Will Canada’s pensions vote to uphold their promises on climate and Indigenous rights?
For years now, Canada’s pension plans have told their beneficiaries that their active ownership of companies holds the key to solving the climate crisis and protecting pensions from climate-related financial risks. This year’s Annual General Meeting (AGM) season is the perfect opportunity for pensions to turn those words into action through their votes on key climate-related shareholder resolutions at Canada’s largest banks.
Important shareholder resolutions are being brought forward by shareholders of the Royal Bank of Canada (RBC) and TD Bank, respectively the 5th and 9th largest financiers of fossil fuels among private banks globally. Shareholders, including Canada’s largest pension plans, will vote on these resolutions at the banks’ upcoming AGMs (RBC on April 5th and TD on April 20th).
You can help by sending a letter to your pension asking them to vote on these resolutions:
Canada’s largest public pension funds hold over $5.2 billion combined in shares of these big banks, giving them significant power to support these clear and practical measures to align bank lending and investment practices with the imperatives of protecting the climate and respecting the rights of Indigenous peoples.
Expectations are high. Beneficiaries have yet to see adequate evidence that their pension funds are meaningfully engaging with the companies they own on protecting the climate or respecting Indigenous rights. A lack of transparency often makes it hard to know that engagement is actually happening, and what the impact or value of that engagement actually is. Many of Canada’s largest pension funds fail to properly disclose their exact engagement expectations, follow through on their own proxy voting guidelines, or meaningfully report the results of their efforts to plan members. Looking at the available voting records of Canadian pensions on climate-related votes in the past reveals a surprisingly weak track record.
A recent report from shareholder advocacy group Investors for Paris Compliance examining the proxy voting records of Climate Action 100+ signatories, which includes many major Canadian institutional investors, reveals that Canadian pension funds are often voting against climate-related shareholder resolutions. For example, the Ontario Teachers’ Pension Plan voted against 69% of North American climate-related shareholder resolutions brought forward in 2022, a trend which appears to contradict OTPPs proxy voting guidelines on climate change.
It’s important to note that voting on shareholder resolutions is only one small piece of a meaningful engagement strategy, but the willingness of pensions to support climate resolutions is revealing. If a pension votes ‘no’ on a resolution calling for a credible climate plan or greater transparency on climate-related financial risks, it’s hard to imagine they will apply more pressure behind closed doors to do the same.
Voting ‘yes’ on these upcoming resolutions is the least our pensions can do to demonstrate that they take their active ownership responsibilities seriously.
You can send a letter to your pension asking them to vote in support of these resolutions:
Below is a summary of some of the upcoming climate-related shareholder votes. Rest assured, we at Shift will be tracking how your pension managers vote.
Upcoming Climate-Related shareholder Votes
The British Columbia General Employees Union (BCGEU) submitted a proposal requesting that RBC amend its policy guidelines to require companies that spin off polluting assets to private companies to disclose climate-related risks consistent with the Task Force on Climate-Related Financial Disclosures, including ensuring that companies ensure board oversight of climate-related risks, disclose scope 1 and 2 greenhouse gas emissions from the acquired assets, and require companies to set GHG emissions reduction targets.
The BCGEU, in partnership with the Union of British Columbia Indian Chiefs (UBCIC), also submitted a resolution calling on RBC to operationalize within its corporate policies and activities the United Nations Declaration on the Rights of lndigenous Peoples (UNDRIP), which requires obtaining the free, prior and informed consent (FPIC) of Indigenous people before implementing measures that may affect them.
The Comptroller of the City of New York, who oversees the New York City Retirement System (which includes the pension funds of New York City’s public employees, teachers and Board of Education staff) announced a shareholder proposal calling for RBC to disclose an absolute greenhouse gas (GHG) emissions target, aligned with a science-based net zero emissions pathway for 2030.
An RBC shareholder represented by Stand.Earth submitted a proposal requesting that RBC adopt a time-bound phase-out of RBC’s lending and underwriting to projects and companies engaging in new fossil fuel exploration, development and transportation.
Canada’s largest pension funds hold over $2.8 billion in shares in RBC.
To view the RBC shareholder resolutions see pg 105 of RBC Proxy Circular (Schedule A).
TD
Vancity Bank and Investors for Paris Compliance submitted a resolution calling on TD to disclose a transition plan that describes how it intends to align its financing activities with its 2030 sectoral emissions reduction targets, including the specific measures and policies to be implemented, reductions to be achieved by such planned measures and policies, and timelines for implementation and associated emission reductions.
Canada’s largest pension funds hold over $2.4 billion in shares in TD.
To view the TD shareholder resolutions see pg 80 of the TD Proxy Circular
