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Canada's biggest public pensions still heavily invested in fossil fuels: study

An analysis by a group of B.C. researchers finds Canada's largest pension plan has increased investment in oil and gas companies by at least 7.7 per cent since the country signed the Paris Agreement in 2016.
Line 3 replacement project
Enbridge is among several oil and gas companies bankrolled by public Canadian pension funds. Construction on Enbridge's controversial Line 3 Replacement Project is finished in Canada, Wisconsin and North Dakota. With roughly 60 per cent of work completed in Minnesota, the line is on track to be in service by the end of 2021.

Canada’s biggest pension funds still hold billions of dollars in fossil fuel investments despite pledges to decarbonize their portfolios, according to new research. 

In a report published today (Aug. 12) as part of the Corporate Mapping Project, several B.C. researchers tracked the investments of Canada’s two largest pension funds, zeroing in on where they bet on companies that produce, process, store and ship fossil fuels.

The results show that the Canada Pension Plan (CPP) — the country’s largest — has increased investments in fossil fuels by 7.7 per cent since 2016, the same year the Canadian government signed the Paris Agreement to limit warming to 1.5 C below pre-industrial levels.

“One of the hugest problems we have right now is bringing forward the capital we need in the scale and scope to tackle 1.5 C temperature change,” says Jessica Dempsey, University of British Columbia researcher in the school's Department of Geography and the report’s lead author.

“These pension funds are invested in a devastating future.”

Dempsey and her colleagues tracked the investments of CPP and the Caisse de dépôt et placement du Québec (CDPQ) through Bloomberg Terminal, an investment tool that combines filings to the US Securities and Exchange Commission with other investor data.

Whereas CPP was found to have increased its investments in fossil fuel companies over the past five years, its counterpart in Quebec was found to have dropped the number of shares it holds in such companies by 14 per cent.

Still, found Dempsey and her research team, CDPQ’s overall oil and gas investments dwarfed those held by CPP by over 50 per cent.

The report comes only days after a major UN climate study found the planet was at risk of crossing the 1.5 C mark as early as the 2030s, roughly a decade earlier than previous projections.

The Intergovernmental Panel on Climate Change (IPCC)’s 4,000-page study — considered the gold standard in climate science — isn’t the only group sounding the alarm. 

Last year, the world’s largest investment management company, BlackRock, sent a letter to its clients wanting of a “significant reallocation of capital” in the face of a changing climate.

And in June, the International Energy Agency, which has advised countries around the world on their energy policies since the 1970s, traced a narrow path to a carbon net-zero future. That blueprint requires axing oil and gas exploration and scrapping new LNG projects beyond 2021.

Reducing emissions over the next 10 years, say scientists, will prove crucial in setting a path to stabilize Earth’s climate by the end of the century. 

“Neither fund has addressed the actions required as outlined in the recently released IPCC [report],” says Dempsey. 


Since the Paris Agreement was signed in 2016, Canada’s two largest pension funds have made gestures to address climate change and reinvest in renewable energy.

Their potential to bankroll a transition to renewable energy is substantial; together, they hold $862.7 billion in investments on behalf of 26 million Canadians. 

Quebec’s Caisse de dépôt introduced a climate strategy in 2017 that, among other measures, mandated a 50 per cent increase in low-carbon investments by 2020. 

Since the Paris Agreement, the Canada Pension Plan had grown its investments in renewable energy to $9 billion in 2020. That's up from $30 million in 2016.

At the same time, as of Dec. 31, 2020, Dempsey and her team found the two funds remain heavily invested in several major oil and gas companies. 

Those include:

  • ExxonMobil  CPP investment: $24.980 million; CDPQ investment: $82.58 million
  • TC Energy  CPP investment: $329.90 million; CDPQ investment: $344.14 million
  • Enbridge  CPP investment: $173,000; CDPQ investment: $1.01 billion
  • A collection of coal companies  CPP investment: $24.2 million; CDPQ investment: $97 million

In an email to Glacier Media, a spokesperson for the Canada Pension Fund Investment Board (CPPIB) rejected the report as "misleading," stating that year-to-year exposure in any sector is determined by fund growth and not the number of shares it holds.

By that metric, the fund's holdings in oil and gas declined from 3.6 per cent to 2.8 per cent between 2016 and 2020, according to Frank Switzer, CPPIB's managing director of investor relations. During the same period, the fund's investments in renewable energy, such as wind and solar, grew from a "negligible amount" to 1.7 per cent of the fund, Switzer says.

In an interview with the Globe and Mail in March, CPPIB CEO John Graham said, “We don’t believe in a blanket divestment approach.”

Instead, Switzer says the pension fund requires the companies it invests in to have "viable transition strategies." Instead of straight investment, he says the CPPIB is holding companies to account "through our voting and influence."

"At the halfway mark of this year’s proxy season, we voted against 44 directors whose companies we determined did not show an appropriate plan to address climate change," says Switzer.

He adds the CPPIB "disagrees with any simple conclusion" that says it can't invest in a variety of energy companies and work to lower emissions at the same time.

"There’s a more encouraging path to achieving a lower-carbon economy," he says, "by leveraging the know-how, innovation and capacity of leading energy firms, compared to not having them as part of an overall solution."

Despite such external pressure, Dempsey says oil and gas companies have failed to meaningfully show they will follow through on a transition to renewable energy. She points to a 2020 report from the International Energy Agency which found, “There are few signs of a major change in company investment spending” and that, “So far, investment by oil and gas companies outside their core business areas has been less than one per cent of total capital expenditure.”

As for Quebec's largest pension fund, a spokesperson for CDPQ says it continues to grow its green investments in real estate, sustainable mobility and renewable energy. That includes wind and solar projects across Canada, the U.S., Mexico, France, the U.K., Spain, India and Taiwan.

By Dec. 31, 2020, CDPQ spokesperson Maxime Chagnon says the fund's low-carbon assets had grown to $36 billion, double their value in 2017.

Over that same period, Chagnon says its investment in direct oil production had declined by 50 per cent, representing one per cent or roughly $3.65 billion of its total assets. But like the CPP, the Quebec fund spokesperson also stopped short of blanket divestment from oil and gas, stating "we have to be mindful that it is a transition" through "strong engagement with companies."

What that engagement looks like concerns Dempsey. Her team's report blames the lack of transparency on lax regulations and poor reporting on pension fund investments. As a result, Dempsey says Canadians don’t get the full picture of how their pension funds are being invested, and when they contribute to global warming.

Switzer declined to comment on calls for pension funds to be more transparent in its investments but pointed to the fund's own disclosure on its website, which he claims is "far exceeding our requirements." Chagnon of CDPQ, meanwhile, says the fund published several metrics in its 2020 Stewardship Investing Report.

Any institutional investor that puts $100 million a year into companies on the U.S. stock market must disclose that money to the US Securities and Exchange Commission. That’s what the report’s authors were able to track.

But major omissions have been revealed in the past and investments outside the U.S. or in private oil and gas companies often remain undisclosed.

One 2020 report found roughly half of CPP’s invested capital, including billions of dollars in oil and gas companies, is not disclosed to Canadians.

Other pension funds are even worse, says Dempsey. 

Bloomberg Terminal subscriptions cost $20,000 a year, effectively leaving the public in the dark. But even with access, the report notes the investment tool misses “tens of billions of equity investments from Canada’s other major public pension funds.”

“It’s very difficult for beneficiaries to really know what their plans are invested in even using the most powerful financial tools available,” says Dempsey.

Describing pension investment as a “black box,” the report’s authors were unable to uncover any data on the Ontario Teachers’ Pension Plan, the Public Sector Investment Pension Board, British Columbia Investment Management Corporation and the Alberta Investment Management Corporation.

“There’s a question of accountability. Canadians, Quebecers pay every day into these funds. I think they have a right to know how [that money is] invested,” Dempsey tells Glacier Media.


Founded in 1966 as a universal, employment-based retirement savings plan, the Canada Pension Plan was legislated to invest in low-risk securities. 

That changed in 1997, when Parliament established the Canada Pension Plan Investment Board. Since then, the fund has moved into the stock market, allowing it to take higher risks. 

It now holds just under $500 billion in assets, making it the largest pool of pension capital in the country.

Dempsey says holding such a wealth of public money should require pension funds to think holistically about what’s best for Canadians.

“What’s the use of a pension if you’re experiencing drought, heat waves, if you can’t spend it,” says the researcher. “It’s not like there aren’t funds that are seeing the writing on the wall.”

In recent years, some of the world's biggest pension funds have moved to ditch fossil fuels. In 2019, Norway’s Government Pension Plan — the largest sovereign wealth fund in the world — dropped more than US$13 billion in fossil fuel investments.

In 2020, the U.K.’s biggest pension fund followed suit. And in New York City this year, two pension funds voted to divest from more than $4 billion worth of fossil fuel investments. 

Do Canadian pension plans have any hope of following in their footsteps? Only if sweeping reforms are carried out, says the report.

It calls on Canadian public pension funds to immediately disclose all investments; phase fossil fuel investments to align with the Paris Agreement limiting warming to less than 1.5 C above pre-industrial levels; and reinvest in renewable energy sources. 

At a deeper level, Dempsey says both federal and provincial governments need to rethink the legal term “fiduciary duty” to fit an era where climate change poses a devastating threat to much of humanity. 

The 'North Star' of investors, fiduciary duty is often interpreted in the financial world as an overriding commitment to get the best return on investments — no matter what. 

That narrow focus, says Dempsey, has made Canadian pension funds blind to their role in financing climate change and threatening the long-term security of their beneficiaries.

“This concept of fiduciary duty is just really arcane. But it’s such a crucial concept. The most important thing with a pension is financial return,” she says.

Dempsey and her co-authors are calling on the federal and provincial governments to provide “regulatory clarity” to rethink fiduciary duty beyond short-term gains. They also ask government to:

  • mandate Canadian pension funds to disclose names and dollar amounts of all holdings and make public the total emissions of investments;
  • mandate pension funds to spell out a timeline to withdraw their fossil fuel investments and provide guidance on reinvestment into renewable energy;
  • and create a “non-proliferation treaty for fossil fuels,” to “phase out and ultimately disallow” investment.

Stefan Labbé is a solutions journalist. That means he covers how people are responding to problems linked to climate change — from housing to energy and everything in between. Have a story idea? Get in touch. Email [email protected].