OMERS Reports Meeting 2025 Emissions Intensity Target; Stops Short of Raising Ambition
OMERS released its 2024 Annual Report on February 28, 2025. The fund reported encouraging progress toward its climate targets, although it has not signalled that it plans to increase its ambition after meeting these initial goals. For institutional investors with a long-term horizon, this is not the time to take their foot off the accelerator. The world is halfway through the critical decade for climate action. Achieving initial goals should bolster confidence that they can work faster to achieve the emissions reductions that are imperative to safeguard Canadians’ retirement futures.
This analysis reviews OMERS’ 2024 Annual Report using the categories in Shift’s annual Canadian Pension Climate Report Card. OMERS scored an overall C+ in the report, which evaluated information disclosed to December 31, 2024.
Paris-aligned target
OMERS continues to work toward its net-zero by 2050 commitment and interim targets. It has placed a limit on the use of carbon offsets/credits to achieve its interim targets. By classifying its investments according to its Climate Taxonomy (2024 Annual Report, p.104), OMERS has provided some transparency into its progress and into the challenges it still faces in establishing credible decarbonization strategies across its portfolio.
OMERS’ 2024 Annual Report does not provide any additional disclosure that would improve its report card score on this indicator. The fund has not yet included scope 3 financed emissions or absolute emissions reductions in its targets, nor has it joined an accountable Paris-aligned investor body such as the Net Zero Asset Owner Alliance or Paris Aligned Asset Owners. These gaps help explain why OMERS’ report card score has lagged behind those of the Ontario Teachers’ Pension Plan (OTPP), which incorporates material scope 3 emissions in some instances; the Caisse de dépôt et placement du Québec (CDPQ), a member of the Net Zero Asset Owner Alliance (NZAOA); and the University Pension Plan (UPP) and Investment Management Corporation of Ontario (IMCO), which both report scope 3 financed emissions and which are members of credible and accountable investor bodies — NZAOA and Paris Aligned Asset Owners (PAAO), respectively.
Interim targets
OMERS has reported emissions reductions on both an intensity and an absolute basis, meeting its 2030 emissions intensity reduction target more than five years ahead of schedule.
Emissions reduction
The fund had committed in September 2023 to reduce the emissions intensity of its portfolio by 50% by 2030 (below 2019 levels) and reported a 58% reduction in its 2024 Annual Report (p.23). OMERS attributes the reductions, “at least in part,” to the “strategic reallocation of capital from higher-emitting to lower-emitting assets and the reduction in emissions intensity across several carbon-intensive assets” (p.91).
OMERS is ahead of its 2030 commitment, and can raise its ambition by setting a new intensity reduction target, by setting absolute reduction targets and by including material scope 3 emissions in its targets. Dutch pension fund ABP, for example, has made absolute reduction commitments for scope 1, 2 and 3 emissions. OMERS could also distinguish between the impacts of asset allocation decisions and decarbonization efforts when it reports on emissions reductions. For example, Swedish fund AP2 has been reporting such information since 2019.
Additional climate-related targets
OMERS reported $23 billion in green investments, a year-over-year increase of $2 billion on its way to its target of $30 billion by 2030 (p.23).
OMERS provided no update on what proportion of its highest-emitting portfolio companies have net-zero commitments or credible net-zero transition plans (its target is 65% by 2030). The pension fund did provide some elaboration that it will assess the credibility of such plans using a methodology that integrates frameworks from, for example, the Transition Plan Taskforce and Institutional Investors Group on Climate Change (pp.23,105).
OMERS did not report any investments in its $3 billion transition sleeve to December 31, 2024. The transition sleeve was announced in its 2022 Annual Report as intended “for assets playing a key role in the global transition toward a lower-carbon economy.” OMERS reports being “actively engaged in evaluating opportunities that align with the established criteria” (2024 Annual Report, p.92)
The pension fund gives no indication that it intends to raise its ambition, and its newly introduced 2030 strategy includes no new climate targets. As OMERS has neither strengthened targets nor announced new ones, its report card score in this category is not yet likely to improve.
Communication of Climate Urgency
In a year when some financial institutions have backtracked on commitments, it’s encouraging to see OMERS continue to say that the fund recognizes “the urgent, global challenge that climate change poses, the risk and opportunities to our investments and the role we can play at OMERS” (p.91).
However, the fund is sending inconsistent messages about this urgency when it fails to include any new climate targets in its newly launched 2030 strategy (p.13) and when it writes about climate impacts without connecting the dots to climate change. As an example, the 2024 Annual Report includes what is essentially a discussion of the physical climate-related risks faced by OMERS-owned Jasper Park Lodge. While climate change is fuelling more intense and destructive fires, including the 2024 wildfire complex that forced over 25,000 people to evacuate and destroyed 1/3 of the structures in the town of Jasper, Alberta, OMERS does not mention the word “climate” in its accounts of the wildfires (pp.18, 89).
Climate Engagement
Shift’s report card looks for evidence that pension funds publicly state timebound, Paris-aligned expectations for portfolio companies and articulate an escalation process up to and including divestment for companies that fail to align with expectations. OMERS is partway, but not fully, there, and its expectations and follow-through are not yet consistent across its portfolio.
Portfolio companies
OMERS has set an expectation for some—but not all—of its companies to have credible net-zero transition plans by 2030. The 2024 Annual Report did not provide an update on how many have such plans.
Examples of engagement with portfolio companies are uneven, with some examples seeming more aligned with achieving net-zero than others. For example, putting real estate assets through a carbon emissions forecasting process seems an essential exercise to create decarbonization pathways. But it seems a stretch to label the addition of one hydrogen fuel cell truck to a huge North American tanker truck fleet as a “decarbonization initiative”, especially when the fleet transports fossil fuels across the continental United States (p.93).
Proxy voting guidelines
OMERS’ proxy voting guidelines remain weaker on climate than those of many of its peer funds. See Shift’s February 2025 report card analysis for further details.
External managers
While OMERS is “primarily a direct investor” (p.86), the pension fund appears to be moving toward more third party managed investments, particularly as it withdraws from direct private equity investments in Europe (p.76). This shift should trigger OMERS to review its processes for determining if external managers, investment partners and private equity funds are aligned to net-zero. UPP’s Climate Transition Investment Framework and its engagement with external managers provide an example.
Collaborative engagement
OMERS continues to engage collaboratively as a member of Climate Engagement Canada and Climate Action 100+. While climate engagement of many sectors is essential, it will not work for all industries. Investors must stop pretending that engaging with bad-faith actors actively calling for rollbacks of climate policy is an effective or credible stewardship approach. (See: As oil CEOs debase their own climate pledges, Bay Street must act.)
Policy engagement
OMERS executives have participated in groups that have undertaken initiatives relating to decarbonization and transition finance (pp.86-87,93), and the fund publicly supported Canadian Sustainability Standards Board (CSSB) standards. But if OMERS fully grasped the threat that runaway climate breakdown poses for its portfolio, then one would anticipate the fund would also publicly support effective climate policy, such as a domestic oil and gas emissions cap, interprovincial grid operability, and a zero-emissions electricity pathway.
Climate Integration
Shift’s report card includes an analysis of this category. OMERS’ 2024 Annual Report provided some additional disclosure, described below.
Board
OMERS reported that its board received in-house education on “OMERS climate and sustainability reporting” in 2024 (p.36).
Fossil-fuel entangled board member Diane A. Kazarian continues to sit on the board. Ms. Kazarian is concurrently a director at fossil fuel company Gibson Energy (oil pipelines, storage facilities and refining). The three Canadian pension funds that received the highest score in the Climate Integration category in Shift’s 2024 report card all had fossil free boards at the time of assessment.
Disclosure and transparency
OMERS reported broadening the scope of its financial disclosure policy to include sustainability-related disclosures and establishing a “Sustainability Reporting Forum” (p.83). The fund disclosed key transactions from 2024 and, as in previous years, included in its annual report a list of significant investments (those exceeding one per cent of total net investment assets).
OMERS increased transparency into the climate positioning of its investment portfolio by providing, for the first time, a breakdown of the portfolio according to its OMERS Climate Taxonomy (p.104). 65% of the portfolio is invested in green (14%), “enabling” (5%) and “low climate impact” (46%) assets.
29% of the portfolio is in “grey” assets. The climate taxonomy defines grey assets as “Investments whose activities have a direct material climate impact and where transition options are increasingly feasible,” such as fossil fuel based utilities and automobile manufacturers (OMERS Climate Taxonomy, p.4).
6% of the portfolio is in “hard to abate” assets, defined in the taxonomy as “investments whose business activities have a direct material climate impact and where transition options are not currently feasible.”
Climate scenario analysis
In its 2024 Annual Report, OMERS provided more information than previous years regarding its climate scenario analysis, while understandably noting the limitations of such an analysis. Caveats aside, OMERS reported that its analysis “indicates that OMERS allocation to renewables, nuclear power and electricity transmission and distribution (T&D) assets would increase the plan’s resilience in scenarios with high transition effort to net zero, due to assumed favorable policies impacting these sectors” (p.95).
Other
Conducted an “inaugural transition risk assessment” (p.95).
Had a service provider build a “heatmap” to examine private asset exposure to wildfire, flood, hurricane, heatwave, sea level rise and water stress (p.96).
Created internal learning modules on sustainable investing and climate change (p.22).
Fossil Fuel Exclusions
No update. OMERS’ limited coal exclusion does not go as far as the exclusions of some of its peers. OMERS has not explained how new investments in oil, gas or related infrastructure could align with a safe climate.
Fossil Fuel Investments
As of December 31, 2024, OMERS reported $4.1 billion in fossil fuels (3% of the $138.2 billion portfolio in “Energy”) (p.66).
From this disclosure, it appears that “Energy” as defined by Global Investment Industry Classification Standards (GICS) makes up half of the 6% of the portfolio in “hard to abate” assets; it is not clear what makes up the other half.
OMERS has not explained how these assets align with its net-zero commitment.