OSFI launching consultation on climate change risks to pensions, financial institutions

Canada’s largest public pension funds are showing modest improvements on climate action but are moving too slowly overall, according to a new report by a climate advocacy group.

The progress report from Shift Action for Pension Wealth and Planet Health found four of the 11 pension plans it examined still don’t have emissions reduction targets for 2030 or 2050. It also noted many of the pension funds still aren’t being transparent about their fossil fuel holdings and none have acknowledged the need to phase them out.

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Adam Scott, executive director of Shift, says it’s important pension plans take action both to reduce investment risk and climate risk. “It’s not just about defending their own portfolios, it’s also about addressing the wider crisis systemically.”

The report noted there were some improvements, including the first climate plans out of the Ontario Municipal Employees Retirement System and the Healthcare of Ontario Pension Plan.

But Scott says there has also been misalignment with some pension plans and their actual action, including at the Canada Pension Plan Investment Board. The CPPIB, one of the few to still not set out interim emissions reduction targets, was the only one to slip in its letter grade in the report.

“We’re quite disappointed to see a pattern of public communication from CPPIB that is offside with their own net-zero plans and commitments,” he adds.

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Scott says there were multiple examples of pension plans continuing to invest in fossil fuel companies that have plans for expansion, which creates a risk, given the transition and the long-term investment horizons of pensions. “When they decide to sell, is there somebody else willing to pay for it? That’s where the risk really comes in.”

The Alberta Investment Management Corp. received the lowest grade among the 11 Canadian pension plans analyzed for the second year, as Shift said it sets no clear targets and has yet to put out a credible climate plan.

Benefits Canada has reached out to both the CPPIB and the AIMCo for a statement regarding the results of the report and is still awaiting a response.

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