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Canada's pension funds lagging behind in transition

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For the second consecutive year, the Caisse de dépôt et placement du Québec (CDPQ) obtained the best ranking in terms of climate leadership among the funds analyzed.


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Compared with many of their international counterparts, Canada's largest pension funds are slow to shed their dependence on fossil fuels, according to a new report. The latter also notes that the oil and gas industry is still very present on the boards of directors of these funds.

The report, published Tuesday by the organization Shift Action for Pension Wealth and Planet Health, evaluates the policies of 11 of the country's largest pension fund managers against international best practices, as well as global greenhouse gas reduction targets. (GES)

Conclusion: Despite progress since the first assessment published last year, the pace of progress is simply not fast enough to protect pensions and align more broadly with climate goals , note in an interview with CBC Adam Scott, general director of the advocacy group.

The report cites the New York City pension funds, as well as than others in France and the Netherlands, as examples of transparency, support for the renewable energy sector and the role of shareholders in demanding change.

Earlier this month, for example, a Dutch fund, PFZW, sold its stakes in Europe's largest oil and gas companies, saying they were not reducing their emissions fast enough.

In Canada, by contrast, four of the eleven pension funds listed still do not have emissions reduction targets for 2030 and 2050, according to the report.

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Part of the problem may lie with corporate boards, the report's authors say. The boards of seven pension funds have at least one director or trustee who is also a director of a fossil fuel-related company.

Good students :

The CDPQ, whose net assets total 434 billion, completely divested from oil production, refining and coal mining in 2022 and increased its investments in low-carbon assets to $47 billion, according to the report .

UPP, a smaller fund representing university workers with about $11 billion in net assets, is praised for its transparency with beneficiaries and for its efforts to have a net zero portfolio by 2040.

Most important improvements:

These funds, which were previously far behind, published climate strategies in 2023.

Last place for the second year in a row:

At press time, AIMCo, which holds $158 billion in assets, had not responded to CBC's questions. It's our job to invest in places where we can make money for our customers, not to impose our values ​​on our customers' money, he said. Evan Siddall, CEO of AIMCo, to the Financial Post in December.

We will therefore continue to invest in oil and gas, which has brought fruit.

A quote from Evan Siddall, CEO of AIMCo

At the beginning of February, AIMCo announced a new billion-dollar fund dedicated to the energy transition and decarbonization.

The 11 funds of Pension companies mentioned in the report manage more than $4 trillion in assets, the report says.

The huge sums of money at stake have sparked debate over whether pension funds have an obligation to consider climate goals or whether their fiduciary duty is solely to maximize returns for beneficiaries.

So New York City employees sued the pension funds last year, arguing that managers were putting climate ahead of the profitability of their investments.

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The oil industry remains a key player in the economy of several countries.

Adam Scott, however, rejects the idea that divestment from fossil fuels could jeopardize retirement savings.

He cites an analysis carried out in 2023 by the University of Waterloo and the environmental group, according to which six large US public pension funds saw an average 13% higher investment return (or US$21 billion more ), if they had gotten rid of fossil fuels ten years ago.

According to Mr. Scott, pension funds occupy a strategic position in the financial sector to contribute to the transition to renewable energy.

They own everyone, including the banks. They own companies, they own the entire real economy and they are long-term investors. So they have a different perspective.

A quote from Adam Scott, managing director of the defense group

According to Julie Segal, who specializes in financial regulation at the defense group Environmental Defense, we We need climate-aligned financial policy, but Canada is far behind in establishing such rules.

A World Bank report recently highlighted that the global pensions sector plays a critical role in the transition to a low-carbon, climate-resilient economy.

The World Bank concluded that pension funds must reinvent themselves to meet today's challenges.

Based on a text by Benjamin Shingler, CBC News

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