Pension wealth for planet health

A long time ago, in my twenties, I made a cross-country bicycling trip. I viscerally remember the days I spent cycling the Icefields Parkway between Banff and Jasper, pushing up long hills before flying down them, amazed at the beauty around me. A fellow cyclist near Lake Louise taught me to stop to look both backwards and forwards. “Sometimes the view behind you is even more beautiful,” he said.

Now, just a few weeks after a third of the town of Jasper’s buildings burned to the ground in a wildfire, surely I’m not the only one wondering if the view behind us might forevermore seem more beautiful than the world ahead.

I think about that potential world ahead a lot in my work at Shift: Action for Pension Wealth and Planet Health, where we help pension plan members engage with their pension managers on climate issues. Our public pension funds, including the Canada Pension Plan, are the institutions we’re relying on to look out for our future. It’s worth asking how those funds are investing our retirement savings during an era of unnatural disasters. 

Pension funds aim to generate income by investing in companies, real estate and other assets. But these investments are starting to suffer losses just as the rest of us are. 

The Fairmont Jasper Park Lodge, for example, is owned by the Ontario Municipal Employees Retirement System (OMERS). The Lodge holds a special place in the hearts of people around the world, who are relieved to hear that while damage is still being assessed, “many of the resort's most historically significant structures have been spared.” For OMERS pensioners, there’s another element to this relief: thankfully, they didn’t see their retirement savings go entirely up in smoke.

But pensions stand to lose if the climate crisis keeps getting worse. It’s not just OMERS and Jasper: most of Canada’s big pensions are trying to understand and protect their assets from similar climate risks. B.C.’s public pension investment manager, British Columbia Investment Management Corporation (BCI), is noting the risks the climate crisis poses to its real estate assets, reporting that since 2021 it has sold $1.2 billion of properties facing physical climate risk. 

BCI, its Alberta counterpart the Alberta Investment Management Corporation (AIMCo), and federal public service pension manager PSP Investments are joint owners of a forestry company that lost 100 hectares of forest to a wildfire last year. And BCI, OMERS, AIMCo and the Ontario Teachers’ Pension Plan (OTPP) are seeing companies in their infrastructure portfolios adapt to a new climate reality: a Washington State utility co-owned by these pension funds is warning customers it may shut off power to certain high-risk areas to avoid sparking wildfires.

It’s not a leap to say that our pension funds are going to find their mandates increasingly difficult — and eventually impossible — to fulfill in a world of climate breakdown. And that’s why they should be the first major Canadian financial institutions to put capital toward climate solutions and to stop investing new money into the primary cause of the climate crisis: fossil fuels. 

As long as we keep burning the coal, oil and gas that are fueling these unnatural disasters, we’re going to keep experiencing heartbreak and loss. The extreme heat, drought, intense wildfires, flooding and hurricanes that we’re experiencing are destroying people’s homes, wreaking havoc on their livelihoods and hurting us mentally and emotionally. 

Lytton burned to the ground. Hundreds died in a heat dome in B.C. Hurricane Fiona strewed wreckage across Atlantic Canada. In the case of Jasper, people around the world are feeling grief for the community and also feeling the loss of great beauty, a literal burn scar across awe-inspiring vistas.

The good news is that we can stop burning coal, oil and gas. We have better and cleaner ways to generate electricity, heat our homes, manufacture materials and consumer products and move ourselves and goods where we need to go.

But the pathway to that brighter future means we need to refuse to put new money into the fossil fuel industry. We need the people who manage some of the biggest purse strings in the country to say “enough is enough” and to stop pouring fuel on the fire. 

Our public pension funds could lead the way.

Every pension fund should have a public screen against new investment in any company that is exploring for new coal, oil and gas reserves, expanding fossil fuel production or lobbying against climate policy. Pension funds that are already the owners of fossil fuel companies must make a difficult but necessary decision: either find a buyer to take these potential stranded assets off their balance books, or institute fully costed plans to rapidly phase out production and retire assets early. 

Unfortunately, for all the talk of “financing reduced emissions,” responsible stewardship and investor influence, there are no examples of our pension funds presenting credible plans for fully phasing out fossil fuel production from their own assets. And none of Canada’s big public pensions has yet made a commitment to end new investment across all of coal, oil, gas and related infrastructure, although a number of funds have instituted some investment exclusions.

In the wake of a wildfire in Jasper, or a heat dome in B.C., or a hurricane in Atlantic Canada, it’s all too easy to feel that the days to come will keep getting worse. Will our pension funds be the first to say they’ll stop fuelling this crisis, and give us some hope that the days to come will be better?

Laura McGrath is the pension engagement manager at Shift: Action for Pension Wealth and Planet Health, a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.