Canada’s public pensions at risk of stranded assets, as fund managers increase fossil investments

An Insecure Future: Canada’s biggest public pensions are still banking on fossil fuels  was released by the Corporate Mapping Project in mid-August . It examines the investments of the Canada Pension Plan Investment Board (CPPIB) and the Caisse de dépôt et placement du Québec (CDPQ) over a five-year period from 2016 to 2020 – the two together manage $862.7 billion, which fund the pensions of over 26 million Canadians. The report finds that, despite public declarations and climate strategies, CPPIB increased the number of shares in oil and gas companies by 7.7 per cent between  2016 and 2020.  The CDPQ in 2017 pledged to increase its low-carbon investments by 50 per cent by 2020, but the authors calculate there was only a 14% drop in fossil fuel investments between 2016 and 2020, and also note that overall, the CDPQ holds over 52 per cent more fossil fuel shares than the CPPIB. The paper also highlights the funds’ investments in individual fossil fuel companies, including ExxonMobil ; TC Energy ; Enbridge; the world’s highest-producing coal companies, and in companies that are members of the Canadian Association of Petroleum Producers.  The numbers are startling,  and demonstrate a high potential for stranded assets which will threaten Canadians’ pension security.

The authors propose a number of policy changes, including a call for Canadian public pension fund trustees/investment boards to “ Immediately design a plan to phase out fossil fuel investment in alignment with targets set by the Paris Agreement to limit global warming below 1.5 degrees Celsius” and re-invest in renewables.  Recommendations for  the federal government include :  “mandate a clear timeline for public pensions to withdraw from all fossil fuel investments. Define reinvestment criteria that support a just and equitable transition to a renewable-based energy system” .

The report is summarized in “For climate’s sake, Canada Pension Plan needs to take a serious look at its investments”  (National Observer, September 7th),  which also summarizes the “oily” corporate connections of the decision-makers of the CPPIB, and highlights the current election promises related to financial regulation of our pension funds.

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