Despite Canada's economic reliance on its oil and gas industry, finance experts and sustainability advocates are urging large public investors like the C$434.4 billion ($326.3 billion) Canada Pension Plan Investment Board to implement long-term investment strategies that better align with the federal government's pledge to achieve net-zero carbon emissions by 2050.
Multiple sources agree that Toronto-based CPPIB, Canada's largest pension fund, should support the country's transition to a low-carbon economy, enhance its disclosure of fossil-fuel investments and set a long-term plan for winding down such assets.
Adam Scott, director of Shift Action for Pension Wealth and Planet Health, a Toronto-based non-profit that aims to bring beneficiaries and their pension funds together to engage on climate change issues, said the organization gives CPPIB "credit for ramping up the scale of their investments into clean energy" even though the pension fund's C$11.6 billion fossil-fuel portfolio is still more than twice as large as its renewable energy portfolio.
Additionally, from his perspective, the pension fund is "not showing any signs of winding down their fossil-fuel portfolio," Mr. Scott added.
"They don't have any measurable pathway or plan about climate change, like goals to align the emissions reduction in the portfolio" with existing sustainability initiatives like the Paris Agreement, which targets net-zero emissions by 2050, Mr. Scott said.
CPPIB's investments in fossil fuels accounted for 2.8%, or C$11.6 billion, of its total portfolio as of March 31, according to data the pension fund provided. The plan's exposure to fossil fuels is defined as investments in oil, gas and coal producers, oil-field services providers and pipelines, and includes debt, equity, and public and private holdings.
The 2.8% exposure to fossil fuels in CPPIB's total portfolio is down from 4.6%, or C$14.5 billion, as of March 31, 2017.
In comparison, the pension fund's equity and debt exposure to renewable energy companies was C$6.6 billion, or 1.5% of its total assets as of June 30, up from C$67 million three years earlier.