With the goal to leverage their collective financial clout, Canadian university endowment funds and pension plans launched the University Network for Investor Engagement (UNIE) on February 18. Working through SHARE, Canada’s leading not-for-profit in responsible investment services, “The UNIE initiative will focus on key sectors where advocacy can make the biggest difference, including finance, transportation, energy and utilities, and manufacturing, focusing both on reducing greenhouse gas emissions and accelerating the transition to a low carbon economy.” Initial participants include Carleton University, Concordia University, McGill University, McMaster University, Mount Alison University, Université de Montreal, University of St. Michael’s College, University of Toronto Asset Management, University of Victoria, and York University.
This development follows on a number of statements and initiatives by Canadian pension administrators – most of which reflect this general strategy to prefer engagement as shareholders over divestment from fossil fuel holdings. Some examples:
In November 2020, the CEOs of Canada’s eight major pension administrators, with approximately $1.6 trillion in assets under management, issued a press release announcing their joint position statement, Companies and investors must put sustainability and inclusive growth at the centre of economic recovery. The text calls on companies to provide consistent and complete environmental, social, and governance (ESG) information, and continues: “For our part, we continue to strengthen our own ESG disclosure and integration practices, and allocate capital to investments best placed to deliver long-term sustainable value creation.” The signatories included: AIMCo, BCI, Caisse de dépôt et placement du Québec, CPP Investments, HOOPP, OMERS, Ontario Teachers’ Pension Plan, and PSP Investments.
“Why are Ontario pensioners investing in future Alberta stranded assets?” (in Corporate Knights, December 16, 2020) describes investment by OP Trust (which holds the pension funds of Ontario civil servants, teachers and healthcare workers) in a natural gas electricity-generation plant in Alberta. The authors summarize the growing global realization that fossil fuel investments are financially risky and conclude, “The people at OPTrust have begun to recognize this. They’ve created multiple reports, with pretty graphs and rosy statements about supporting the Paris Agreement. But this statement rings out: “Emission reduction targets are not today’s objective.” Like many other organizations, they are unwilling to walk the talk.”
Similarly, a Net Zero Emissions Commitment released by the Ontario Teachers Pension Plan on January 21 has been criticized as possible greenwashing. An article in The National Observer, “Breaking down Ontario Teachers’ 2050 net-zero emissions promise” (Feb. 4) states: “With no clear definition for what net-zero means or how it will alter investment decisions, the commitment runs the risk of becoming a cynical example of greenwashing……If OTPP is serious about adopting a globally significant climate-safe investment strategy, it needs a plan to exclude all new oil, gas and coal investments; a timeline for phasing out existing fossil fuel holdings; a commitment to decarbonize its portfolio by 2030; ambitious new targets for increasing investments in profitable climate solutions; and a requirement for owned companies to refrain from lobbying activities that undermine ambitious climate policy, set corporate timelines for reducing emissions, and link executive compensation to measurable climate goals.” These goals reflect the position of the authors, who are members of ShiftAction for Pension wealth and Planet Health, which outlines the same demands in their Open Letter campaign for teachers . (In the FAQ statement accompanying the Net Zero statement, the OTPP states: “We favour engagement over divestment, since selling our stakes simply passes on the problem and causes us to lose our ability to influence for positive change.” )
On February 19, the British Columbia Investment Management Corporation (BCI), which manages pensions for B.C. public sector workers, announced that it “will target a cumulative $5 billion investment in sustainability bonds by 2025 …. and reduce the carbon exposure in its global public equities portfolio by 30 per cent by 2025” from 2019. BCI was a founding signatory to the Principles for Responsible Investment (PRI) in 2006, has supported the TCFD recommendations, and issued its own Climate Action Plan in 2018. The Energy Mix summarized the B.C. developments in this February 22 article .
Alberta public sector pensions lose more control over pension savings
A joint press conference by union leaders protested the January 4 2021 Ministerial Orders which build on Bill 22 in 2019 by further weakening the decision-making powers of the Alberta Teachers Retirement Fund . From the unions’ press release: “….. not only will AIMCo be the monopoly provider of investment management services, they will also be able to ignore the wishes of the pension plans when it comes to decisions about how the retirement savings of workers and retirees should be invested……We think Jason Kenney’s end game is to use the retirement savings of hundreds of thousands of Albertan to prop up oil and gas ventures in the province that are having an increasingly difficult time raising money from global investors and international markets …. To be clear: we are not opposed to all oil and gas investments. What we ARE opposed to is a system in which the government gives itself the power to invest other people’s money in risky ventures without their permission.” The Alberta Teachers Association is preparing a legal challenge to the Ministerial Order, according to a CBC report. The back story is described in “Alberta’s United Conservative Party Has Seized Control of Its Public-Sector Pension Funds” (Jacobin, Feb. 2), an interview with Alberta Teachers Retirement Fund Board Chair Greg Meeker .
Climate Risk consultations by Canadian pension fund regulator
On January 11, 2011, the Office of the Superintendent of Financial Institutions (OSFI), Canada’s regulator of banks and pension plans, announced a three-month consultation on the climate change risks to financial stability, based on a discussion paper, Navigating Uncertainty in Climate Change: Promoting Preparedness and Resilience to Climate-Related Risks.