Labour unions, pension funds and divestment: resolutions from Alberta, Ontario conventions and a U.S. report from Stand.earth

Labour Confronts the Climate Crisis” appeared in the November issue of Our Times magazine, written by James Hutt of the Canadian Association of University Teachers (CAUT). He highlights the notable speakers from the November convention of the Ontario Federation of Labour, but states that the main discussion at the convention focused on if and how unions can fight climate change through divestment, ethical investing, and active involvement in their pension fund management.

From the article :  

“  Many speakers underlined that divestment may have limited financial impact but can be very effective as a political tool. Democratic institutions, in particular unions, can use it to make a powerful statement and undermine the social legitimacy of the fossil fuel industry…

…. speakers concluded that there are a number of important actions unions should take regarding their pension funds, including demanding transparency and input into how funds are being invested. Unions can also advocate for investing in community-led renewable initiatives, and they can help these initiatives scale up.

The final panel recognized that while pensions do have a role to play, ultimately our true power lies elsewhere. As workers and unions engaged in the climate fight, it’s clear that we must go beyond pension-board tables and the confines of capital markets.”

At its annual convention held in early December, the Alberta Union of Provincial Employees (AUPE)  passed three environmental resolutions, announced and summarized in a press release (Dec. 4).  These included calls for 1.  just transition for workers,  2. a green new deal that includes providing union jobs through an expanded public sector,  modernizes public infrastructure , recognizes Indigenous rights and treaties; and builds a just society, and 3. a  call for the  Alberta Investment Management Corp.  (AIMCo) to “quantify the climate risks of its investments and adopt a path to net zero” in the pension funds it manages.  Response from AIMCo is presented in an article in Benefits Canada , which notes that AUPE members have a seat on the AIMCo sponsors’ Board through their membership in the Local Authorities Pension Plan.   

AUPE members are right to be concerned with the performance of AIMCo – as described in the report published on December 15 by the Parkland Institute at the University of Alberta. Can AIMCo be Fixed?  traces the controversial moves by the UCP government to take control of public sector pensions, as well as AIMCo’s risky volatility trading strategy (VOLTS), which led to a $2 billion loss in 2020.  The authors at Parkland conclude that “A thorough rethink of AIMCo’s board of directors and ownership structure is required in light of the troubling actions by the UCP government, AIMCo’s poor performance as an investment manager in recent years, and the serious structural weaknesses of AIMCo”.  The report makes five policy recommendations for change, none of which relate to its management of climate risks, but focus on the ownership and governance structure, including: Eliminate the Crown’s sole ownership of AIMCo and “Implement a new ownership structure with the government holding a minority position to prevent governments using AIMCo funds for their own political purposes”.

The Parkland report is the latest of several which have condemned the Alberta pension manager for its bias to oil and gas investments, described in a previous WCR article when it invested in the Coastal GasLink pipeline in 2020, and in the 2019 report from Progress Alberta, Alberta’s Failed Oil and Gas Bailout .

From the U.S., a new report released by Stand.earth and the Climate Safe Pensions Network argues for the importance of divestment.  The Quiet Culprit: Pension Funds Bankrolling the Climate Crisis  details the fossil fuel exposure of 14 public pension funds, revealing that  $81.6 billion is invested in coal, oil, and gas. The report notes, for example, that nine of the fourteen funds  have invested over $281 million in TC Energy, the company behind the controversial Coastal GasLink pipeline violating Indigenous rights in Wet’suwet’en land. The pension funds also have over $3.24 billion invested in big tar sands miners Canadian Natural Resources, Cenovus, ConocoPhillips, Exxon and Suncor.  The conclusion?  “With over $46 trillion in assets worldwide, pension funds are among the largest institutional investors in fossil fuels. These investments have dangerously underperformed the rest of the market, making public pensions’ fossil fuels investments inherently risky….The fastest way for pensions to address climate change is to divest fossil fuel holdings and invest in just and equitable climate solutions.”

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