Climate Pension Quarterly - Issue #18
Climate change is “threatening the foundation of financial markets”
As we approach the end of 2025, it may be difficult for many Canadians to grasp the sense of urgency and action required to address the climate crisis. The headlines we see in Canada tend to obscure the global momentum of the energy transition and the forces driving it. In order for pension funds to meet their obligations to their members, it is critical that executives and staff look beyond the day-to-day battles of Canadian petro-politics and see the larger reality.
On the losing side of the energy transition, incumbent industries have pulled out all the stops this year to delay the inevitable shift away from fossil fuels. The lobbying from oil and gas companies has been aggressive and focused, taking advantage of every opportunity to weaken or eliminate climate policies.
In Canada, the federal government led by Prime Minister Mark Carney has scrapped or paused nearly a dozen federal climate policies and signed a memorandum of understanding with Alberta that could facilitate new oil pipelines to the west coast. In the United States, the Trump administration has gone to extraordinary lengths to scrap every possible climate transition policy, program, law, or regulation – at the behest of fossil fuel companies. In Europe, Exxon and other oil companies have lobbied to undermine some of the world’s strongest sustainable finance rules.
Behind the scenes at COP30
I recently returned from attending COP30 in Belém, Brazil, where positive signs of global progress and cooperation in the hallways were overshadowed by political failures in the main negotiations. To some, these events contribute to a sense of apathy or fatalism, but I think the reality behind this difficult year is much more hopeful.
Recent coverage of United Nations COP meetings tends to focus on the inability of 195 countries to agree on phasing out fossil fuels. But the fact is that COP decisions are consensus-based, and it’s not unexpected that twenty or so petrostate governments continue to try to block fossil fuel phase-out plans. Thankfully, governments that are determined to act on climate do not need the agreement of all countries in order to move forward.
In Belém, more than eighty countries openly called for a roadmap for fossil fuel phaseout. Fast-growing coalitions of governments and subnationals, such as the fossil fuel phase-out treaty and the Beyond Oil and Gas Alliance, are rapidly gaining strength. Colombia and the Netherlands announced plans to co-host the First International Conference on the Just Transition Away from Fossil Fuels next year. And leadership of the accelerating global energy transition to renewable energy and electrification has now passed to some of the largest developing economies.
The best path to energy security, energy access, and economic competitiveness now lies with the so-called “electrotech revolution”– involving electric vehicles (of all types), heat pumps and induction cooking – powered by cheap, distributed, flexible and secure renewable energy and battery storage. The economics of this transition are unstoppable, and are already re-ordering global energy systems. In spite of the political noise, multilateral institutions continue to project an imminent end to fossil fuel demand growth.
With that global view, the aggressiveness of the fossil fuel industry in trying to block climate policy is not a sign of strength, but a desperate attempt to slow the inevitable. This is the behaviour of a cornered animal. That’s why so many fossil fuel lobbyists force their way into climate COP meetings and why the industry demands that governments scrap climate policies.
Four young Canadians hold our national pension manager to account
I saw other signs of progress and cooperation on the sidelines of COP30. In parallel legal conferences and side events, there was growing attention and interest in climate litigation. As of June 2025, more than 3,000 climate-related cases have been filed in more than 55 countries to ensure action and accountability from governments and institutions.
In particular, there was considerable interest in a case brought by four young Canadians against the Canada Pension Plan Investment Board (CPPIB), alleging the pension manager is breaching its legal duties by subjecting pension contributions to undue risk of loss from poorly-managed climate risk. Ecojustice, which is representing the applicants, says this is the first time a Canadian investor has been sued for mismanaging climate risks. Click here to watch a recording of Shift’s November 25 webinar about the case.
Net-Zero Asset Owner Alliance: “Climate change presents unprecedented system-level risks”
CPPIB’s apparent lack of concern about its climate risk exposure contrasts with the Net-Zero Asset Owner Alliance (NZAOA)’s recent statement that “Climate change presents unprecedented system-level risks that cannot be fully diversified away, threatening the foundation of financial markets and capitalism itself.” The NZAOA’s November 2025 report for asset owners emphasized that aligning portfolios with net-zero by 2050 “represents prudent risk and opportunity management.” The NZAOA counts Caisse de dépôt et placement du Québec (La Caisse) and Ontario’s University Pension Plan (UPP) as members.
Political noise and oil and gas industry talking points cannot change the fact that pension funds need a stable climate in order to protect their long-term returns and meet their obligations to beneficiaries. When policymakers and other investors waver on their climate commitments, it becomes even more important for pension funds to hold the line.
Click into the Quarterly to see a few of the stories we followed over the past three months.
Thank you,
-Adam Scott, Executive Director, Shift