Activism is working to move pension funds away from stranded fossil assets

 “Canadian pensions are retiring fossil fuel investments” (Corporate Knights magazine, November 9) strikes a hopeful note about the state of Canada’s pension funds, stating:  “Canadian pension portfolio exposures to fossil fuel stocks are down to a 10th of what they were 10 years ago, notwithstanding some controversial private equity investments.”   The article summarizes analysis from the Canadian Pensions Dashboard for Responsible Investing, a new project of The Natural Step Canada, Smart Prosperity Institute, and Corporate Knights.  That full report is a unique overview of sustainability performance, and employs measures such carbon footprint of the portfolio, presence of net-zero targets, the pay link to Environmental Standards (ESG), support for shareholder environmental resolutions, and more.

Another related Corporate Knights article describes youth-driven campaigns which have challenged pension plans to acknowledge and adjust to climate risk.  “How young people are using climate litigation to fight for their future” focuses on youth activism targeting pension funds. It describes a years-long challenge to the Retail Employees Superannuation Trust (REST)  in Australia, which ultimately ended in the pension fund settling a lawsuit out of court by acknowledging that “climate change is a material, direct and current financial risk” that could “lead to catastrophic economic and social consequences.”  The fund also agreed to be more proactive and “ensure that investment managers take active steps to consider, measure and manage financial risks posed by climate change and other relevant ESG risks.”  A second example describes the current activist campaign calling for the Ontario Teachers’ Pension Plan (OTPP) to phase out all current fossil fuel investments by 2025 and completely decarbonize its portfolio by 2030. Retired teachers and high school students have mobilized in Toronto, under the leadership of Shift Action for Pension Wealth and Planet Health (Shift), which is organizing similar campaigns at the ten largest Canadian pension funds.  In September 2021, the Ontario Teachers Pension Plan Board announced  “industry-leading targets to reduce portfolio carbon emissions intensity by 45% by 2025 and two-thirds (67%) by 2030, compared to its 2019 baseline. These emission reduction targets cover all the Fund’s real assets, private natural resources, equity and corporate credit holdings across public and private markets, including external managers.”    The WCR has more detail here .

Relevant to all pension management: new research published in Nature Energy   and summarized in The Guardian with this headline:  “Half world’s fossil fuel assets could become worthless by 2036 in net zero transition” .

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