The Canada Pension Plan Investment Board’s latest annual report greenwashes its investment strategies, according to Shift Action for Pension Wealth and Planet Health.
“[A close reading] of its 2023 annual report shows Canada’s national pension manager continues to obscure its exposure to and prolongation of the fossil fuel economy while failing to understand that its mandate will be impossible to fulfill without urgent action to avert catastrophic climate change,” wrote the watchdog organization in a statement.
In the annual report, the CPPIB said it wouldn’t divest from fossil fuel assets, but would continue to invest in and exert influence on investee organizations to promote the smooth transition away from fossil fuel reliance. According to Shift’s statement, this supports the CPPIB’s stewardship activities.
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“But the CPPIB continues to disregard the scientific consensus that achieving net-zero emissions by 2050 requires an immediate end to fossil fuel expansion and the simple fact that transition inherently means phasing out fossil fuels, which do not have a profitable or credible pathway to decarbonization.”
Shift also highlighted the annual report’s claim that the CPPIB held $79 billion in green and transitional assets, noting what’s meant by the term transitional assets is unclear. “The CPPIB’s reporting also makes it impossible — perhaps intentionally — for Canadians to understand how much of our national retirement fund is invested in fossil fuels versus renewable energy and other climate solutions.”
The watchdog organization also noted the CPPIB doesn’t factor carbon emissions reductions or achieving climate targets into its staff compensation structure. Other public sector pension investment organizations, including the Caisse de dépôt et placement du Québec and the Ontario Teachers’ Pension Plan, have adopted the practice of incentivizing emissions reductions and environmental targets.
The annual report included references to the use of carbon credits, including credits verified in accordance with Verra’s Verified Carbon Standard. In its statement, Shift cited a recent study that found a significant portion of these verified credits are valueless. “This strategy of buying questionable offsets rather than making real-world emissions reductions is a waste of money and an example of greenwashing and will make it harder for CPPIB to achieve its climate targets in the long term.”
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Shift also referenced the CPPIB’s acquisition of a 49 per cent stake in Aera Energy, a petroleum producer responsible for 25 per cent of California’s fossil fuel production. The move was highlighted in a video message from John Graham, the organization’s chief executive officer, released alongside the annual report.
“It is next-level greenwashing for the CPPIB to feature an oil and gas company as a net-zero investment against a backdrop of forests and wind farms in a promotional video,” said the Shift statement. “The notion that renewable energy can be used to decarbonize oil and gas production is absurd, completely ignoring scope 3 emissions and falsely relying on expensive, non-viable technologies that can’t deliver needed emissions reductions, such as carbon capture utilization and storage.”
The CPPIB didn’t respond to requests to comment on Shift’s statement.