Montreal, Canada – A recent report by the advocacy group Shift Action for Pension Wealth and Planet Health has shed light on Canada’s largest pension funds’ slow progress in shifting away from fossil fuel investments. The report evaluated 11 of the country’s most significant pension managers against global greenhouse gas emission reduction targets and international best practices. While some improvement has been noted since the previous assessment, the overall pace of progress is deemed insufficient to align with climate goals.
The report highlights the pressure from climate activists on pension managers to move towards renewable energy investments and divest from fossil fuels. While some pension funds in other countries have already started divesting from fossil fuels, Canadian pension funds are lagging behind. The report specifically mentions the efforts of pension funds in New York City, France, and the Netherlands to be more transparent about investments and support renewable energy.
One standout in the report is Quebec’s Caisse de dépôt et placement du Québec (CDPQ), which has been recognized for its leadership in climate action for the second consecutive year. In contrast, the Alberta Investment Management Corporation (AIMCo) has been ranked the lowest for the second year in a row, failing to commit to measurable climate goals aligning with climate safety.
The report also raises concerns about board-level entanglements between the pension sector and oil and gas production in Canada. Seven out of 11 pension funds have board members or trustees with ties to the fossil fuel industry. While efforts have been made to address climate concerns, some pension funds still lack clear emissions reduction targets for the future.
The report emphasizes the significant role pension funds play in driving the transition towards renewable energy and away from fossil fuels. With Canadian pension funds collectively managing over $2.2 trillion in retirement savings, the debate over balancing climate goals with financial returns continues. While some argue that divesting from fossil fuels can enhance returns in the long run, others believe maximizing returns for beneficiaries should be the primary focus.
As the global pension industry faces increasing pressure to address climate risks, the need for greater regulation in the financial sector becomes apparent. The World Bank’s report underlines the critical role of pension funds in transitioning to a low-carbon, climate-resilient economy. With assets totaling an estimated $44 trillion US in 2018, pension funds are urged to adapt to global challenges and redefine fiduciary duties to align with climate goals.
In conclusion, the report calls for more significant regulatory measures to ensure financial institutions set clear and measurable climate targets. While other jurisdictions, such as the European Union, have made strides in this area, Canada is urged to catch up and establish climate-aligned finance policies to drive the transition towards a sustainable future.