A Canadian sustainable finance nongovernmental organization and pension funds watchdog has criticized Canada Pension Plan Investment Board, Toronto, for planning to invest in another privately held fossil fuel firm.
The pension fund said in an Aug. 13 news release that it will invest about C$1.2 billion ($874 million) in Tallgrass Energy, a Denver-based energy infrastructure company that operates more than 10,000 miles of pipeline assets across 14 states in the U.S.
The C$632.3 billion CPPIB noted in the news release, however, that Tallgrass is “currently engaged in several initiatives aligned with the global transition to a lower-carbon future,” including the development of carbon dioxide, hydrogen, renewable fuels and decarbonized power assets.
However, in its own statement Aug. 13, Toronto-based pension fund watchdog Shift Action for Pension Wealth and Planet Health, described the planned deal as “yet another risky bet on climate failure.”
CPPIB’s investment in Tallgrass, Shift Action warned, “further entrenches” the giant pension fund’s “exposure to the continued operation and expansion of fossil fuel infrastructure” and also added that this presents a “high-risk gamble that the world will continue its dependence on oil and gas.”
Achieving net-zero emissions by 2050 and averting the worst impacts of climate change, Shift Action indicated, “necessitates a rapid phaseout of oil and gas production and early retirement of fossil fuel assets.”
Noting that CPPIB has already made a commitment to achieving net-zero emissions by 2050, Shift Action cited that Tallgrass has no net-zero targets and no plan to phase out its pipeline assets in line with global climate goals.
“Even as Canadians face another summer of devastating heat waves, wildfires and floods, CPPIB continues to risk our national pension fund on the fossil fuel infrastructure that’s causing these unnatural disasters,” said Patrick DeRochie, senior manager at Shift Action, in the release. “As leading institutional investors in Canada and around the world exit this dead-end sector, CPPIB seems hell-bent on further exposing Canadians to the risks of fossil fuels while pretending that it’s somehow about ‘decarbonization.’"
Shift Action further said the Tallgrass stake will mark the fifth private transaction in the fossil fuel sector that CPPIB has undertaken in 2024 alone, following in the heels of a $300 million commitment to fracking expansion in Ohio, through Encino Energy. Encino is 98% owned by CPPIB; a $1 billion investment in Wolf Midstream, which is 100% owned by CPPIB, to increase the natural gas liquids capacity of Wolf’s NGL North System; a merger between Aera Energy, was 49% owned by CPPIB, and California Resources Corp.; and a proposed $6.2 billion acquisition by CPPIB and Global Infrastructure Partners of Allete, a major U.S. electric utility player that includes renewable energy and electricity distribution assets across the U.S. Midwest, but also a fleet of coal- and gas-fired power plants and a lignite coal mine.
DeRochie said in a statement to Pensions & Investments that Tallgrass is “a fossil fuel pipeline company whose core business is dependent on the continued extraction, transportation and combustion of oil and gas.” The only pathway to decarbonization in line with global climate goals for a pipeline company is the early retirement of assets, he added.
CPPIB is “risking Canadian pension savings on dangerous distractions that serve to greenwash the operations of oil and gas pipelines instead of investing in proven, cost-effective, deployable, scalable climate solutions,” DeRochie added.
On Feb. 10, 2022, when CPPIB committed to net zero by 2050, the pension fund said it would accomplish this goal by “continuing to invest and exert our influence in the whole economy transition as active investors; achieving carbon neutrality for our internal operations by end of fiscal 2023; increasing investment in green and transition assets to at least $130 billion by 2030; and building on our decarbonization investment approach.”
A spokesperson for CPPIB declined to comment.
