Canada’s biggest pension managers saw their investments in the country’s top four tar sands/oil sands producers grow by $2.9 billion in the first three months of this year, a 147% increase from last year, the Reuters news agency revealed last week in a new analysis.
“Much of that increase, which bucked a declining trend since 2018, came from rising prices of shares already owned, but the funds also purchased more shares,” Reuters writes, citing regulatory filings with the U.S. Securities and Exchange Commission, “raising questions about the funds’ recent commitments to greening their portfolios.”
The five funds—the Canada Pension Plan Investment Board (CPPIB), the Caisse de dépôt et placement du Québec, the Ontario Teachers’ Pension Plan (OTPP), British Columbia Investment Management Corporation (BCI), and the Public Sector Pension Investment Board (PSP)—manage more than $1.4 trillion in combined assets, the news report states.
“Canadian pension [funds] face pressure to balance a mandate to be environmentally responsible with their fiduciary duty to maximize returns,” Reuters says. “Canada’s oil sands are a high-carbon industry, yet their rising share prices are tempting for investors.” As well, some pension funds “say they favour continuing to invest in fossil fuel producers to help those firms transition toward producing cleaner energy.”
Shift Action Director Adam Scott had some pointed questions about how the funds’ engagement with fossil fuel producers is working out for them so far. “We have a big problem with pension funds saying, ‘we believe in engagement, not divestment’, but there’s no sign of this engagement,” he told Reuters. “The very act of owning them implies the funds do not support transition.”
Reuters has details on the individual pension funds’ holdings, as well as analysis from Randy Bauslaugh, co-chair of the Pension Funds Group at Toronto-based law firm McCarthy Tétrault. In a new paper published last week, he said pension funds have a legal responsibility to factor climate change risk into their decisions.
“Pension fund fiduciaries who fail to consider or manage climate-related financial risks and opportunities may find themselves personally liable for economic, reputational, or organizational loss resulting from that failure,” Bauslaugh wrote.
