Recent weeks and months have seen a rise in activity around pension fund divestment from carbon assets.
This month, the City of New York announced a plan to divest from fossil fuels within its five pension funds. In doing so, it joins pension plans in Washington, Berlin and Cape Town, as well as funds at the University of Oxford in Britain, Stanford University in California and Trinity College in Ireland in seeking to divest from carbon assets.
The state of New York has also pledged to divest from fossil fuel investments by its public pension plan. “We call an end to any investment in fossil fuel-related activities in the pension fund and we’re going to work with comptroller Tom DiNapoli because the future of the environment, the future of the economy and the future of our children is all in clean technology and we should put our money where our mouth is,” said New York Gov. Andrew Cuomo in his state of the state address on Jan. 3.
Read: Plan members protest Ontario Teachers’ fossil fuel investments
In Canada, one of the country’s largest public pensions funds is taking action on the carbon issue. In October 2017, the Caisse de dépôt et placement du Québec published its plan to address its carbon footprint in its investments. To that end, the Caisse’s short-term goal is to increase its investments in low-carbon energy by $8 billion and reduce the carbon footprint of every dollar it spends by 25 per cent over the medium term.
One issue that often arises in discussions about considerations of environmental matters in investment decisions is that Canada’s pension plans must put their fiduciary responsibilities for plan members before anything else. But in a recent report by the United Nations about the issue, interviewees from Canada’s pension sector noted that while monetary gain must come first, “so long as there is a clear focus on the financial implications of [environmental] issues,” they could justifiably factor them into investment decisions.
The UN report also noted that the Canadian economy’s heavy dependence on the oil and gas industries influences investors’ views on climate change. But while any movement towards greater consideration of climate change issues could be a concern for a province like Alberta, Mike McKinnon, a spokesperson for the Ministry of Energy, noted that fighting climate change is the energy industry’s problem, too.
Read: Fossil fuel-free fund challenges perceptions about divestment with 16% annualized return
“We’re proud to be world leaders in taking action to fight climate change while proving that it goes hand in hand with a strong energy economy,” said McKinnon in an email to Benefits Canada. The Alberta government’s climate change plans will mean a more diversified resource sector, he added. “This is positioning Alberta as the sustainable, responsible producer Canada and the world needs for the 21st century, while protecting Alberta’s economy from the business risks of climate change that threaten our most important industry.”
With some large public institutional investors showing increased activity around divestment from fossil fuels, will other pension funds follow suit this year or are they likely to deal with the issue in other ways? Have your say in Benefits Canada‘s latest online poll.
Last week’s poll asked whether it’s time for the the federal government to act on implementing a seniors price index that would provide more generous inflation adjustments for old-age security and guaranteed income supplement benefits. The vast majority (84 per cent) of respondents said
Read: Should the feds introduce a seniors price index for OAS, GIS?
