VANCOUVER — The world’s leading authority on climate change says we are headed for catastrophe unless emissions are slashed quickly. Yet, two of Canada’s biggest public pension plans are still banking on fossil fuels, a new Corporate Mapping Project report shows.
The Canada Pension Plan Investment Board (CPPIB) and the Caisse de dépôt et placement du Québec (the Quebec Plan) are the largest public pension plans responsible for managing Canadians’ investments. They could lead the way toward a global transition to a greener, more sustainable economy, but their commitments to climate action may be more talk than walk, say the report authors just days after publication of the United Nations Intergovernmental Panel on Climate Change’s sixth report.
“The Canada Pension Plan has actually increased its shares in fossil fuel companies since Canada signed the Paris Agreement in 2016 and while the Quebec plan has slightly decreased its fossil fuel shares in the same period, it still has over 52 per cent more fossil fuel shares than the Canada Pension Plan,” says co-author Jessica Dempsey.
Collectively, the two funds hold $862.7 billion of investments on behalf of over 26 million Canadians. The latest International Energy Agency report clearly shows that continued investment in the fossil fuel industry is risky, and with long-term investment horizons our public pension funds are currently exposed to those risks when they could instead be invested in mitigating climate change, Dempsey and co-author James Rowe say in their report, An Insecure Future: Canada’s biggest public pensions are still banking on fossil fuels.
“Canada Pension Plan managers have made public statements about their commitment to consider climate impacts in their investment portfolio. They did not, however, clarify how and to what extent these commitments would impact investment decisions,” Rowe says.
The Canada Pension Plan has increased its investments in renewables alongside this growth in fossil fuel investments, but Rowe notes its current approach is akin to eating an anti-cancer diet while smoking more cigarettes, a dangerous health and mitigation strategy to say the least.
The investment patterns of neither the Canada nor Quebec pension plans’ reflect the urgent action needed to address the scale of the climate crisis, Dempsey and Rowe say. Both plans are heavily invested in member companies of the Canadian Association of Petroleum Producers, which has a history of obstructing the necessary transition away from fossil fuels required for Canada to meet the targets set out in the Paris Agreement, they explain.
“So we have to question what these public pension fund managers are doing investing in companies that are actively derailing necessary climate action,” Dempsey says.
Because the disclosure practices of Canadian public pension funds are limited, the report examines the plans’ investments over a five-year period from 2016 to 2020 using data from the Bloomberg Terminal to evaluate the funds’ investments in companies in the oil and gas industry.
The report includes recommendations for Canadian public pension fund trustees and investment boards and for the federal and provincial governments. The authors say that through regulations, governments should direct pension plans to avoid short-term economic gains that imperil long-term climate security for Canadians and the global community. As well, governments should mandate Canadian pension funds to disclose the names and dollar amounts of all holdings so that beneficiaries and citizens can know the impact of their investments in fossil fuels and high-carbon industries.
For more information and to arrange interviews, please contact Jean Kavanagh at 604-802-5729, [email protected]
