Canadian pension funds aren’t leading on addressing climate change but they’re at least not lagging behind as much as in the past, according to new findings from the Asset Owners Disclosure Project.
In its 2017 global climate index, the non-profit organization gave Canada an overall grade of D when looking at asset owners’ performance. Canada ranked 14th on a list of countries analyzed, just ahead of the United States, but well behind leaders Sweden, Norway and New Zealand. None of the Canadian pension funds were leaders, but the country saw a large drop in the percentage of organizations that scored the worst ranking, laggards. The study found 24 per cent of Canadian organizations were laggards taking no action on climate, down from 44 per cent in 2016. The rest fell in the middle categories of challengers, learners and bystanders.
As for specific pension funds, the top-ranking Canadian plan is OPSEU Pension Trust, which received a grade of B and ranked 61st out of the organizations analyzed. Other Canadian organizations that scored higher include B.C. Public Service Pension Plan (85th) and the B.C. Teachers’ Pension Plan. The Canada Pension Plan Investment Board ranked 106th, which was big drop from last year. The Ontario Teachers’ Pension Plan ranked 109th, which was also significantly worse than in 2016. Both plans received a grade of C.
“We are glad to see the attention focusing on climate change as an investment risk as we continue to work to better understand the impacts to our own portfolio and organization,” said Katharine Preston, director of responsible investing, strategic relationships and portfolio intelligence at OPTrust. Earlier this year, OPTrust released a report on climate change disclosure, a move Preston said “highlights the work still left to do for our industry to better address this challenge.” It also released a report that assessed the sensitivity of its portfolio to climate change risk.
The ranking looks at pension funds’ actions around governance and strategy, risk management and disclosure of metrics on investments in the low carbon economy. Actions taken include integrating climate risk into investments; incorporating climate change into policy frameworks; calculating portfolio carbon emissions; and assessing the risk of stranded assets.
The climate index covers the top 500 asset owners around the world with $40 trillion in assets under management. It found that overall, asset owners are boosting their efforts to protect themselves from climate change. European countries ranked highest, while the United States and China were at the bottom. Besides pension funds, the asset owners analyzed include insurers, sovereign wealth funds, foundations and endowments.