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News and Updates.

Statement from Shift Action for Pension Wealth and Planet Health on the Ontario Teachers’ Pension Plan’s increased stake in Scotia Gas Networks

For Immediate Release: August 3, 2021

Toronto, ON - The Ontario Teachers’ Pension Plan (OTPP) has a gas problem, and it keeps getting worse. 

Yesterday, the OTPP announced it’s investing even more of the retirement savings of Ontario teachers in fossil fuel infrastructure in the midst of a worsening climate crisis. The OTPP is increasing its stake from 25% to 37.5% in Scotia Gas Networks Ltd. (SGN), the second largest fossil gas distribution network in the United Kingdom. Notably, OMERS also owns 25% of SGN, while Brookfield Super-Core Infrastructure Partners will acquire a 37.5% stake from Scottish energy company SSE and the Abu Dhabi Investment Authority in the £1.2 billion (CA$2.1 billion) transaction.    

SSE’s sale of its stake in SGN completes the company’s plans to completely divest its gas assets and focus on renewable energy and electrification to align with a credible net-zero pathway. In contrast, the OTPP has spent the last year growing its portfolio of fossil gas assets, including the Abu Dhabi National Oil Company’s gas pipelines in June 2020, Italy’s second largest gas distribution pipeline network in December 2020, and Washington-based utility Puget Sound Energy, which generates two-thirds of its electricity from fossil fuels, last month. As of December 31, 2020, the OTPP’s Infrastructure portfolio alone was composed of nearly CA$2 billion in fossil gas pipeline assets.   

The OTPP’s latest foray into gas pipelines calls into question the credibility of its recent commitment to net-zero emissions by 2050. Hundreds of active and retired Ontario teachers have asked the OTPP for details on how it plans to meet its net-zero goal, but the pension fund has so far failed to release a plan while continuing to invest in risky fossil fuels. The OTPP claims without evidence that its increased investment in SGN reflects its commitment to somehow achieving net-zero, helping the U.K. achieve its ambitious carbon reduction targets, and providing the capital needed to accelerate the transition away from fossil fuels. SGN is engaged in pilot projects to feed green hydrogen through its pipelines and invest in district energy systems, but has no credible explanation for how “natural gas networks will play an important role in the transition of the energy sector to a net zero future.” 

Already, analysts in the U.K. have highlighted the financial risks of investing in fossil gas pipelines, as public pressure to accelerate climate action grows and deepens. In May, the International Energy Agency said that limiting global heating to 1.5℃ means there can be no investment in new fossil fuel supply projects from now on and an immediate phase-out of existing fossil fuel projects is needed. Similarly, leading research institutions in collaboration with the United Nations Environment Programme found that gas production must decrease by 3% per year between 2020 and 2030 to ensure a safe climate future. 

The OTPP continues to gamble the retirement savings of thousands of active and retired teachers on fossil fuel infrastructure like gas pipelines and unproven moonshot technologies like hydrogen, both of which are already being outcompeted by cheaper renewables. There are growing physical, transition, regulatory and reputational risks that could turn the OTPP’s investments in SGN and other fossil gas pipelines into stranded assets.  

Contact information for media requests:

Patrick DeRochie, Manager, Shift Action for Pension Wealth & Planet Health. patrick@shiftaction.ca - 416-576-2701.

 

Shift Action for Pension Wealth and Planet Health is a charitable initiative that monitors the fossil fuel and climate-related investments of Canadian pension funds and works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis. 

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Statement from Shift Action for Pension Wealth and Planet Health on the Ontario Teachers’ Pension Plan’s Purchase of a stake in Puget Sound Energy

For Immediate Release: July 8, 2021

Toronto, ON - Yesterday, the Ontario Teachers’ Pension Plan (OTPP) announced that it is partnering with Macquarie Asset Management to purchase a 31.6% stake in Puget Sound Energy (PSE) from CPP Investments. While PSE certainly has the potential to become part of the solution to the climate crisis, that is not the case today. There are significant barriers that could undermine the value of the company and concerning signs that PSE is working actively to delay the rapid action that is needed to ensure a safe climate future.

The OTPP will own 15.8% of the Washington State-based integrated electric and gas utility. Notably, three other Canadian pension funds also own stakes in PSE, including British Columbia Investment Management Corporation (20.9%), Alberta Investment Management Corporation (13.6%), and Ontario Municipal Employees Retirement System (23.9%).

OTPP claims that the PSE investment is aligned with its 2050 net-zero commitment and critical to decarbonizing Washington State’s power generation. Despite its lofty “beyond net-zero by 2045” commitment and laudable investments in climate solutions, PSE generates nearly two-thirds of its electricity from fossil fuels, is embroiled in litigation over the costs of decommissioning the coal plant it owns in Montana, is actively trying to build a fossil gas export terminal in Tacoma, and recently waged a sophisticated public relations and lobbying campaign to block legislative efforts to ban fossil gas hook-ups in new buildings in Washington cities.

These are not the actions of a utility fully committed to a climate safe future.

If PSE’s and OTPP’s net-zero commitments are to be taken seriously, the OTPP and PSE’s other pension fund owners must immediately move to end PSE’s efforts to expand fossil fuel infrastructure and delay Washington’s ambitious climate policies. To protect the retirement savings of Canadian pension plan members and align their investments with a safe climate future, PSE’s pension fund owners must rapidly accelerate the utility’s pathway to decarbonization.

Background info on Puget Sound Energy

Contact information for media requests:

Adam Scott, Director, Shift Action for Pension Wealth & Planet Health 

adamscott@shiftaction.ca

416-347-3858

Patrick DeRochie, Manager, Shift Action for Pension Wealth & Planet Health

patrick@shiftaction.ca

416-576-2701

Shift Action for Pension Wealth and Planet Health is a charitable initiative that monitors the fossil fuel and climate-related investments of Canadian pension funds and works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis. 

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For Immediate Release: June 16, 2021

Statement from Shift Action for Pension Wealth & Planet Health on PSP Investments’ annual report and responsible investment report

Toronto, ON - PSP's investment approach fails to acknowledge the scale and urgency of the climate crisis. PSP Investments has made early progress in putting in place the internal tools and processes required to assess and manage the financial risks of climate change. However, it is unclear how PSP is using this climate-related information to protect the pensions of more than 900,000 federal public servants and align their retirement savings with a safe climate future.

Leading pension managers around the world are creating plans to address the climate crisis through ambitious science-based net-zero targets, pulling out of investments in risky fossil fuels, and rapidly scaling up investments in climate solutions. 

But PSP has no such plans-- no climate targets, no timelines for reducing its exposure to high-risk fossil fuel companies that are worsening the climate crisis, and no policies or plans to align its portfolio with the Paris agreement goal of limiting global heating to 1.5℃. PSP has also ignored repeated requests from its beneficiaries to ensure transparency through publishing the exposure of its portfolio to high-risk fossil fuels. 

The climate crisis represents an unprecedented and existential risk to every sector of economic activity. Pension funds have a fiduciary duty to manage this risk. It’s past time that PSP established a long-term investment goal aligned with Canada’s international climate obligations while creating a clear and measurable short-term plan to achieve it. Federal pensions and our planet are at stake. 

In the past year, PSP has:

  • Measured and assessed the climate-related financial risks to its portfolio, engaged with owned companies to reduce those risks, and identified climate-related investment opportunities;

  • Reduced the carbon footprint of its portfolio by 5 per cent below the previous fiscal year;

  • Increased its portfolio of renewable energy assets to $3.8 billion and its portfolio of “green assets” to $12.6 billion, although it neglects to explain exactly how its “sustainable infrastructure” and “sustainable forestry” holdings are aligned with a safe climate future .

However, without articulating clear decarbonization goals and timelines or enhancing disclosure, PSP has yet to take the necessary steps to align its portfolio with the Paris agreement. Today’s annual report and responsible investing report show that PSP has:

  • Ignored beneficiary calls to disclose the totality of its investments in oil, gas, coal and pipelines, even though it prominently showcases its renewable energy investments;

  • Increased the carbon intensity of its portfolio by over 8 per cent over the previous fiscal year;

  • Increased its investments in “energy” in its Credit Investments portfolio by nearly 250 per cent over the previous fiscal year;

  • Increased its investments in oil and gas in its Natural Resources portfolio by 77 per cent over the previous fiscal year;

  • Completely omitted any reference to its 2020 acquisition of AltaGas, a high-risk fossil gas company that is actively attempting to expand gas infrastructure in British Columbia, Nova Scotia, and the United States. PSP also omitted any reference to the doubling of AltaGas’ ownership stake in PetroGas, an oil and gas distribution services firm, in October 2020;

If PSP wants to be taken seriously as a climate leader, it must:

  • Immediately put an exclusionary screen on new oil, gas and coal investments;

  • Phase out all current oil, gas and coal investments by 2025;

  • Decarbonize its portfolio by 2040;

  • Establish ambitious targets for increased investments in profitable climate solutions;

  • Develop robust and transparent climate-related engagement criteria for owned companies that includes forbidding participation in and funding of lobbying activities that undermine climate policy, company reduction timelines for achieving zero-emissions, and linking executive compensation to measurable emissions reduction goals. The escalatory tool of divestment would be employed if these engagement strategies do not produce desired outcomes;

  • Announce a policy that adopts the United Nations Declaration on the Rights of Indigenous Peoples and respects the rights of Indigenous Nations to Free, Prior and Informed Consent of energy and industrial projects on their traditional lands.

Background Information

For more information please contact:

Adam Scott, Director, Shift Action for Pension Wealth & Planet Health 

adamscott@shiftaction.ca, 416-347-3858.

Patrick DeRochie, Senior Manager, Shift Action for Pension Wealth & Planet Health

patrick@shiftaction.ca, 416-576-2701.

Shift Action for Pension Wealth and Planet Health is a charitable initiative that monitors the fossil fuel investments of Canadian pension funds and works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.

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For Immediate Release: May 18, 2021

Statement from Adam Scott, Director of Shift, on the significance for Canadian finance institutions of the IEA’s new Net-Zero by 2050 outlook. 

The release of the International Energy Agency’s new 1.5℃ energy scenario is game changing for the responses of Canadian finance institutions to the climate crisis. The world’s most influential energy modelling analysis provides essential clarity on what is required to achieve the energy transition in line with the goals of the Paris Agreement.

In one fell swoop, the IEA’s definitive new outlook forces meaning into empty net-zero pledges made by governments, finance institutions and companies in recent years. Until now, most of these pledges lacked the required honesty, ambition, and planning detail for achieving their stated objectives, often veering instead into dangerous greenwash.     

The IEA’s findings are unequivocal: “There is no need for investment in new fossil fuel supply... No new oil and natural gas fields are needed in our pathway, and oil and natural gas supplies become increasingly concentrated in a small number of low-cost producers.”

In a news interview, the executive director of the IEA said that oil and gas projects may become "junk investments" that could throw domestic climate targets off course.

Finance institutions can no longer justify lending, underwriting, insuring, or investing in coal, gas or oil expansion projects, or the infrastructure that facilitates that expansion.   

The use of Paris-Aligned outlooks as a basis for decision-making isn’t optional. We need a roadmap showing the direction we must take in order to prevent the worst impacts of the climate crisis from becoming reality.

Outlooks are self-fulfilling prophecies. Financial decisions made today must assume a future where we are successful in achieving our climate goals. Continuing to make decisions based on the assumption of climate failure locks-in that failure. This new scenario must therefore form the default outlook for anyone using scenario analysis tools to understand exposure to climate risk.  

This year, a growing list of Canada’s largest finance institutions have made net-zero pledges without a credible plan for achieving the Paris Agreement goals. For example, the Ontario Teachers’ Pension Plan, Canada’s third largest pension fund, has yet to release any interim details on how it will achieve its goals. Net-zero pledges from the big five banks have also excluded promises to end finance for coal, gas and oil projects, undermining their credibility.  

Adam Scott, Director, Shift Action for Pension Wealth & Planet Health 

adamscott[at]shiftaction.ca

416-347-3858

Patrick DeRochie, Manager, Shift Action for Pension Wealth & Planet Health

patrick[at]shiftaction.ca

416-576-2701

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For Immediate Release: March 30, 2021

Statement from Shift Action for Pension Wealth and Planet Health on climate-related financial risk in the Ontario Teachers’ Pension Plan’s 2020 annual report

Toronto, ON - All things considered, the Ontario Teachers’ Pension Plan (OTPP) weathered the pandemic storms of the past year effectively. However, the economic shocks from COVID-19 have revealed the growing long-term risks of the fund’s exposure to fossil fuel investments, and the growing financial benefits of shifting capital into climate solutions.

The global pandemic caused an unprecedented shock to oil demand over the past year. The impact of this sudden short-term drop was just a taste of how the expected terminal decline in global fossil fuel demand anticipated over the coming years will impact long-term investors like the OTPP. 

Notably, despite otherwise strong results in navigating the challenges of the pandemic, the OTPP underperformed in areas linked to fossil fuels, a factor contributing to missing its benchmark by 2.1 per cent:

  • OTPP’s Natural Resources portfolio, which includes nearly $3.3 billion in oil and gas, fell by 11.2 per cent in 2020;

  • OTPP’s infrastructure portfolio, composed of nearly $2 billion in fossil gas pipeline infrastructure, returned just 2.6 per cent against a 7.5 per cent sector benchmark in 2020;

  • OTPP acknowledged that its portfolio of five airports faced particularly poor returns due to COVID-19, raising broader questions about the long-term prospects for aviation growth in a world racing to slash the emissions that are driving the climate crisis;

  • OTPP’s wise decision to reduce its exposure to the fossil fuels sector in its public equity portfolio paid off, with just 2 per cent of this portfolio in “energy” buoying overall strong returns of 15.2 per cent in 2020. 

Thankfully, we are seeing a clear multi-year trend of the OTPP reducing the percentage of its portfolio allocated to fossil fuel investments and significantly increasing its capital allocation towards profitable and fast-growing climate solutions. This is a smart approach to reduce risk and increase exposure to growing clean sectors.

Despite its progress in managing the financial risks of climate change, the OTPP still hasn’t provided details on its 2050 net-zero emissions commitment or a roadmap and timeline to achieve it. Further, the OTPP provided teachers with essentially no information on some of its 2020 investment decisions that would appear to be incompatible with its net-zero commitment, including its joint purchase of the Abu Dhabi National Oil Company’s fossil gas pipeline network and a 70 per cent stake in Italy’s largest independent fossil gas pipeline system, as well as the decision by Bristol airport, wholly owned by the OTPP, to take a U.K. community to court over its rejection of the airport’s expansion plans.

The OTPP’s increasingly sophisticated management of climate risks and hedging against the poor financial performance of fossil fuels shows that it is starting to listen to the growing number of working and retired Ontario teachers who are demanding their retirement savings be aligned with a safe climate future. Over the last year, teachers and students worked together to call on the OTPP to stop investing in the oil, gas and coal that is fuelling the climate crisis.    

    

Contact information for media requests:

Adam Scott, Director, Shift Action for Pension Wealth & Planet Health. adamscott@shiftaction.ca, 416-347-3858

Patrick DeRochie, Manager, Shift Action for Pension Wealth & Planet Health. patrick@shiftaction.ca, 416-576-2701

Shift Action for Pension Wealth and Planet Health is a charitable initiative that monitors the fossil fuel investments of Canadian pension funds and works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.

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For Immediate Release: March 10, 2021

Statement from Adam Scott, Director of Shift Action for Pension Wealth & Planet Health, on BMO’s Unambitious “Climate Ambition” announcement

Toronto, ON - Another day, another climate commitment from a Canadian bank that ignores its own role in financing the primary cause of the climate crisis: fossil fuels. 

BMO’s commitment to net-zero emissions by 2050 is another welcome acknowledgement that finance institutions have an obligation to address the climate crisis through their lending and investment decisions. Yet Canada’s banks have so far failed to acknowledge the requirement to immediately and dramatically shift financing away from fossil fuels and into climate solutions.  

Research from BankTrack shows that between 2016 and 2019, BMO provided over USD$82 billion in financing to oil, gas and coal companies and projects, making it the 16th largest financier of fossil fuels among private banks in the world. Similarly, an analysis published last month by German finance NGO Urgewald showed that BMO provided nearly USD$3 billion in loans nearly and USD$2.3 billion in underwriting for global coal companies between October 2018 and October 2020.

A bank that finances the expansion of coal in 2021 demonstrates a fundamental lack of climate literacy. BMO’s claims of “climate ambition” cannot be taken seriously without immediate action to shift away from financing all forms of fossil fuels.

BMO is also a lead financier of two controversial Canadian fossil fuel pipeline projects that violate Indigenous rights and that are incompatible with a climate safe future-- Enbridge’s Line 3 tar sands pipeline and TC Energy’s Coastal GasLink fracked gas pipeline. BMO is the lead bank on two loans to Enbridge totalling USD$4.05 billion, participated in two other loans to Enbridge, and was the lead underwriter of a bond issuance for Enbridge to build Line 3. It was also the lead agent on a CAD$3 billion loan in September 2019 to TC Energy, which is trying to build the Coastal GasLink fracked gas pipeline to the B.C. coast.

A bank that is claiming climate leadership while financing fossil fuel pipelines is either greenwashing, or doesn’t understand the urgent action the climate crisis necessitates.     

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Background information:

“Banking on Climate Change: Fossil Fuel Finance Report 2020.” Rainforest Action Network, BankTrack, Indigenous Environmental Network, Sierra Club, Oil Change International and Reclaim Finance. https://www.ran.org/bankingonclimatechange2020/  

“Financial Backers of Global Coal.” Urgewald. https://coalexit.org/finance-data

“Who’s banking the Coastal GasLink pipeline?” Rainforest Action Network. https://www.ran.org/the-understory/2020-update-whos-banking-the-coastal-gaslink-pipeline/

“Who’s banking Line 3 and Keystone XL?” Rainforest Action Network. https://www.ran.org/wp-content/uploads/2020/12/RAN-Briefing_Line3_KXL.pdf 

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For more information or interview requests, please contact:

Patrick DeRochie, Manager, Shift Action for Pension Wealth & Planet Health

patrick@shiftaction.ca; 416-576-2701


Shift Action for Pension Wealth and Planet Health is an initiative that monitors the fossil fuel investments of Canadian financial institutions and works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.

FEBRUARY 25, 2021

NEW REPORT: cANADIAN FINANCIAL INSTITUTIONS AMONG THE “dIRTY THIRTY” FINANCIERS OF THE GLOBAL COAL INDUSTRY

For Immediate Release:

Toronto, Ontario - Canadian financial institutions are some of the largest financiers of the global coal industry, according to the 2020 Global Coal Exit List, new financial data released today by German non-profit Urgewald. 

The analysis shows that, five years after the Paris climate agreement, global financial institutions, including Canada’s largest banks, asset managers and insurance companies, continue to finance the growth of coal in the midst of a worsening climate emergency.

“It is simply unacceptable for Canadian financial institutions to be funnelling billions of dollars to the coal industry in 2021, when the climate crisis is already harming people, economies and ecosystems around the world,” says Adam Scott, Director of Shift Action for Pension Wealth & Planet Health. “It demonstrates a fundamental lack of climate literacy from the Canadian financial community. We need to rapidly phase out coal mining and power generation.”

On a country basis, Canadian financial institutions make Canada the fourth largest lender to the coal industry in the world from October 2018 to October 2020, as well as the 7th largest underwriter and 4th largest investor. Canadian financial institutions.

  • Provided nearly US$20 billion in loans to the coal industry during the two-year period analyzed, behind financial institutions in only Japan, the United States and the United Kingdom;

  • Provided nearly US$21 billion in underwriting to coal, behind just China, the U.S., Japan, India, the U.K. and France;

  • Held over US$6 billion in bonds and over US$36 billion in shares across the global coal value chain, investing more than financial institutions in every country except the U.S., Japan and the U.K.

In particular, four Canadian banks are among the “Dirty Thirty,” the top 30 lenders to the global coal industry between October 2018 and October 2020, including:

  • Royal Bank of Canada is the 12th largest coal lender in the world, which provided $US5.2 billion in loans to coal during this period;

  • TD Bank, the 15th largest coal lender in the world, with over $US4.4 billion lent to coal;

  • Scotiabank, ranked 21st, provided over $US3.8 billion in loans to coal; and

  • BMO Financial Group is the 29th largest coal lender, providing nearly US$3 billion in loans to coal between October 2018 and October 2020.

The newly released data also includes a list of the 30 largest global investors in coal. Canadian insurance company Sun Life Financial ranked 14th, with nearly US$10.4 billion in shares and bonds in global coal companies.

The ongoing financing of the coal industry by Canadian financial institutions comes as over 151 large banks and insurers have already blacklisted coal. Meanwhile, Canada’s federal government itself has committed to phase out coal-fired electricity domestically by 2030 and leads the Powering Past Coal Alliance to phase out coal-fired power internationally.

The 2020 Global Coal Exit List is the first time in history that anyone has attempted to analyze commercial banks’ and institutional investors’ exposure to the entire coal industry, covering financial flows to 934 companies. The analysis covers investments in and lending and underwriting for coal companies and projects by banks, asset managers, pension funds and insurance companies over a two-year timeframe beginning in October 2018, when the International Panel on Climate Change warned that limiting global heating to 1.5°C would require global carbon emissions to fall by at least 45 per cent below 2010 levels by 2030 and reach net-zero by 2050.

The United Nations Environment Programme’s 2020 Production Gap report recently found that in order to follow a 1.5℃-consistent emissions pathway, between 2020 and 2030, global coal production must decline by 11% per year.

Find the international press release from Urgewald and our international partners, as well as complete data and methodology behind the 2020 Global Coal Exit List data set here.

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For media inquiries or to arrange an interview, please contact:

Adam Scott, Director - Shift Action for Pension Wealth & Planet Health. 416-347-3858. adamscott@shiftaction.ca 


Patrick DeRochie, Manager - Shift Action for Pension Wealth & Planet Health . 416-576-2701. patrick@shiftaction.ca


January 22, 2021

Statement from Shift Action for Pension Wealth and Planet Health on the Ontario Teachers’ Pension Plan’s incomplete 2050 net-zero emissions commitment

For Immediate Release:

We are pleased to see the Ontario Teachers’ Pension Plan (OTPP) take a critical first step towards addressing the unprecedented risks the climate crisis creates for its beneficiaries and for our planet. We hope this announcement is a signal that the OTPP and other Canadian pension funds are finally ready to admit the scale of action the climate crisis requires of them. 

However, a commitment to net-zero emissions has little credibility on its own without announcing the concrete steps the OTPP will take to achieve this goal. These details should have been released today. Without a plan for major changes to the way the pension fund makes investment decisions, a net-zero commitment runs the risk of becoming a cynical example of greenwashing. 

In recent years, the OTPP has continued to make decisions that run counter to responsible climate risk management, including deals to purchase and expand high-carbon, long-lived infrastructure like gas pipelines and airports. This cannot continue. 

Hundreds of Ontario teachers have written to the OTPP, calling for concrete action to protect their pensions and the climate. Earlier this month, a coalition of students and teachers released a video setting out clear demands to align the pension fund with a climate-safe future.  

For this net-zero investment strategy to have credibility, the OTPP must also announce:

  • Exclusionary screens on new oil, gas and coal investments (as already exist for tobacco and weapons);

  • A phase out of all current oil, gas and coal investments by 2025;

  • A clear timeline for decarbonizing the portfolio by 2030;

  • New and ambitious targets for increased investments in profitable climate solutions;

  • A policy that owned companies must refrain from lobbying activities that undermine ambitious climate policy, set timelines for reducing emissions, and link executive compensation to measurable climate goals.

A growing number of Canadian and global companies, investors and financial institutions are announcing 2050 net-zero policies. Yet the OTPP continues to hold billions in teachers’ pension savings in oil, gas and coal investments. In the last six months alone, the OTPP joined a consortium to buy a US$10.1 billion stake in Abu Dhabi’s gas pipeline network, bought a 69.4% stake in Italy’s second largest gas pipeline operator, and watched its wholly-owned Bristol Airport take a regional government in the U.K to court after its citizens rejected the airport’s expansion plans. These are not the actions of an institutional investor that is serious about mitigating the climate crisis.    

A climate-safe investment strategy requires a phase-out of fossil fuel holdings and significant investments in the transformation of our economy and energy systems. An incomplete 2050 net-zero emissions commitment that lacks concrete details falls far short of this imperative. We look forward to seeing a detailed plan.


Background Information

Summary of the OTPP’s approach to climate risk and investments in fossil fuels. https://drive.google.com/file/d/17AgrcPbHVhxOzBbwz2HkmfqUGiqC9z4I/view. 

A message from students to their teachers. https://www.youtube.com/watch?v=JPOiHGJqCmM&t=11s 

CarbonBrief. Briefing: The problems with net-zero emissions

https://www.carbonbrief.org/guest-post-the-problem-with-net-zero-emissions-targets 

Contact information for media requests:

Adam Scott, Director, Shift Action for Pension Wealth & Planet Health 

adamscott[at]shiftaction.ca


Patrick DeRochie, Manager, Shift Action for Pension Wealth & Planet Health

patrick[at]shiftaction.ca

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jANUARY 4, 2021

STATEMENT FROM SHIFT ON THE ONTARIO TEACHERS’ PENSION PLAN’S ACQUISITION OF A 69.4 PER CENT STAKE IN AN ITALIAN FOSSIL GAS PIPELINE NETWORK

Toronto, ON - On Christmas Eve, working and retired teachers across Ontario were treated to yet another fossil gas pipeline network on behalf of their pension fund. The Ontario Teachers’ Pension Plan (OTPP) quietly revealed that it’s buying a 69.4% stake in Società Gasdotti Italia S.p.A, the owner and operator of a 1,700-km network of fossil gas pipelines in Italy. OTPP did not disclose how much of teachers’ pension savings are being used to buy this giant piece of fossil fuel infrastructure.

Anticipating growing concerns from teachers about climate-related financial risk, OTPP tried to claim that its Italian gas pipelines will somehow “enable the shift to low- or zero-carbon alternatives like green hydrogen and biomethane to support broad decarbonisation efforts in Italy and Europe.” OTPP’s press release cites an incomplete, unpublished feasibility study relying on unproven assertions that gas pipeline networks can somehow be switched to hydrogen and decarbonized. In fact, numerous technical studies show that only a small percentage of hydrogen could ever safely be blended into existing gas pipelines, making gas pipeline networks ultimately dead-end investments as we transition entirely away from fossil fuels to stabilize our climate. Climate science shows we must phase out gas combustion entirely in the coming years, so high-carbon assets of this kind will either become stranded, or will block our path to climate safety. Either way, it’s a risky strategy for long-term investors like pension funds.        

Attempts to portray investments in gas infrastructure as a climate solution are a new and deceptive form of climate denial. OTPP says that it understands the climate crisis, yet continues to invest teachers’ retirement savings in infrastructure and companies that are not aligned with what the science says is required to secure a safe climate future. Instead of listening to teachers and immediately excluding new investments in fossil fuels and phasing out current investments, OTPP is doubling down on climate-heating gas while making unjustified claims that it’s part of a decarbonization strategy.

For Immediate Release: December 18, 2020

Statement by PAtrick Derochie, manager at Shift, on Desjardins’ Policy to Exit Coal Financing

Toronto, ON - The publication of Desjardins’ coal exclusion policy is a welcome display of climate leadership in Canada’s financial sector. Shift applauds Desjardins for its commitment to totally withdraw from coal financing by 2030 for OECD countries and 2040 for the developing world. This is the sort of leadership needed from all finance institutions in the face of a worsening global climate crisis.  

However, if Desjardins and other financial institutions are truly committed to limiting  global temperature increase to 1.5°C to avoid the worst impacts of the climate crisis, they must also end financing for all fossil fuels, including oil and gas.

According to international climate finance NGO Reclaim Finance and its Coal Policy Tool, Desjardins is the 17th large financial institution in the world to adopt a robust coal exit policy and the first in North America. Desjardins’ restrictions on the provision of financial services for coal puts it head over heels above Canada’s Big Five banks and Maple Eight pension funds. 

Other than the inadequate coal exclusion policy announced by RBC earlier this fall, none of Canada’s large banks or pension funds have committed to end their financing of coal. Canadian financial institutions continue to pour tens of billions of dollars into climate-wrecking fossil fuel companies and projects. Canada’s Big Five banks alone provided over $7 billion in financing to coal mining and power production between 2016 and 2019, since the Paris climate agreement was signed.

The 2020 Production Gap report released earlier this month by leading international research institutions is clear: To follow a 1.5°C-consistent pathway, global coal, oil and gas production would have to decline annually by 11%, 4%, and 3%, respectively. 

There is simply no space in the global carbon budget for the financing of new fossil fuels.

cpt2.png

Background information:

“Desjardin’s Position on Coal.” Desjardins. https://www.desjardins.com/ressources/pdf/d00-desjardins_position_coal.pdf 

“Desjardins adopts a robust coal exit policy.” Reclaim Finance. https://reclaimfinance.org/site/en/2020/12/18/desjardins-adopts-a-robust-coal-exit-policy/  

“Banking on Climate Change: Fossil Fuel Finance Report 2020.” Rainforest Action Network, BankTrack, Indigenous Environmental Network, Sierra Club, Oil Change International and Reclaim Finance. https://www.ran.org/bankingonclimatechange2020/  

“2020 Production Gap Report.” United Nations Environment Programme, Stockholm Environment Institute, International Institute for Sustainable Development, Overseas Development Institute and E3G. https://productiongap.org/2020report/

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For more information or interview requests, please contact:

Patrick DeRochie, Shift Action for Pension Wealth and Planet Health: patrick@shiftaction.ca, 416-576-2701

 

For Immediate Release: November 9, 2020

Statement by Adam Scott, Director of Shift, on TD BANK ANNOUNCING THE EXCLUSION OF FUNDING FOR OIL AND GAS PROJECTS IN THE ARCTIC NATIONAL WILDLIFE REFUGE

Toronto, ON - While it’s encouraging to see TD join BMO and RBC in recognizing limits to financing fossil fuels during a worsening global climate crisis, it’s hard to understand why the bank chose to limit this ban only to projects within the Arctic National Wildlife Refuge (ANWR).

This is like making a commitment to quit drinking, but only giving up Polar Ice vodka. 

In justifying the new policy, TD cites concerns around the destruction of wild places, the worsening climate emergency, and harm to Indigenous communities. But these significant harms are clearly caused by fossil fuel projects undertaken all around the world.

Doesn’t TD’s concern for the environment, a stable climate and Indigenous rights extend to oil and gas projects beyond the ANWR?

A growing number of Canadian and global companies, investors and financial institutions are announcing 2050 net-zero policies. Yet since the Paris Agreement was signed, between 2016 and 2019 Canadian banks provided nearly half a trillion U.S. dollars in financing for fossil fuel projects and companies. TD Bank alone provided US$103.43 billion to expand oil, gas and coal.

This cannot continue.

A vague 2050 net-zero policy can't be a smokescreen to justify continuing to finance tens of billions in fossil fuel developments each year. These policies rarely include credible steps to reaching that goal, and TD’s announcement today is no different. Canadian financial institutions like banks, pension funds, insurers and asset managers will all need to stop financing all fossil fuel projects if they intend to achieve their stated net-zero goals.  

Background information:

Banking On Climate Change: Fossil Fuel Finance Report 2020 - Rainforest Action Network. https://www.ran.org/bankingonclimatechange2020/

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For more information or interview requests, please contact:

Adam Scott, Director, Shift Action for Pension Wealth and Planet Health, 416-347-3858, adamscott@shiftaction.ca

For Immediate Release: SEPTEMBER 29, 2020

Statement by Adam Scott, Director of Shift, on CPP INVESTMENTS’ 2020 REPORT ON SUSTAINABLE INVESTING AND ITS INADEQUATE APPROACH TO MANAGING CLIMATE RISK

Toronto, ON - The CPP is betting Canadian retirement savings against the unstoppable transition to a clean energy economy, and fueling the global climate crisis in the process.

CPP’s report states: "We are confident that major investments supporting the shift over time to lower-carbon energy sources will come from companies that currently derive most of their revenue from hydrocarbons.”

But contrary to this claim, there is no evidence that fossil fuel companies have credible plans for transitioning to a zero-carbon business model as is required in the face of the climate crisis.

CPP’s excessive exposure to risky fossil fuels was recently highlighted in a report from the Canada Climate Law Initiative, questioning whether CPP can meet its fiduciary duty to manage its investments in the best interests of its beneficiaries. The CPP itself acknowledged in June 2020 that it has nearly $12 billion invested in fossil fuels, including $141 million in Chinese coal companies. That’s nearly double what it has invested in climate solutions like renewable energy.  

This week, CPP’s ownership of a harmful fracking company in Colorado, Crestone Peak Resources, was exposed in the Globe & Mail. In addition to harming the environment and health of front-line communities with its fracking operations, it was revealed that the CPP-owned company made over US$600,000 in political donations in Colorado’s 2018 state elections in an attempt to block environmental and health protections.

In another example of risky recent fossil fuel investments, CPP spent at least €830 million through its Nephin Energy subsidiary to buy gas interests off the coast of Ireland from Shell in 2018. While CPP planned for strong long-term returns, the new Irish coalition government recently committed to a ban on new licenses for exploration and production of gas as part of Ireland’s plan to fight climate change.  

Today’s sustainable investing report does little to address these serious climate risk concerns. In spite of implementing modest measures to understand its climate risk to date, CPP has yet to establish meaningful and measurable goals with respect to climate change. CPP must set a clear timeline for shifting our investments out of coal, gas and oil and into profitable climate solutions.

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For more information or interview requests, please contact:

Adam Scott, Director, Shift Action for Pension Wealth and Planet Health, 416-347-3858, adamscott@shiftaction.ca. 

 

 

ANALYSIS: July 16, 2020

Pension reports show a plan is needed to shift Canada’s retirement savings out of fossil fuels

Pension investments in climate solutions are performing well, while oil, gas and coal are a financial drag. This trend can be expected to accelerate in the future. So when will Canada’s biggest pension funds establish clear plans to exit risky fossil fuels and boost investments in the clean energy future?  

Most of Canada’s largest public pension funds released their annual reports in recent months, outlining how the retirement savings of millions of Canadians have fared in the early wake of the COVID-19 pandemic and its turbulent economic fallout.

Canadians should be thankful that our pension savings have held up relatively well amidst the biggest economic crisis since the Great Depression. But a deeper dive into their public reports reveals another story: investments in fossil fuels are a big drag on Canadians’ retirement savings, while investments in climate solutions continue to perform well through the crisis.

Let’s take a look at some climate-related highlights of the latest annual reports of four of Canada’s biggest public pension funds.

    

AIMCo (Alberta Investment Management Corporation)

AIMCo manages the pensions of working and retired public sector employees in Alberta, as well as the Alberta Heritage Savings Trust Fund, which was created to invest Alberta’s oil and gas revenues in the province’s future and diversify the provincial economy.

Much of the recent media attention on AIMCo has focused on its losses on a risky volatility-based investing strategy. But AIMCo is also heavily exposed to the fossil fuel sector, and Canadian oil and gas companies, in particular. This overexposure to fossil fuels has contributed to AIMCo’s below-average performance for years, but now the pandemic-driven collapse in global oil demand is hitting the value of Albertans’ retirement savings.

At the end of March, Alberta’s Local Authorities Pension Plan (LAPP), which is managed by AIMCo, reported a -20.9 per cent return for its Canadian public equities portfolio in the first quarter of 2020, a loss of about $1.2 billion. The LAPP reports that the portfolio suffered “due in part to the Saudi-Russian oil price war.”

In July, AIMCo reported that its public equities portfolio, composed of nearly $3.4 billion of “energy” investments, endured a -18.5% return over the previous year. Interestingly, AIMCo’s annual report only covered the 2019 calendar year, neglecting to inform Albertans how its fossil-fuel-heavy portfolio performed since the COVID-19 crisis sent the oil and gas industry into a tailspin beginning in March.

Alberta’s Heritage Savings Trust Fund also released its annual report in July. The provincial wealth fund, managed by AIMCo and particularly overexposed to Alberta oil and gas, reported a loss of nearly $2 billion from the year before, falling to its lowest value in eight years—just $16.3 billion. This comes in stark contrast to Norway’s sovereign wealth fund, which also invests the country’s oil and gas wealth on behalf of a comparable population. The Norwegian fund, created 14 years after the Alberta Heritage Savings Trust, is now worth CA$1.4 trillion and recently moved to exclude Canadian oilsands investments due to their impact on climate change.   

Strangely, AIMCo fund managers ignored the global trend of poor fossil fuel financial performance, with Chief Investment Officer Dale MacMaster writing in the annual report that “for Alberta in particular, the energy sector ended the year on a pretty good note as well, with some positive news about pipelines and higher commodity prices.”

On the contrary, AIMCo notes in its annual report that “assets linked to sustainable development continue to grow, with project funding increasingly allocated… to alternative energy, reflecting the transition to the low-carbon economy.” AIMCo’s annual report highlights that nearly 20 per cent of its Infrastructure portfolio, which saw a 7.4 per cent net return, is composed of renewable energy, with strong performers including wind and solar developers and utilities that are transitioning out of fossil fuels.

 

(CPPIB) Canada Pension Plan Investment Board

The $410 billion pension plan covering 20 million Canadians managed to post a return of 3.1 per cent for the fiscal year ending March 31, 2020, despite the unprecedented market downturn in March due to COVID-19. However, CPPIB’s fossil-fueled Energy and Resources portfolio saw the worst return of any asset group, shrinking by 23.4 per cent. 

CPPIB uses a range of sophisticated tools to measure the financial risks of climate change to its portfolio. It has dramatically increased its investments in low-carbon opportunities like renewable energy, green buildings and electric vehicles. It was also the first global pension fund to issue green bonds to finance green projects.

But the CPPIB’s investments in climate solutions are dwarfed by its massive holdings in fossil fuels, estimated conservatively at $6 billion. Clearly the CPPIB’s relatively stable performance comes in spite of its ongoing exposure to fossil fuels. 

(OTPP) Ontario Teachers’ Pension Plan

OTPP is still a pension fund without clear objectives on climate change. In spite of making real progress in understanding the climate risks facing the $207 billion fund, OTPP has not set clear measurable goals or timelines for limiting this risk, for cutting carbon from its portfolio, for company engagement, or for investing in profitable climate solutions. Like most Canadian pension funds, OTPP set out to create internal processes on climate risk, without first deciding what it aims to achieve. 

OTPP released its annual report in April and it only covered the 2019 calendar year. So it is difficult to ascertain the impact of COVID-19 on its investments. However, the report did highlight significant investments in fossil fuels, including:

  • 12 per cent, or $4.33 billion, of OTPP’s $36.1 billion “inflation sensitive portfolio” is composed of oil and gas.

  • 20 per cent of the fund’s $17 billion Infrastructure portfolio, or $3.4 billion, is invested in “energy”. The report did not distinguish between renewable energy and fossil fuel energy.

  • OTPP holds over $200 million in each of at least five oil and gas companies and partnerships that will be negatively impacted by future climate action, including:

    • Aethon Energy, a Texas-based private investment firm focused on direct investments in North American upstream oil and gas assets;

    • Chisholm Energy Holdings, a Texas-based oil and gas company;

    • Hawkwood Energy, a Denver based oil and gas company;

    • Scotia Gas Network, the United Kingdom’s second largest natural gas distribution company;

    • Since 2015, OTPP has owned outright HRG Royalty, a $3.3 billion former subsidiary of Chevron that owns land, oil and gas titles, and royalty interests in western Canada.

Meanwhile, OTPP released its 2019 Climate Change Report in July, highlighting a number of internal tools and processes the pension fund is using to better manage the financial risks of climate change and identify climate-related investment opportunities. The report showed that just 15 per cent of OTPP’s portfolio drives nearly three-quarters of the portfolio’s emissions. 

We were happy to see that OTPP reported a reduction of its portfolio’s carbon footprint by 15 per cent between 2018 and 2019 through divestment, “mainly due to the sale of a particularly high-carbon-intensity private asset.” OTPP has not disclosed the identity of this asset. 

The Climate Change Report also neglected to include mention of OTPP’s move to join a consortium that purchased a $10.1 billion, 49 per cent stake in the Abu Dhabi National Oil Company’s gas pipeline network, the largest fossil fuel infrastructure transaction in the world so far in 2020. If the fund truly wants to become a leader on climate change, it can’t continue to invest billions in fossil fuels while making new investments to lock-in fossil fuel infrastructure and carbon pollution.

 

(PSP) Public Sector Pension Investment Board 

The $170 billion pension fund for federal public servants also managed to weather the economic crisis relatively well, posting a net loss of just 0.6 per cent as of March 31, 2020. While PSP took several measures to mitigate the impacts of COVID-19, the pension fund’s investment approach signaled a recognition of climate-related risks:

  • PSP reports that its decision to underweight the “energy sector” in its public equities portfolio proved to be beneficial” and that “having small exposure to oil… was also a tailwind during the last quarter.”

  • PSP limited “energy” investments in its private equity portfolio and posted a 5.2 per cent return.

  • PSP limited its exposure to “energy” in its private debt portfolio to just one per cent, and managed a 4.3 per cent return, attributing the portfolio’s outperformance partly to “limited to no exposure to industries such as energy, airlines and hospitality.”

  • PSP’s real estate portfolio suffered a -4.4 per cent return. While it notes a number of reasons for real estate’s poor performance, PSP highlights the weakness of its Alberta office portfolio, which “was particularly impacted by the pandemic and the drop in oil prices that exacerbated the negative sentiment on the Alberta economy.”

  • PSP’s Infrastructure portfolio posted a strong 8.7 per cent return, despite economic volatility. The report highlights in particular its direct investments in “the renewables sub-sector” as recording “significant valuation gains.”

  • PSP’s Natural Resources portfolio saw a -5.2 per cent return, noting that the COVID-19 pandemic “especially impacted the portfolio’s non-core oil and gas assets due to a decrease in demand in an already overly supplied market.”  

  • In its responsible investment report, PSP highlights that it avoided 3.6 million tonnes of carbon pollution through its investments in 150 renewable energy assets, the equivalent of taking 750,000 cars off the road every year. The pension fund also decreased the weighted average carbon intensity of its portfolio by more than 25 per cent between 2016 and 2020.

 

Conclusion

For Canada’s largest pension funds, the ingredients of a climate-safe investment strategy are starting to come together. The investment manager’s now recognize the financial risks and opportunities of climate change and express a desire to invest in companies and assets that benefit from the transition to a zero-carbon economy. They are building sophisticated processes and internal structures to assess and manage these climate-related risks and opportunities. They publicly highlight their investments in climate solutions such as renewable energy and clean technology, while at the same time downplaying or hiding their massive holdings in fossil fuels. And they even in some cases publicly report on the poor performance of their fossil fuel investments. However, without a clear recipe for what all these efforts hope to achieve, the results will come out half-baked.   

It’s time to stop fumbling in the dark. Every one of these pension funds lacks clear and measurable goals for how they intend to invest responsibly in the midst of a worsening global climate crisis. 

There’s no point in measuring the carbon intensity of a portfolio without establishing a timeline and tools for reducing it. There’s no reason to engage owned companies without first clarifying expectations. And there’s no method to selling risky high-carbon assets, only to acquire new ones.

Here is what a comprehensive board-level plan to tackle climate change and protect the pension savings of millions of Canadians must include:

pension asks.png
 

For Immediate Release: June 23, 2020

Statement by Adam Scott, Director of Shift, on the Ontario Teachers’ Pension Plan’s joint $10.1 billion investment in the Abu Dhabi National Oil Company’s fossil gas pipelines

Toronto, ON - The Ontario Teachers’ Pension Plan (OTPP) is putting the hard-earned retirement savings of thousands of working and retired teachers at risk by investing in a massive piece of fossil fuel infrastructure in the midst of a worsening climate crisis and a volatile disruption to global energy markets.

The OTPP’s move to join a consortium purchasing a $10.1 billion, 49 per cent stake in the state-owned Abu Dhabi National Oil Company’s fossil gas pipeline network is the largest fossil fuel infrastructure transaction in the world in 2020. It exposes the pension savings of thousands of Ontario teachers to climate-related financial risk. It undermines global action to address the climate crisis by locking in polluting infrastructure for decades to come. And it contradicts the OTPP’s own commitments to align its portfolio with a safe climate. 

In the short-term, oil and gas producers and many infrastructure operators have faced a sharp decline in demand and profitability as a result of the COVID-19 pandemic. In the long-term, all fossil fuel infrastructure faces terminal decline as a result of a global energy transition in response to the climate crisis. Fossil gas is a significant source of greenhouse gas pollution. Stabilizing global temperatures at safe levels requires gas extraction and combustion to be wound down rapidly, along with coal and oil. 

Investments like the OTPP’s in fossil fuel infrastructure are betting the hard-earned retirement savings of thousands of Ontario teachers against the long-term safety of our climate.

“I am appalled that the OTPP is investing my retirement savings in fossil gas pipelines,” says Teri Burgess, a grade 8 teacher in Marathon, Ontario. “This is a risky financial move. It’s also morally egregious that the pension savings from my teacher’s salary are being used to lock-in carbon pollution and extreme weather that may harm the young people I educate and support.”    

Ensuring the growth of pensions in the long-term requires ending investments that lock-in fossil fuels and redeploying massive pools of finance into climate solutions like renewable energy and clean technology. 

Background Information on the OTPP’s approach to climate change and fossil fuels

OTPP has made only modest progress in aligning its portfolio with a safe climate and it continues to invest in climate breakdown. Details about the OTPP’s approach to climate change and investments on fossil fuels can be found here.

  • OTPP manages over $200 billion in teachers’ retirement savings, but it appears that only a small portion of this is invested in climate solutions like renewable energy and clean technology.

  • OTPP has not disclosed how much of teachers’ pension money is invested in fossil fuel companies, but estimates range from $8 billion to $25 billion.

  • Financial disclosures show that companies with shares owned by OTPP include:

    • Oil and gas producers like ExxonMobil, Chevron and Occidental Petroleum

    • Coal companies like Duke Energy, Dominion and Southern Company

    • Pipeline companies like Kinder Morgan, TC Energy and Scotia Gas Network

    • Oilsands companies like Suncor, Canadian Natural Resources, Imperial Oil and Teck Resources

    • OTPP wholly owns HRG Royalty, a company that holds oil, gas and mineral land and royalty rights across large parts of Western Canada, which OTPP bought from Chevron in 2015 for $3.3 billion.

  • OTPP says that owning shares in these fossil fuel companies empowers teachers to encourage these companies to improve environmental performance and reduce carbon pollution. But OTPP has not explained or demonstrated how its engagement efforts have actually led to meaningful climate action by these companies.  

  • OTPP uses a number of tools to assess the risks of climate change to teachers’ retirement savings, but is not transparent about how these tools affect its investment strategy.

  • OTPP excludes investments in tobacco companies, guns and arms manufacturers, and weapons producers from its portfolio. But OTPP has not yet disclosed exclusions on investments in fossil fuels.

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For more information or interview requests, please contact:

Adam Scott, Director, Shift Action for Pension Wealth and Planet Health, 416-347-3858, adamscott@shiftaction.ca

Shift Action for Pension Wealth and Planet Health is an initiative supported by charitable foundations that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.