Beneficiaries pile climate pressure on Canadian pension funds

Letters have been sent to the boards and executives of the 10 largest funds today asking how they are meeting their legal obligations

Beneficiaries pile climate pressure on Canadian pension funds
Steve Randall

Canada’s biggest pension funds are being challenged to detail how they are meeting their legal obligations on climate change.

Letters from beneficiaries of 10 funds have sent letters today (Sept. 29) requesting information about how mangers are fulfilling their fiduciary obligations amid the worsening climate change crisis.

Signatories include working and retired people from healthcare, education, science, and elected officials. Union representatives including the presidents of CUPE Ontario, and the Public Service Alliance of Canada have also signed the letters.

“Without significant action to manage climate risks and align investments with climate safety immediately, I worry that pension funds will be unable to pay the full pensions of thousands of dedicated municipal workers when they retire,” says Fred Hahn, President of CUPE Ontario, which represents over 125,000 members of the Ontario Municipal Employees Retirement System (OMERS). 

Young Canadians are among those backing the action. Chloe Tse is a student at the University of Toronto and a Canada Pension Plan contributor.

“I won’t be able to collect CPP until well after 2050. The climate crisis is worsening, and I just don’t know if my pension is prepared for what’s coming,” she said. “The CPP doesn’t fully disclose our holdings, it’s still investing billions of dollars in fossil fuels, and it doesn’t seem to have a credible climate plan. I need to know if my pension is prepared for the economic and financial disruption the climate crisis will bring in my lifetime.”

One of the funds sent letters is Caisse de Depot et Placement du Quebec which has announced this week that it will sell billions of dollars’ worth of oil assets.

Canada’s second largest pension fund will divest its oil-production assets by the end of 2022. These assets make up around 1% of its $390 billion portfolio.

“The climate situation affects everyone, and we can no longer address it with the same methods used a few years ago,” Charles Emond, chief executive officer of the pension fund, said in a statement. “We have to make important decisions on issues such as oil production and decarbonizing sectors that are essential to our economies.”

Legal backgrounder

The beneficiaries’ letters have been drafted in association with Shift: Action for Pension Wealth & Planet Health, Environmental Defence, and environmental law charity Ecojustice.

They include a legal backgrounder setting out the fiduciary obligations that fund managers have to beneficiaries along with a list of questions about climate change for fund managers to answer.

“Pension funds must assess and act decisively to limit their exposure to climate risks or else potentially face legal consequences,” says Andhra Azevedo, Ecojustice lawyer. “Pension fund beneficiaries are asking their pension funds to be transparent about their policies and actions to date so beneficiaries can determine if their fund is meeting these requirements.”

Which funds?

The funds have been asked to provide information about how they are meeting their duty to act in the best long-term interests of their beneficiaries by December 31, 2021.

The funds who have been sent letters are:

  • Alberta Investment Management Corporation (AIMCo) - $123.4 billion AUM
  • British Columbia Investment Management Corporation (BCI) - $199.6 billion AUM
  • Caisse de dépôt et placement du Québec (CDPQ) - $390 billion AUM
  • Canada Pension Plan Investment Board (CPP Investments) - $519.6 billion AUM
  • Healthcare of Ontario Pension Plan (HOOPP) - $104 billion AUM
  • Investment Management Corporation of Ontario (IMCO) - $73.3 billion AUM
  • Ontario Municipal Employees Retirement System (OMERS) - $114 billion AUM
  • OPSEU Pension Trust (OPTrust) - $23 billion AUM
  • Ontario Teachers’ Pension Plan (OTPP) - $227.7 billion AUM
  • Public Sector Pension Investment Board (PSP Investments) - $204.5 billion AUM