Shift's report shows uneven decarbonization efforts, with worst fund getting an F grade
Canada's 11 largest pension funds, collectively managing $2.4tn in assets, exhibit significant disparities in their decarbonization commitments, as reported by Shift Action for Pension Wealth and Planet Health.
The third annual Canadian Pension Climate Report Card, released on February 19, evaluates these funds' climate policies based on publicly disclosed information up to December 31, 2024.
The report grades each pension fund from A to F across six climate-related criteria: Paris-aligned targets, interim targets, climate urgency, climate engagement, climate integration, and fossil fuel exclusions.
Top-ranking and lower-scoring funds
Caisse de dépôt et placement du Québec (CDPQ) achieved the highest overall score with a B+.
The Investment Management Corp. of Ontario (IMCO) and the University Pension Plan (UPP) also received B+ grades.
The Ontario Teachers’ Pension Plan (OTPP) earned a B, while the Ontario Municipal Employees Retirement System (OMERS) received a C+. The Healthcare of Ontario Pension Plan (HOOPP), OPTrust, and the Public Sector Pension Investment Board (PSP) each scored a C.
British Columbia Investment Management Corp. (BCI) and the Canada Pension Plan Investment Board (CPPIB) were graded C-, and the Alberta Investment Management Co. (AIMCo) received an F, the lowest score in the assessment.
Climate commitments and gaps
The report emphasizes that all 11 Canadian pension funds recognize the financial risks associated with climate change, including global warming, and destabilizing planetary systems, which could impact their ability to meet long-term obligations to beneficiaries.
Shift's analysis indicates that Canada's pension sector is enhancing internal climate expertise, supporting portfolio companies in decarbonization efforts, and moving toward stricter fossil fuel exclusions.
However, the report also highlights significant disparities between leading and lagging funds, raising concerns about the readiness of all pension giants to maintain their commitments amid political and climate-related challenges.
In recent months, Canadian pension funds have made notable investments in renewable energy.
The Financial Times reports that in October 2024, CDPQ acquired a 25 percent stake in the UK's First Hydro Company from Brookfield Asset Management for £500m, making its first investment in pumped hydro storage.
First Hydro operates two pumped hydropower stations in Wales, capable of supplying electricity to approximately 2 million homes.
Additionally, in August 2024, according to Reuters, the Canada Pension Plan Investment Board (CPPIB) expressed optimism about expanding investments in Brazil's clean energy and water sectors, reflecting a strategic focus on sustainable infrastructure.
These investments align with the global trend of pension funds increasing allocations to renewable energy and sustainable infrastructure, aiming to mitigate climate-related financial risks and capitalize on the transition to a low-carbon economy.
