Hits and misses in UPP’s climate stewardship update

Oct 16

Ontario’s University Pension Plan (UPP) has been a leader on climate engagement – but its new stewardship plan is too light on specifics to know if UPP is stepping up or backing down

UPP’s new Climate Stewardship Plan – an overview

UPP, which manages $13.5 billion in pension assets for 46,000 members in the Ontario university sector, recently posted its updated Climate Stewardship Plan (2026–2029). The plan sees the pension fund making an important directional shift towards advocating for a policy environment that encourages climate alignment. Highlights include a commitment to advocate for “effective, economically sound and science-based carbon pricing and methane regulation in Canada” and to “promote industrial policies that strengthen climate resilience and create investment opportunities in areas such as critical minerals, clean electricity, and nature-based solutions”.

However, the plan’s overall lack of specificity, especially compared to UPP’s original Climate Stewardship Plan (2023–2025), makes it difficult to determine what climate stewardship activities UPP will actually undertake. UPP has a track record of climate-aligned engagement and has transparently reported to members on its climate action plan and climate stewardship, so the fund has earned some benefit of the doubt. It remains committed to achieve net-zero portfolio emissions by 2040, and is a member of the Net-Zero Asset Owner Alliance. Still, with this updated plan, stakeholders are being asked to an extent to trust that UPP will follow through on vague and directional commitments.

UPP has ranked among the top three in each of Shift’s four annual Canadian pension climate report cards, and has been a top scorer in the Climate engagement category. The fund had anchored its engagement in net-zero and Paris-aligned expectations, identified priority engagement sectors and a specific number of companies to engage, and set out actions and timelines to strengthen climate-related proxy voting. While its approach had not been perfect (see Shift’s analysis of UPP’s Climate Stewardship Plan (2023–2025) here and Climate Transition Investment Framework here), it was groundbreaking among Canadian pension funds on a number of counts, including the specificity of its stewardship activities and its commitment to Paris-aligned engagement outcomes.

But UPP’s updated plan omits direct reference to net-zero or Paris-aligned outcomes, provides little information on UPP’s intended engagement with “high-emitting sectors” or “priority companies”, and gives no detail on how UPP will engage on carbon pricing, methane regulation, and industrial policy. In Shift’s assessment, UPP’s updated climate stewardship plan does not necessarily represent a backward step, but fails to contain enough detail to reconfirm UPP’s climate leadership.

Over 2025 and 2026, Shift has noted examples of pension funds making misguided moves to water down or omit details of their climate strategies and commitments (see p. 11 in Shift’s most recent report card). But the best way for fund managers to assure their members of their ability to meet their fiduciary obligation to manage existential climate-related financial risk is to be as clear and precise as possible. We urge UPP to layer in details and specificity as it implements its 2026-2029 climate stewardship plan.

UPP’s new Climate Stewardship Plan – the details

The good

UPP squarely places climate-related stewardship within the bounds of fulfilling its fiduciary duty to members (p. 1);
UPP continues to reference its 2022 climate action plan, which recapped consensus climate science and the objectives of the Paris Agreement, acknowledged double materiality – that the climate affects investments, and investments affect the climate – and committed the fund to reach net-zero portfolio emissions by 2040;
UPP appears to be recognizing the limits of company-focused climate engagement and shifting its focus to the regulatory and policy environment in which those companies act. Science-aligned policy engagement is a critical avenue for pension funds to use their influence, and in line with what Shift has called for in our annual pension climate report card;
UPP specifically identifies that it will advocate for “effective, economically sound and science-based carbon pricing and methane regulation in Canada” (p.3).

The vague

UPP will continue to engage with external managers on climate to “integrate climate considerations into their proxy voting activities, and support climate-aligned public policy.”
UPP will engage unidentified “priority companies” on factors including credible transition strategies and climate-aligned capital allocation (p.5). It’s not clear what expectations UPP is setting, over what time horizon, or what escalatory steps UPP will use to enforce its expectations. Based on past disclosure, UPP is likely to use escalatory proxy voting, votes against directors, and follow-up communication to companies.
UPP will focus on financial reporting and the audit function as areas for greater integration of climate considerations, but the wording is vague, e.g. “Work with audit and accounting firms, company management, and boards to strengthen the integration of climate considerations into financial reporting and audit practices” (p.5).
UPP will “selectively engage with high-emitting sectors” (p.5). No expectations, timelines, or escalation measures are provided. By using the catch-all “high-emitting sectors”, UPP fails to distinguish those companies that have a net-zero transition pathway from those that do not, i.e. fossil fuel companies, and it is unclear if UPP will continue to engage with companies that can’t transition.
UPP will “promote industrial policies that strengthen climate resilience and create investment opportunities in areas such as critical minerals, clean electricity, and nature-based solutions.” (p.3). While this sounds like useful advocacy for the energy transition, it is unclear what it means in practice. If UPP is committed to “promoting” such policies, one would expect the fund to name the policies it intends to promote.

The misses

Abandons the specific and measurable commitments seen in the 2023–2025 plan (e.g. engage with 27 companies across three sectors with Paris-aligned expectations) in favour of directional commitments to “advocate”, “support”, “encourage” or “promote” goals, many of which are vague, i.e. “integrate climate considerations”, “industrial policies that strengthen climate resilience”.
No direct reference to net-zero by 2050 or Paris-aligned outcomes.
No timelines for proposed activities (other than the broad 2026–2029 period that the plan covers) or escalation measures. This contrasts with the 2023–2025 plan, which, for example, laid out year-over-year escalatory steps on proxy voting and promised to “refine” UPP’s position in Canadian oil companies after reviewing information.

Devilish details

UPP additionally commits to (a) advocate for adoption of climate-related disclosure requirements aligned with international reporting standards, and (b) support the development and implementation of Canada’s green and transition taxonomy (p.3).

Shift is in agreement that required climate-related disclosures and a credible green and transition taxonomy will enable the financial sector to avoid greenwashing and better direct capital toward the energy transition. However, the devil is in the details, particularly in relation to the oil and gas sector.

Shift was concerned to note that in a letter from Canadian financial institutions to the Minister of Finance, UPP joined a call for phased (i.e. delayed) implementation of some elements of disclosure, including scenario analysis and scope 3 emissions. Scenario analysis and scope 3 emissions are particularly salient gaps for the fossil fuel sector in Canada.

Shift (among others) has also raised concerns about the proposed “abatement” category in the green and transition taxonomy and its potential to drive capital toward the fossil fuel industry and carbon lock in (see The Taxonomy Fossil Fuel Conflict: Why Oil and Gas Inclusion Would be Counterproductive).

Still room to get it right

While UPP’s climate stewardship plan update didn’t quite hit the mark, Shift is optimistic that the fund will continue engaging and advocating in line with its track record to date. UPP has led and/or made climate-aligned policy submissions; voted against company directors on climate-related rationale; run webinars to explain its climate approach to external managers; commissioned an alignment report to understand how external managers were voting on priority issues; and played a leadership role in collaborations such as Climate Engagement Canada and the sustainable finance taxonomy process (for details, see Shift’s 2025 Canadian Pension Climate Report Card - UPP analysis (pdf), p.12). If UPP approaches its policy advocacy aims with the same energy and conviction it showed in implementing its 2023–2025 stewardship plan, then it may well keep its reputation as a leader on climate engagement. But given the plan as it stands, there’s no guarantee of what UPP will be doing over the next few years. UPP members, which include a number of climate scientists and policy experts, will be watching.

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