCO) and Ontario’s University Pension Plan (UPP) added their names to an open letter calling for Canada to rapidly implement a sustainable finance taxonomy and joined more than 600 other institutional investors in signing on to the 2024 Global Investor Statement to Governments on the Climate Crisis, a call for climate policy implementation and a whole-of-government climate approach from all levels of government. Some Canadian funds, such as the British Columbia Investment Management Corporation and UPP, transparently post these submissions and letters on their websites. There is no such disclosure from CPPIB.
CPPIB does, however, report that it participates in domestic and international discussions to help shape evolving regulation, market convention, standard setting and best practices in sustainable investing. CPPIB is particularly involved in improving sustainability reporting, transparency and standards, stating that doing so creates a common language for material sustainability-related factors, including climate change, helps ensure investors can make more informed investment decisions, and helps capital markets work more efficiently. In 2024, CPPIB’s CSO, Richard Manley, was chair of the ISSB Investor Advisory Group, while a CPPIB sustainability professional is Co-Chair of the ESG Data Convergence Initiative. Manley is now listed as a Chair Emeritus of the ISSB Investor Advisory Group. CPPIB also says that it regularly participates in regulatory consultations and provides comments on sustainability-related public consultations, and participates in discussions with relevant stakeholders, including standard-setters, policy-makers and regulators.
In June 2024, CPPIB signed on to a joint letter from Canadian pension funds to support and strengthen the Canadian Sustainability Standards Board’s draft sustainability disclosure standards. And in August 2024, CPPIB CSO Richard Manley wrote an op-ed in the Financial Times encouraging companies to support the ISSB sustainability reporting standards as “an act of enlightened self-interest” and called out industry associations for undermining this work “by arguing for extended reliefs or carve-outs.”
2024 UPDATES
Continues to have some of the most transparent disclosures of its holdings in the Canadian pension sector.
Held public meetings in 2024, but neglected to answer written climate-related questions from over 7,000 Canadians and did not post audio, video or written recordings of the in-person public meetings held in each province.
96% of AUM covered under its portfolio carbon footprint, with improvements in company-reported emissions data.
24% of portfolio scope 3 emissions now directly reported by companies, up 6-7% from last year.
Scenario analysis showed that the fund faces growing physical and transition risk under different scenarios.
CPP Investments Insights Institute provided some extra transparency and disclosure of the fund’s approach to climate change.
Number of fossil-entangled directors decreased from four to three in 2024.
Regular training for board and staff, including climate.
OVERVIEW
CPPIB continues to integrate climate-related considerations across the organization, as demonstrated by its above-average disclosure, relatively strong emissions data reporting and ongoing climate training for board and staff. But CPPIB continues to fail to demonstrate the resilience of its portfolio to climate risks and the soundness of its investment thesis for decarbonizing fossil fuel companies. Its board remains deeply entangled with fossil fuel interests.
DETAILS
Accountable Paris-aligned membership
CPPIB is not a member of any accountable and credible Paris-aligned investor body, such as the Net-Zero Asset Owner Alliance or the Paris Aligned Asset Owners.
Transparency and disclosure of holdings
CPPIB has among the most comprehensive and transparent disclosure of its holdings in the Canadian pension sector. It is one of the only Canadian pension funds to disclose an annual inventory of all holdings and the only fund to disclose quarterly results and transactions. CPPIB discloses its investments across asset classes through its website, including private equity relationships, public equity holdings and real estate holdings. CPPIB’s website also includes disclosure of “Real Assets Investments” including portfolio companies held in its Sustainable Energies, Infrastructure and Real Estate portfolios. And CPPIB provides additional climate-related disclosures through its Insights Institute, including a Harvard Business School study of CPPIB’s net-zero commitment posted in May 2024.
This relatively high level of transparency is something that CPPIB doesn’t hesitate to publicize. In a September 2024 Bloomberg podcast, CEO John Graham claimed that “we’re a big believer in transparency” and that “We lean into transparency around our returns, the assets we hold…” Similarly, at CPPIB’s National Virtual Public Meeting in November 2024, Graham said that “We want to maintain the highest levels of public trust and confidence in the work that we do and the way we do it,” and touted CPPIB’s number two ranking in the Global Pension Transparency Benchmark in 2024.
However, CPPIB's lack of disclosure of the proceedings at its 2024 public meetings fall below the fund's typical standard for transparency. After telling Canadians that it would endeavour to answer all questions asked in-person and by email during public meetings held in fall 2024, CPPIB failed to provide written responses to questions submitted by over 7,000 Canadians. Many plan members who attended the meetings in-person reported that they felt as if their questions were either ignored or given responses that were evasive or inadequate. Even though the pension manager recorded meetings held in every province outside Quebec, CPPIB has not released video, audio or transcripts of the in-person meetings.
Disclosure of fossil fuel assets
This inadequate transparency from a federal Crown corporation is reflected in CPPIB’s continued refusal to provide comprehensive disclosure of its fossil fuel assets, “green assets” and “transition assets”, despite repeated requests from plan members. While CPPIB executives disclosed at public meetings in fall 2024 that 3.5% of the portfolio was invested in fossil fuels, CPPIB has not followed up with a detailed list of these assets.
Moreover, the 3.5% figure, which equates to $22.6 billion, appears to be a significant underestimate that only includes fossil fuel producers and omits related infrastructure and fossil fuel utilities (such as gas-fired power generation and gas transmission and distribution assets). Without CPPIB providing more granular disclosure, it is impossible to determine what asset classes and holdings should be included in CPPIB’s total fossil fuel investments. Shift estimates the figure could be nearly double the disclosed $22.6 billion. See Estimated Investments in Fossil Fuels in the Fossil Fuels Exclusions section for more information.
Parliamentary calls for more transparency in private equity investments
The inadequacy of CPPIB’s reporting as it relates to climate change is reflected in its private equity disclosures. While CPPIB reports a list of private equity relationships, investments and fund commitments on its website, it is challenging, if not impossible, to understand how CPPIB’s private equity investments are being disbursed, how much CPPIB has committed to each asset, and what the private equity funds or firms are doing with Canada Pension Plan money.
For example, Shift tracked two private equity investments by CPPIB in recent years that eventually saw the funds disbursed to purchase and extend the life of a coal plant, and to buy a portfolio of gas assets in Texas and finance construction of a liquefied natural gas terminal in Louisiana. The findings compelled the House of Commons Committee on Environment and Sustainable Development to call on the Minister of Environment and Climate Change and Minister of Finance to require federally-regulated public pension funds, particularly CPPIB, to fully disclose their investments in private equity funds.
“Green and Transition” assets
As noted above, despite repeated requests, CPPIB has not disclosed which assets it considers to be “green” and “transition”, despite reporting $83 billion worth of such assets in FY 2024 and targeting $130 billion by 2030. While CPPIB’s definitions for “green and transition assets” use internationally credible standards, it is impossible to know which individual assets CPPIB considers to be “green” vs. “transition”, and whether these assets have credible climate plans.
This problem is further exemplified by CPPIB’s “Sustainable Energies” portfolio, which includes renewable energy, energy efficiency and conservation, and agriculture companies, but also oil and gas producers, pipeline companies, gas-fired power producers and CCUS infrastructure for oil and gas. When asked about the misleading labeling of fossil fuel assets as “sustainable energies” at a public meeting in Winnipeg in 2024, CPPIB Global Head of Public Affairs and Communications Michel Leduc gave a meandering response about the need to break down internal siloes and invest in the whole-of-economy transition.
The conflation of CPPIB’s “green and transition assets” and “sustainable energies” portfolio could constitute an attempt to mislead Canadians about the climate risks or benefits of CPPIB assets. This may leave CPPIB vulnerable to a complaint under the greenwashing provisions of Bill C-59.
Transparency and disclosure of climate risk
Climate plan
CPPIB published a comprehensive climate plan, Investing in the path to net-zero, in 2022 and has issued several short reports on the energy transition and decarbonization in the years since. The most recent updates on CPPIB’s net-zero commitment came with CPPIB’s 2023 Report on Sustainable Investing and Annual Report 2024. CPPIB did not release a sustainable investing report in fall 2024, but included climate-related disclosures in its Annual Report 2024.
Greenhouse gas emissions data
CPPIB now has 96% of its AUM covered under its portfolio carbon footprint. This coverage uses updated carbon metric calculation methodology, informed by ISSB disclosure standards, and includes government-issued securities, public equities, private equities, corporate bonds, private credit, infrastructure and real estate. CPPIB’s emissions disclosure uses the Enterprise Value Ownership method and reflects updates informed by the Partnership for Carbon Accounting Financials.
The quality of CPPIB’s emissions data improved between FY 2023 and FY 2024, with company-reported data increasing from 42% to 47% and proxy data decreasing from 52% to 48%. While CPPIB does not yet include scope 3 emissions in its reporting “as the quality and coverage of data is not yet sufficient”, the investment manager reported that 24% of its scope 3 emissions were directly reported by portfolio companies in FY 2024, up from 6-7% the previous year. CPPIB reported in its 2023 Report on Sustainable Investing that it created a new framework to assess physical and transition impacts on its private real estate holdings in 2023, but did not provide an update on this assessment in FY 2024.
Climate scenario analysis
CPPIB included brief reporting on two scenarios it used to assess the potential impacts of climate change on its portfolio and stress test the resilience of its investments, using a set of generally accepted climate scenarios including The Bank of England 2021 Climate Biennial Exploratory Scenario and The Network for Greening the Financial System scenarios. Notably, recent analyses from Carbon Tracker, the Institute and Faculty of Actuaries and the University of Exeter, and Ortec Finance suggest that climate scenarios commonly used by financial institutions tend to drastically underestimate the damage that climate change could do to the global economy.
CPPIB’s scenario analysis found that in a business-as-usual scenario where global decarbonization efforts are less successful, the fund’s market value could potentially drop by 15% in a given year during the next 30 years, largely driven by physical risks. In a scenario where “policy actions are more heavily concentrated in years after 2030 through abrupt adoption of stricter mitigation efforts to limit warming to no more than 2°C, a threshold above the upper bounds of the Paris Agreement goals, the Fund’s market value could be negatively impacted by up to 12% in a given year during the next 10 years,” largely driven by transition risks.
CPPIB’s 2024 scenario analysis shows that the portfolio faces greater losses than the previous year’s scenario analysis exercises, which showed a 13% drop in market value under the business-as-usual scenario and a 11% drop in market value in the second scenario. This is particularly pertinent because the second scenario, in which “policy actions are more heavily concentrated in years after 2030 through abrupt adoption of stricter mitigation efforts to limit warming to no more than 2°C”, has become more likely. Canada’s federal government has set 2035, not 2030, as the timeline for adopting steeper emissions reduction targets and the new administration in the United States will likely attempt to delay and obstruct accelerated climate action for the next four years.
With this information in hand, which clearly shows that delayed action on climate is bringing escalating risk to the fund, it is unclear why CPPIB continues to invest in fossil fuel expansion. Every action CPPIB and its portfolio companies take to expand and prolong the use of oil and gas brings a delayed or disorderly transition closer to fruition, increasing the likelihood of double-digit losses.
Heightened risk in real assets portfolio
CPPIB also discloses that its Real Assets (RA) portfolio, which includes real estate, infrastructure, and conventional and renewable energy assets globally, faces even higher climate risks: “RA is also expected to be more sensitive to climate change risk than some other departments. RA’s initiatives and contributions towards meeting key climate metrics and targets are critical for the Fund to achieve its net-zero commitment by 2050. Exposure to operational, legal, and regulatory risk is, in part, driven by different transaction types, including investments with controlling interest that can often involve greater asset management and oversight requirements.”
Board climate expertise and/or fossil fuel entanglement
Climate expertise
No directors of the CPPIB board are identified as having climate expertise. As in previous years, CPPIB’s “Board Composition matrix” does not include climate risk expertise in its key areas of skills and experience, nor does it include more generic “ESG” or “sustainability” expertise.
Fossil fuel entanglement
As of December 31, 2024, three of 12 CPPIB Board members – one-quarter of the board – have current ties to fossil fuel companies. This represents an improvement since last year, when CPPIB had four fossil-entangled directors. Sylvia Chrominska remains on the board of CPPIB but appears to have departed the board of Wajax Corp., an industrial supplier of equipment for mining and oil extraction, among other industries.
The CPPIB board includes the following fossil fuel entanglements:
Judith Athaide sits on the board of directors of Kiwetinohk Energy, which produces and processes fossil gas in the Montney and Duvernay formations in Alberta and British Columbia and operates gas-fired power generation and renewable energy projects in Alberta.
Ashleigh Everett is the current President, Corporate Secretary and Director of Royal Canadian Securities Ltd., which is the holding company for Domo Gasoline Corporation Ltd., a gasoline retailer with over 90 stations throughout Western Canada.
Barry Perry sits on the board of Capital Power. Capital Power owns and operates 12 fossil gas power plants, as well as a growing portfolio of wind, solar battery and projects. Capital Power scrapped a proposed $2.4-billion carbon capture and storage project at its Genesee gas-fired power plant in Alberta in 2024. Perry also serves on the board of the Royal Bank of Canada, which was the largest financier of fossil fuels among Canadian banks and seventh largest in the world in 2024.
At a CPPIB public meeting in fall 2024, CPPIB Global Head of Public Affairs and Communications Michel Leduc questionably implied that it would be “hard to avoid” or “very difficult” not to have directors from fossil fuel companies on CPPIB’s board because “Canada’s energy industry has been such a big part of the economy” and CPPIB needs to find top talent and strong governance experience. This ignores the potential conflict between these directors’ legal obligation to maximize returns for the shareholders of fossil fuel companies and their fiduciary duty to Canada Pension Plan members. This potential conflict should require these’ directors’ recusal from discussions on governance matters related to climate and energy that come before the board of CPPIB.
Executive compensation and climate
Despite a detailed four-page discussion in Annual Report 2024 about its compensation program, CPPIB provides no information regarding whether or not executive or staff compensation is tied to the achievement of climate-related targets. CPPIB’s 2023 Report on Sustainable Investing states that "sustainability-related considerations are incorporated into employee objectives and compensation structures across the Fund,” but no link to climate targets is specified.
Canadian pension managers CDPQ, Healthcare of Ontario Pension Plan, IMCO, OMERS, OPTrust and OTPP have all disclosed a link between executive compensation and climate targets and/or climate strategy implementation.
2024 UPDATES
No investment exclusions on coal, oil, gas or related infrastructure.
Made new investments totalling at least $3.3 billion in fossil fuels in 2024.
OVERVIEW
CPPIB has no investment exclusions on coal, oil, gas or related infrastructure, and continues to acquire fossil fuel assets while claiming that the new investments are about generating returns by decarbonizing high-carbon, hard-to-abate assets. Without demonstrating a credible Paris-aligned transition plan for fossil fuels, this increases CPPIB’s exposure to stranded assets and gives CPPIB a perverse financial incentive to continue operating fossil fuel infrastructure for longer.
For a comparison of CPPIB’s lack of fossil fuel exclusions with respect to other Canadian pension managers, see this report’s Table 3: Fossil Fuel Exclusions.
DETAILS
As in previous years, CPPIB executives continue to say the investment manager won’t use “blanket divestment” when faced with growing calls for CPPIB to exclude, phase out or release credible transition plans for its fossil fuel assets.
In contrast, five Canadian funds have placed at least partial exclusions on some fossil fuel investments. CDPQ announced it has completed its exit from coal mining and from oil producers, made phase-out commitments for thermal coal projects and placed an investment exclusion on new oil pipelines. The seven international funds analyzed in Shift’s 2022, 2023 and 2024 Report Cards all have at least some fossil fuel exclusions in place, with the €569-billion Dutch fund ABP having excluded, since October 2021, companies that derive more than 1% of revenues from coal mines or oil and gas extraction.
Gas is not a transition fuel
CPPIB communicated in 2024 about its conflicting, erroneous position on the role of gas in the energy transition. At a public meeting in Winnipeg in October 2024, CPPIB Global Head of Public Affairs and Communications Michel Leduc claimed that “our investment thesis is, some cleaner forms of energy, particularly natural gas, will displace the most high-carbon forms, especially coal, and other forms of fossil fuel.” Leduc went on to say that “we see (natural gas) as a transition fuel, relative to coal for example, or oil. If you’re going to have a transition fuel among the many options, (natural gas is) probably one of the better ones.” In the same response, the CPPIB executive acknowledged that “natural gas is not renewable at all” and that “it’s not the solution, obviously, to get to net-zero.”
Gas is a leading cause of the climate crisis, not a transition fuel. It is well-established that gas must be rapidly phased out, along with other fossil fuels, to limit global heating to relatively safe levels. A 2024 peer-reviewed study finds that liquefied natural gas in particular is more polluting than coal, so the climate benefits of replacing coal with gas are dubious. As cleaner and cheaper renewable energy and battery storage technologies disrupt global energy markets, alongside electrification technologies like heat pumps, demand for gas is already declining in Europe, and is expected to peak globally within the next five years according to the IEA’s World Energy Outlook, under all policy scenarios. Reliance on imported gas is seen as a growing risk to energy security in many countries.
CPPIB executives implied in 2024 that they saw artificial intelligence as a reason to continue investing in oil and gas because of the growth in energy demand spurred by AI and the data centres that power it, in spite of such growth being entirely incompatible with net-zero goals.
ESTIMATED INVESTMENTS IN FOSSIL FUELS
$22.6 billion (at minimum) in fossil fuel producers (October 2024)
At CPP Investments’ public meetings in fall 2024, spokespersons said that 3.5% of the (at the time) $647 billion portfolio, or $22.6 billion, was invested in fossil fuels. This number is likely an underestimate that refers only to fossil fuel producers and omits related infrastructure and fossil fuel utilities (such as gas-fired power generation and gas transmission and distribution assets). By adding up various disclosures from CPPIB’s reporting, it is possible to estimate that this figure could be much higher: CPP’s Active Equities portfolio includes 4% ($2.6 billion) in “Utilities”, its Real Assets portfolio includes 15% ($20.6 billion) in “Utilities and other infrastructure”, its Credit Investments portfolio includes 13% in “Other” ($11.6 billion) and its Private Equity portfolio includes 5% in “Other” ($7.8 billion). Without CPPIB providing more granular disclosure, it is impossible to determine how much of these additional figures should be included in CPPIB’s total fossil fuel investments. Shift estimates the figure could be nearly double the disclosed $22.6 billion.
CPPIB’s private investments in fossil fuels include:
An 11.2% stake in California Resources Corporation, California’s largest oil and gas producer.
A 15.75% stake in Calpine, America's largest generator of electricity from natural gas and geothermal resources. On January 10, 2025, the Globe and Mail reported that CPPIB would sell its stake in the electric power generator, with the deal expected to close in the second half of 2025.
A 98% ownership stake in Encino Acquisition Partners (Encino Energy), one of the largest private oil and gas producers in the U.S. and a top 25 North American natural gas producer.
A 72% stake in LongPoint Minerals, LLC and a 44% stake in LongPoint Minerals II, LLC, a Denver-based company that focuses on the acquisition of oil and natural gas mineral and royalty interests in the U.S.
A 12% stake in Nedgia, the largest natural gas distribution company in Spain.
A 43.5% stake in Nephin Energy, a gas producer and pipeline operator that exploits the Corrib gas field, Ireland’s largest offshore gas field that provides up to 30% of Ireland's natural gas supply.
An estimated 24.5% stake in Tallgrass Energy, which operates 16,000 km of oil and gas pipelines and storage terminals across 14 U.S. states.
A 90% stake in Teine Energy, a private company focused on acquiring and developing oil and gas assets in western Canada.
A 49.9% stake in Transportadora de Gas del Perú S.A., the largest exporter and transporter of natural gas and natural gas liquids in Peru.
A 35% stake in Williams Ohio Valley Midstream JV, which includes the Utica East Ohio Midstream system, transporting propane and ethane in Ohio, and the Ohio Valley Midstream system that transports ethane between West Virginia and Pennsylvania.
A 99% ownership stake in Wolf Midstream and Wolf Carbon Solutions, the owner and operator of Alberta’s Access Pipeline System, which operates pipelines near Edmonton that gather and deliver the diluent needed to allow bitumen to flow through export pipelines. Wolf also built, owns and operates the Alberta Carbon Trunk Line, as well as two major oil storage facilities.
In 2024, CPPIB committed US$500 million to Quantum Capital Solutions Fund II, “which will invest primarily in asset-level joint ventures and hybrid credit investments within the conventional energy sector in the U.S.”
In May 2024, CPPIB announced its proposed acquisition of a 40% stake in Allete, an energy infrastructure company with a portfolio of renewable energy and electricity distribution and transmission assets across the U.S. Midwest, but also a lignite coal mine in North Dakota, a fleet of coal- and gas-fired power plants, and gas distribution assets. The Allete transaction is expected to close in mid-2025.
Overall
Publicly acknowledge the consensus science, including analysis from the Intergovernmental Panel on Climate Change and the International Energy Agency, that limiting global temperature increase to 1.5°C requires an immediate end to expansion as well as the rapid phase-out of oil, gas, coal and related infrastructure.
Become a vocal proponent of stringent, ambitious, Paris-aligned climate and energy policies that provide certainty for companies and investments.
Join a credible and accountable Paris-aligned investor body, such as the Net-Zero Asset Owner Alliance or the Paris Aligned Asset Owners.
Stop greenwashing: Ensure the operations and activities of CPPIB and its owned companies are actually consistent with science-based global climate commitments.
Paris-aligned target
Stop undermining the credibility of its net-zero commitment by pretending that investments that expand and prolong the use of fossil fuels can somehow be part of a “decarbonization” strategy.
Set interim targets to ensure accountability toward its portfolio’s net-zero commitment and alignment with the goals of the Paris Agreement.
Place a strict limit on the role of carbon offsets in both its own net-zero commitment and the net-zero commitments of portfolio companies.
Interim targets
Set credible Paris-aligned emissions reduction targets for 2030 and 2035, including targets to reduce portfolio emissions intensity, absolute emissions and scope 3 emissions.
Disclose which individual assets CPPIB considers to be “transition” and which it considers to be “green.”
Communication of climate urgency
Convey climate urgency by describing and communicating the accelerating impacts of climate change on the fund’s investments, Canadian households and communities, and the long-term stability of economic, financial and ecological systems.
Put CPPIB’s determination and responsibility in the face of the climate crisis front and centre in its communications. Embrace CPPIB’s climate approach as core to its identity.
Stop repeating false industry talking points about the “ingenuity” of the oil and gas sector and the supposed ”critical role" that oil and gas companies play in the energy transition.
Acknowledge that the investment and asset management decisions of CPPIB have an impact on the trajectory of the climate crisis and the pace of the energy transition.
Climate engagement
Follow through on climate-related expectations of owned companies to have credible transition plans by escalating up to divestment for those that do not meet timebound engagement milestones.
Set an expectation that owned companies:
Specifically tie staff and executive compensation to the achievement of climate targets;
refrain from lobbying against climate action, directly or through industry associations; and
refrain from directing capital toward fossil fuel expansion.
Strengthen proxy voting guidelines to align with leading peers by indicating that CPPIB will vote for climate-related shareholder proposals and against company directors failing on oversight of climate risk, instead of will consider voting.
Establish timebound, results-based targets for engaging with external fund managers on Paris-alignment and require that all new or renewed external fund manager contracts adhere to a Paris-aligned investment strategy.
Provide specific direction to external managers on handling climate-related risks, aligning investments with net-zero pathways and developing credible climate plans.
Build on public advocacy beyond mandatory standardized climate risk disclosure to become a vocal proponent of stringent, ambitious, Paris-aligned climate and energy policies that provide certainty for companies and investors.
Climate integration
Provide meaningful written answers to the 7,000+ Canadians that submitted climate-related questions to the CPPIB’s public meetings process in fall 2024.
Disclose how relationships with private equity firms and financial commitments to private equity funds were subsequently disbursed, including dollar amounts, companies and projects.
Set targets for increasing the amount of portfolio companies reporting on scope 3 emissions data.
Report on the overall findings of the assessment of physical and transition risks to CPPIB’s private real estate holdings.
Require climate expertise on the Board of Directors. Ensure Board members have ongoing and current training on climate.
Avoid conflicts of interest and refrain from (re-)appointing directors with simultaneous corporate directorships with fossil fuel companies to the Board.
Tie executive and staff compensation to the achievement of climate targets.
Fossil fuel exclusions
Place an exclusion on any new investments in coal, oil, gas and pipelines.
Divest from fossil fuel producers.
Commit to a timebound and managed phaseout of existing fossil fuel assets.
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