CPPIB Watch: A quarterly update on CPPIB-owned fossil fuel companies (September 2026)

The Canada Pension Plan Investment Board (CPPIB) is making a risky bet on gas to power the build-out of data centres for artificial intelligence (AI). 

By supplying the insatiable demand for energy associated with AI via gas-powered data centres, CPPIB is contradicting its own Climate Change Principles, crowding-out renewable energy, and locking-in carbon pollution that increases climate risks to the Canada Pension Plan (CPP) and its members.

CPPIB is the pension manager for the $864-billion CPP, mandated to invest in the best interests of 22 million Canadians. A CPPIB executive recently told Canadians that climate change is “the single biggest source of risk for the fund.” The pension manager says that it aims to “invest for a whole economy transition required by climate change.”

But CPPIB’s strategy for data centres contradicts its stated climate approach. CPPIB executives have repeatedly said that they plan to capitalize on AI’s skyrocketing demand for energy by investing in data centres and power transmission and generation – regardless of the source of power. CPPIB’s CEO himself has repeatedly said the fund would continue investing in oil and gas.

CPPIB’s commitment to continued fossil fuel investment ignores the blaring warnings from scientists that fossil fuels must be rapidly phased out to avoid dangerous climate tipping points. Gas-powered AI is part of the problem: a recent peer-reviewed study concludes that without climate-aligned policy steering, the AI buildout will increase the carbon intensity of the global economy and reinforce fossil fuel incumbency. 

CPPIB’s AI investment strategy also ignores warnings from American gas investors that project cancellations, construction challenges, regulatory delays and political opposition are constraining the build-out of data centres and gas demand growth

CPPIB’s strategy to invest in gas-powered AI infrastructure

CPPIB’s AI investment strategy is playing out in a series of recent moves to develop data centres and power them with gas.

In 2025, CPPIB invested $416 million to help finance a massive data centre complex for Elon Musk’s xAI (now SpaceX) in Tennessee and Mississippi. The company is facing intense backlash and accusations of environmental racism for installing dozens of unpermitted gas turbines to power its data centres. The National Association for the Advancement of Colored Peoples and the Southern Environmental Law Centre is suing xAI over the harmful gas-powered infrastructure, with xAI saying that if the lawsuit is successful, shutting down the gas turbines would “inflict catastrophic harms” on the company’s AI services.

Last fall, CPPIB announced a $1.4 billion investment to take a minority stake in AlphaGen, a major American fossil fuel power producer that says it’s “well positioned to benefit from AI and electrification-related power demand growth.”

In Wyoming, CPPIB-owned Tallgrass Energy is partnering with Big Tech companies to build a giant data centre campus to be powered by new gas plants and supplied by Tallgrass’ pipeline network. Tallgrass is also hoping to use its pipeline network to supply gas to Kevin O’Leary’s controversial proposed data centre in drought-stricken Utah.

Another CPPIB-backed company, VoltaGrid, is planning to deploy more than 7.5 gigawatts of gas-fired turbines to power data centres, falsely claiming that they are “environmentally responsible.” The company’s gas-powered data centres are facing political opposition, regulatory delays and court challenges in Georgia, Texas and New Brunswick, while VoltaGrid’s data centre development plans in Washington were recently cancelled due to public opposition.

CPPIB’s investment strategy is also playing out in Alberta, where the provincial government is making it virtually impossible to power data centres with renewable energy. In February, CPPIB signed a Memorandum of Understanding with TransAlta and Brookfield to advance a data centre that would be powered by gas.

Fossil-fuel-entangled CPPIB directors have competing obligations

Don’t expect CPPIB’s board to rein in CPPIB’s strategy to finance gas-powered data centres. CPPIB director Barry Perry simultaneously serves as the chair of Capital Power, which is executing a strategy to weaken Canada’s clean electricity regulation so it can power data centres with its gas plants. Another CPPIB director, Elizabeth Cannon, serves on the board of Canadian Natural Resources Ltd., Canada’s second largest gas producer.

These dual roles can lead to competing obligations between maximizing returns for gas company shareholders and acting in the best long-term interests of CPP members, creating potential conflicts of interest and raising questions about whether CPPIB directors are independently assessing climate-related financial risks.     

CPPIB needs a responsible AI policy

There are also examples of CPPIB investing in AI infrastructure and companies that have climate targets. This summer, CPPIB formed a $1-billion strategic partnership with CtrlS Datacentres Ltd., an Indian data centre operator committed to using 100% renewable energy by 2030 and achieving net-zero by 2040. Last week, CPPIB invested $1.8 billion to take a 51% stake in atNorth, boasting about the company’s “100% renewable energy integration” and target to “drive decarbonisation of global operations by 2040.”

CPPIB’s Climate Change Principles seem to matter for some data centre investments, and not for others. A CPPIB executive said in May that the pension manager conducts due diligence to ensure data centre developers have “a responsible plan for power supply and water rights” and that its AI investment decisions "are based on the practices established” in the World Economic Forum (WEF)’s Responsible AI Playbook for Investors. 

Gas-powered CPPIB data centre investments contradict this statement, and the WEF playbook itself is silent on the AI industry’s approach to energy and water use, and barely mentions climate change. Similarly, the federal government’s new “Responsible Data Centre Development Principles” suggest that “priority should be given” to “sustainable, low-impact technologies” and “low-emissions energy sources” without describing what that means.

The AI boom will have dramatic social, environmental and economic consequences for Canadians. CPPIB must disclose a responsible AI policy that ensures its investments in AI technology, infrastructure and companies are aligned with the long-term interests of CPP members. 

CPPIB’s bet on gas-powered data centres undermines our retirement security

Considering its inadequate approach to managing climate risks, CPPIB’s AI investment strategy is troubling. The pension manager’s investment decisions could either accelerate the build-out of renewable energy – or prolong the use of gas, lock-in carbon pollution for decades, and contribute to dangerous global heating that harms ecosystems and communities, stunts economic growth and destabilizes the financial system. 

CPPIB has no disclosed climate action plan, no net-zero emissions commitment, no targets to reduce portfolio emissions, no goals to invest more in profitable climate solutions, and no exclusions on financing the primary drivers of climate change – oil, gas and coal. The investment manager is facing a lawsuit brought by young Canadians, who allege that CPPIB is failing to adequately manage climate risks while investing billions in the expansion of fossil fuels. 

Millions of Canadians are already feeling the impacts of climate-fueled wildfires, heatwaves, floods and storms. Yet CPPIB is using our CPP savings to make the climate crisis even worse. With a mandate to protect Canadians’ retirement security decades into the future, CPPIB’s gamble to power the AI boom with gas is reckless, imprudent and irresponsible.