Welcome as it is that the federal government announced improvements in the Canada Pension Plan on October 4, it would be even more welcome to know that the CPP Invesment Board (CPPIB) was not risking our future pensions by remaining invested in the fossil fuel industry. Friends of the Earth Canada has launched a new campaign, Time to Climate Risk-proof the CPP, which reveals that approximately 22% of the Canadian portfolio is invested in fossil fuel producers or pipeline companies, including coal. The Friends of the Earth campaign includes an online site called Pension Power , enabling ordinary Canadians to query their pension fund managers. It also calls on the CPPIB to sign onto the Montreal Pledge, and the Portfolio Decarbonization Coalition (PDC), two United Nations Environmental Program initiatives that encourage institutional investors to decarbonize their portfolios and disclose risky assets. Anything less ignores the now-apparent decline of the fossil fuel industry and the shift to a low carbon world, and thus fails the fiduciary responsibility of institutional investors – to protect assets against risk.
Canada’s Shareholder Association for Research and Education (SHARE) has published studies on the need for responsible investment; Royal Bank of Canada (RBC), Suncor Energy and NEI Investments published Unburnable Carbon and Stranded Assets : What investors need to know in January 2015, and Canada’s Marc Carney, in his high profile role as Governor of the Bank of England and Chair of the international Financial Stability Board, has been a world leader in warning about the dangers of stranded assets since 2015 . How can the Canada Pension Plan Investment Board have missed the message that other Canadians are so well aware of?
Further reading: For an overview of the international literature, see Divestment and Stranded Assets in the Low-carbon Transition from the OECD (Oct. 2015) or more recently: Unconventional Risks: The Growing Uncertainty of Oil Investments in July 2016; Shorting the Climate ( from the Rainforest Alliance Network, BankTrack, Sierra Club and Oil Change International); “New York City Pension Funds begin to craft a Fossil Fuel Divestment Path others can Follow” (July 2016), and “Fiduciary responsibility and climate change” in Corporate Knights (Aug. 30).