An annual report ranking the green performance of major Canadian pension funds has placed British Columbia’s biggest public investor at the bottom of the pack.
The report, released Wednesday by the climate finance watchdog group SHIFT, analyzed the approach to climate risk and investment decisions of 11 of Canada’s largest pension managers, which together hold $2.4 trillion in retirement savings.
Several Canadian pension fund managers saw their climate record improve in this year’s rankings.
Caisse de dépôt et placement du Québec (CDPQ), Investment Management Corporation of Ontario (IMCO), and Ontario’s University Pension Plan (UPP) took the top three spots after improving across a number of climate metrics.
But the charity's report also noted many large pension managers are falling behind on efforts to limit risk from climate change.
The British Columbia Investment Management Corporation (BCI) was Canada’s second-worst performing pension fund when it came to climate action. Its C- rating tied the Canada Pension Plan Investment Board (CPPIB), whose $675 billion in assets makes it the country’s largest pension manager.
Only the Alberta Investment Management Corporation (AIMCo) — cited for “blatant political interference” from the Alberta government and fossil fuel interests — fared poorer, scoring the ranking’s first failing grade.
B.C.'s largest pension fund manager holds $9B in fossil fuel investments, says report
As of March 2024, BCI managed roughly $240 billion in assets. The investment manager serves 740,000 participants in B.C.’s public pension plans. Those plans include:
- the Municipal Pension Plan;
- Public Service Pension Plan;
- Teachers’ Pension Plan;
- College Pension Plan;
- BC Railway Company Pension Plan;
- WorkSafeBC Pension Plan;
- BC Hydro Pension Plan;
- and the pension plans for staff and faculty at the University of Victoria and University of British Columbia.
BCI also manages insurance and benefit funds for over 2.5 million workers and retirees in the province, according to SHIFT.
The report card found BCI had made some gains over the past year on climate engagement. However, it still received a failing grade for not aligning itself with the Paris climate accords commitments to ween down emissions to net-zero by mid-century. BCI also got an F grade for its continued investment in an at least $9 billion in fossil fuels, up from $8.1 billion last year, according to SHIFT'S calculations.
By contrast, five Canadian funds have placed at least partial exclusions on some fossil fuel investments, with Quebec’s public pension manager, CDPQ, saying it would completely exit investments in coal mining, oil producers, and new oil pipelines, SHIFT says.
“Making matters worse, BCI has yet to announce any exclusion on new fossil fuel investments and seems determined to ignore the fact that many of its privately owned fossil fuel infrastructure assets lack a credible transition pathway,” the report said.
BCI says it's looking to shift away from fossil fuels, influence companies as investor
As of September 2024, some of BCI's biggest fossil fuel investment's were in Canadian Natural Resources Ltd. ($351 million), Enbridge Inc. ($263 million), and ExxonMobile Corp. ($118 million). Other known fossil fuel assets include a 26 per cent stake in Czech Gas Networks; a 27 per cent stake in National Gas; and undisclosed stakes in Corex Resources and Connaught Oil and Gas, among others.
In its 2024 corporate annual report, BCI acknowledged that “over the long term, an orderly transition to a low-carbon economy that is aligned with a net-zero (1.5 C) scenario will ultimately benefit our client’s portfolios.” And in the short term, the pension manager said it will try to advocate to “increase the pace of action toward the global goal of net zero by 2050.”
The BCI annual report also says it will continue to use its influence as a large institutional investor “to help avoid the negative long-term economic outcomes that may result from climate change, which is crucial for meeting our long-term return objectives.”
But according to SHIFT, the statements come as “BCI has not taken the basic step of excluding new investment in fossil fuels.”
That has left the pension manager “trailing far behind several of its peers.”
Canadian funds especially vulnerable
Meanwhile, Canada's national pension fund, CPPIB, had its score fall as a result of a number of factors, including its continued refusal to set interim emissions reduction targets, persistent greenwashing from executives, and its continued financing of high-risk fossil fuel projects, the report said.
The SHIFT report also cited recent research from the Dutch-headquartered risk management company Ortec Finance that found CPPIB's dire projections still underestimate the impact of climate change on the country’s pension funds.
The November 2024 study found Canadian pension funds were especially vulnerable to stranded assets should industry move to quickly sell off carbon-intensive projects.
Ortec’s report lays out a scenario where a quickly warming planet is on track to hit 3.7 degrees Celsius of warming beyond pre-industrial levels by 2100.
Under that level of warming, Canadian pension funds could see their investment returns decline by 40 per cent by the late 2030s — “largely as a result of severe physical climate impacts,” says SHIFT.
Senior SHIFT manager Laura McGrath said in a statement that pension fund managers have a duty to act as “bulwark against climate backsliding.”
She said it's up to pension funds to be “the adults in the room” if they're going to protect their members’ retirement security in a warming world.
