Climate Pension Quarterly - Issue #17
Pension funds must draw the line on fossil fuel expansion
Prime Minister Mark Carney, who warned 10 years ago that climate change is “the tragedy of the horizon”, now leads a government actively courting more fossil fuel expansion. This, despite a decade of warnings about the perils of that route.
Most recently:
the Science Based Targets initiative’s net-zero standard for financial institutions called for an immediate end of fossil fuel project finance,
the world’s highest court ruled that countries can be held liable for billions in climate damages, and
new research drew a causal connection between heat waves and major fossil fuel companies.
It's deeply frustrating to see our prime minister doing exactly what he warned against in 2015 – “imposing a cost on future generations that the current generation has no direct incentive to fix.”
Government representatives are now meeting with institutional investors, including pension funds, to gauge their willingness to commit capital to ‘major projects’ on their list. But as pension funds face this latest wave of climate-denying political pressure, their long-term obligations to their members have not changed.
Canadians currently in their 20s or 30s won’t reach 65, the standard age of retirement, until at least 2050. The already intensifying climate impacts we’re experiencing today serve as a reminder of the growing systemic risks that could make it impossible for pension funds to fulfill their mandates to ensure full pensions are available for these workers when they retire – a point we took pains to make clear in our recent warning that Canada's Chief Actuary is severely underestimating climate risks to public pension plans. Pension funds simply can’t agree to finance new fossil fuel projects without breaching their legal duties to their younger members.
Pension funds can’t justify allocating capital to LNG projects such as LNG Canada’s Phase 2, or any future oil or gas projects that might find their way into government priority lists.
A global LNG supply glut looms as fossil fuel demand is flattening and expected to structurally decline. The energy transition continues to accelerate, creating a strong risk of asset stranding. And because fossil gas is a leading cause of the climate crisis, such investments contribute significantly to increasing global emissions of C02 and methane.
False claims that LNG projects could somehow lower emissions in other countries don’t hold water, as gas competes with cleaner and cheaper renewable energy, not coal. Pushing countries to switch from one fossil fuel (coal) to another (gas) serves only as a roadblock to the inevitable uptake of renewables.
Nor can any country achieve long-term energy security by becoming dependent on another high-cost imported fuel. This is why major economies such as the EU and China are investing to reduce energy imports.
The smart money is not on continuing to build the economy of the last century. Thankfully, a growing number of Canadian pension funds are beginning to understand this reality.
In the third quarter of 2025, we saw some Canadian pension funds make significant exits from fossil fuel assets, and Quebec’s public pension manager launched an ambitious new climate strategy. Troublingly, Canada’s national pension manager, the Canada Pension Plan Investment Board (CPPIB), continued to prop up fossil fuels both through its investments and its publications, and one pension fund was rumoured to be in the bidding for a major UK LNG import terminal.
You can see links to the full stories, including our feature pieces on CPPIB, in this compact September edition of the Climate Pension Quarterly.
Finally, in case you missed it, check out our August op-ed in The Hill Times (paywalled). Shift’s Cheryl Randall and Laura McGrath argue that Canadians need climate experts – not fossil fuel interests – on the board of our national pension manager.
-Adam Scott, Executive Director, Shift