Canadian pension funds are falling behind their international peers when it comes to climate change risk management, according to an annual report released yesterday.
“Climate change risk is now a mainstream issue for institutional investors and last year has seen many significantly step up their action to manage this. However, only a handful [of institutional investors] are protecting their portfolios from the very real danger of stranded assets, and it is shocking that nearly half the world’s biggest investors are doing nothing at all to mitigate climate risk,” said Julian Poulter, chief executive officer of the Asset Owners Disclosure Project, in releasing the 2016 analysis.
Collectively, Canadian investment funds — including insurers, endowments and foundations as well as pensions — ranked 11th, coming behind the Scandinavian countries, Australia, France, the United States and Brazil. None of the Canadian funds on the list ranked as leaders and just four ranked as learners. Another eight were bystanders with the remaining 10 Canadian funds getting a grade of X indicating they’re taking no action to protect against climate change risk.
Of the four learner funds, three were pensions: Ontario Teachers’ Pension Plan, OPSEU Pension Trust and the Canadian Pension Plan Investment Board. While OPSEU Pension Trusts’ rank moved up 18 places from the 2015 list, Ontario Teachers’ slipped 30 places to 64th while the CPPIB fell to 74th from 37th last year.
Asked to comment this morning, Michel Leduc, head of public affairs at the CPPIB, referred to comments on the report in the Globe and Mail. “This report doesn’t come close to representing all that CPPIB is doing to manage this risk,” he said.
“We share the view that climate change is a category of investment risk and we also believe that it’s a challenge for all significant institutional investors.”
The analysis by the Asset Owners Disclosure Project, a non-profit organization based in Britain, based its grades on how the funds manage risks linked to their high-carbon assets, engagement with investors and companies they own and investments in low-carbon assets.
Rankings for Canadian pension plans analyzed:
Learners:
Canada Pension Plan Investment Board
Ontario Teachers’ Pension Plan
OPSEU Pension Trust
Bystanders
B.C. Municipal Pension Plan
B.C. Public Service Pension Plan
B.C. Teachers
Canadian Forces Pension Plans
Healthcare of Ontario Pension Plan
Ontario Municipal Employees Retirement System
Laggards
Air Canada Pension Plan
Alberta Local Authorities Pension Plan
BCE Inc. Pension Scheme
Bell Canada
Canadian National Railways Pension Scheme
Canada Post Corporation Pension Scheme
Fonds d’amortissement des regimes de retraite
Hydro-Quebec Pension Plan
Quebec Government and Public Employees Retirement Plan
Quebec Teachers Pension Plan