Statement: Canada’s Chief Actuary continues to severely underestimate climate risks to the CPP
Toronto, ON | Traditional territories of the Wendat, Anishnaabeg, Haudenosaunee, Chippewas, and Mississaugas of the Credit First Nation
Canada’s Office of the Chief Actuary (OCA) has again failed to consider the increasing potential for systemic climate-related financial risks in its “baseline” assessment of the sustainability of the CPP in its 32nd Actuarial Report on the Canada Pension Plan (CPP), published on Monday.
The harsh reality is that the future health of programs like the CPP is dependent on a stable climate. A precautionary warning from actuaries is needed to make this clear for decision-makers.
According to the OCA’s Actuarial Report on the CPP, our national retirement fund “remains sustainable for generations to come.” But the report does not “incorporate the potential impacts from climate change explicitly in the best-estimate assumptions,” failing to account for climate-related financial risks that are material, chronic, severe, escalating and systemic in nature.
The OCA is essentially letting Canadians believe that their retirement security would be minimally impacted if the world fails to avert dangerous global warming. This is irresponsible, and demonstrates how Canada’s financial sector continues to discount the potential costs and impacts of the climate crisis.
The OCA’s assessments abdicate its core responsibility to evaluate the long-term financial health of social security programs and public pension and insurance plans under federal responsibility. While the OCA does explore some climate-related financial risks in the scenario analysis section of the Actuarial Report, these risks are not included in its “best estimate assumptions”. Any decision-maker attempting to use the top-line findings of the actuarial report to make decisions must do so under the false assumption that climate impacts will not occur.
High levels of warming are likely to have catastrophic consequences for the ecological systems that underpin economic growth and financial stability. According to the Intergovernmental Panel on Climate Change, 3°C of global warming could expose 3.25 billion people to lethal heat and humidity, decimate fresh water supplies and global food production, cause the extinction of plants and animals, lead to the collapse of marine ecosystems, and trigger catastrophic sea level rise. Such impacts create systemic risks for global economic growth and stability.
Given the potential for severe financial impacts if global temperatures are not stabilized as soon as possible, it’s hard to see how the OCA can make credible best-estimate assumptions for the CPP’s funded status while excluding climate impacts. Experts have warned that climate risks could determine whether or not pensions remain fully funded in the long-term. For example, research from Ortec Finance warns that Canadian pension funds could see investment returns fall by up to 50% by 2040 in severe climate scenarios, with potential declines approaching 60% by 2100.
The OCA seems stuck in a holding pattern, demonstrating an unwillingness to incorporate these systemic climate risks. In January of this year, the OCA published an analysis of how climate impacts could be incorporated into its assumptions, but concluded that the OCA is “not ready to explicitly incorporate the potential impacts of climate change on best-estimate investment assumptions into its next actuarial valuation cycle.”
The OCA’s equivocation on systemic climate risks continued in this week’s Actuarial Report on the CPP, with the OCA writing that “Climate change can affect the CPP through various channels given its potential impact on the future demographic, economic, and investment environments. However, there is a lot of uncertainty on the direction and magnitude of these potential impacts, and the risk is evolving constantly.” The report also notes that the OCA’s climate scenarios “are meant as tools to illustrate the risks” and “the results should be interpreted with caution”, before concluding that the OCA “is therefore not ready to incorporate the potential impacts from climate change explicitly in the best-estimate assumptions.”
The climate crisis is here, and it’s imposing measurable economic costs and dragging down global economic growth and investment returns through extreme weather events, supply chain disruptions, and reduced agricultural productivity. Canadians are already coping with the worsening impacts and increasing costs of climate change, but the OCA is downplaying the growing risks to a key pillar of our retirement security in a warming world.
Background Information
In August 2025, Shift, represented by environmental law charity Ecojustice, wrote to the OCA warning that it is severely underestimating the systemic financial risks of climate change in its valuation assessments. Shift and Ecojustice expressed concern that the OCA is failing to assess the cascading economic and financial impacts of a rapidly warming world. This could have severe consequences for the CPP, which now has $777.5 billion in assets under management on behalf of over 22 million Canadians.
Beyond including risks within “best-estimate” assessments, Shift and Ecojustice made clear in the letter that the OCA needs to improve the quality of its scenario analysis tools. We made several recommendations for the OCA to address the climate-related risks that appear to be missing from its work, including:
Include realistic climate tipping points and cascading impacts in risk assessments;
Reassess economic models to avoid underestimating worst-case climate scenarios;
Provide clearer qualitative descriptions of climate uncertainties and risks;
Give greater consideration to risks from fossil fuel investments;
Integrate climate impacts into baseline financial projections.
The OCA did not respond to Shift’s letter, and declined a subsequent request to discuss our concerns.
For further reading on the underestimation of climate risks by economists and actuaries, see:
U.K. Institute and Faculty of Actuaries and University of Exeter. The Emperor’s New Climate Scenarios: Limitations and assumptions of commonly used climate-change scenarios in financial services. (July 2023).
U.K. Institute and Faculty of Actuaries and University of Exeter. Climate Scorpion - the sting is in the tail: Introducing Planetary Solvency. (March 2024).
Ortec Finance. Climate risks facing the pension industry worldwide. (November 2024).
U.K. Institute and Faculty of Actuaries and University of Exeter. Planetary Solvency - finding our balance with nature: Global risk management for human prosperity. (January 2025).
Ortec Finance. Translating the cost of climate change for the global pension industry - 2025 update. (October 2025).
Contact information for interview requests:
Adam Scott, Executive Director | Shift Action for Pension Wealth & Planet Health
adamscott@shiftaction.ca
416-347-3858
Shift Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis. Shift is a project of MakeWay Canada.