Canada is the eighth-largest investor in new coal projects around the world, according to a new report by German non-profit organization Urgewald.
Of the top 100 investors in companies developing new coal plants listed in the organization’s report, the Caisse de dépôt et placement du Québec ranked No. 72, with $433 million invested. The Canada Pension Plan Investment Board just missed appearing on the list, with $267 million invested.
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Using the report and the CPPIB’s publications, Friends of the Earth Canada has produced a report that specifically highlighted the pension fund’s overall coal investment activities, which it calculated to stand at $12.2 billion.
The organization arrived at the number by adding the $339 million listed in Urgewald’s report on new coal developers, another $6.9 billion in Urgewald’s report on the 100 top investors in new coal, as well as $4.9 billion from scanning the CPPIB’s website.
By that logic, however, that $6.9 billion comprises the stakes the board has in companies like the Royal Bank of Canada and the Bank of New York Mellon Corp., since they appear in Urgewald’s list. As a result, the number characterized those and many other non-energy companies as investments in coal.
Notably, many of the energy companies the CPPIB has invested in aren’t solely coal plants, either, while they do indeed have coal as part of their businesses. However, the list compiled by Friends of the Earth Canada characterized them as part of the CPPIB’s total investment in coal.
The board’s stake in Canadian-based Capital Power Corp., for example, represents $30 million of the above $12.2 billion. Capital Power, however, doesn’t only produce energy using coal, with its natural gas electricity production in Canada at 1,394 megawatts. That’s just above coal at 1,376 megawatts, not to mention an additional 527 megawatts of wind energy. In addition, the company’s newer activities in consultation, development or construction in the United States include 11 new solar and wind projects.
Indeed, included in the number are the board’s stakes in General Electric Co. ($177 million), LG ($25 million) and Mitsubishi Corp. ($164 million).
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Asked whether the CPPIB should be following the government of Canada’s stated aim of transitioning away from coal power by 2030, a spokesperson for Environment and Climate Change Canada said: “The transition to a low-carbon economy offers economic opportunities measured in the trillions of dollars. Phasing out traditional coal-fired power generation will require action by all actors, including governments and the financial community, to shift flows towards lower carbon options.”
The CPPIB remains at arm’s-length from federal and provincial governments, and it’s the prerogative of its board of directors to set its investment policies in accordance with it mandate, the spokesperson added.
“The burning of coal to create electricity is bad both for the environment and human health. We will phase out coal-fired electricity production to reduce the number of premature deaths, emergency-room visits and health-care costs and accelerating the phase-out of coal-fired power is one of the most important steps the international community can take to meet the objectives of the Paris agreement.”
A spokesperson from the CPPIB noted the potential negative impacts of divestment of fossil fuel holdings on investment returns. ”As an alternative, we consider climate change investment-related risks as part of our investment review process,” the spokesperson said.
While the board acknowledges the challenge of climate change, it must, as a long-term investor, consider how government policies will play out over the coming decades, the spokesperson added.
“We believe that we will bridge to a lower carbon world over a period of decades. We are exploring opportunities in both the traditional energy and renewable energy sectors in a thoughtful, prudent manner, to ensure we can deliver risk-adjusted returns for the fund in the long term.”
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