Statement on OTPP's 2022 Responsible Investing and Climate Strategy Report
Statement from Shift on Ontario Teachers’ 2022 Responsible Investing and Climate Strategy Report
For Immediate Release: September 1, 2021
Toronto, ON | Traditional territories of the Huron-Wendat, the Anishnaabeg, Haudenosaunee, Chippewas and the Mississaugas of the Credit First Nation - With the release of its 2022 Responsible Investing and Climate Strategy Report, the Ontario Teachers’ Pension Plan (OTPP) continues to demonstrate national leadership in aligning the retirement savings of its members with a safe climate future. But despite its increasingly sophisticated strategy to manage climate-related financial risks, the OTPP is silent on how its massive oil, gas, pipeline and related infrastructure investments have a credible, science-based pathway to decarbonization.
There is much to admire in the OTPP’s evolving climate strategy. The $242.5 billion pension manager is clearly communicating the urgency of the climate emergency and the influence it has to address it, making big investments in profitable climate solutions, and pursuing a pathway to some of the most stringent portfolio decarbonization targets of any pension fund in Canada. Today’s report shows that the OTPP has:
Invested over $33 billion, or 13.6% of the total portfolio, in “green assets that support the net-zero transition and a sustainable future” (p.17), including $3 billion in new investments in climate solutions in 2021 alone (p.8);
Committed to reach $50 billion in green investments (by an unspecified date) (p.8);
Reduced the carbon intensity of its portfolio by over 30% between 2019 and 2021 (p.7);
Increased carbon emissions reporting among private companies owned by the OTPP from 37% to 80% between 2019 and 2021 (p.15), while focusing engagement efforts on the creation of “decarbonization playbooks” for high-carbon companies (p.15);
Established clear expectations for companies on climate change (p.25), as reflected in its new Responsible Investing Guidelines and Proxy Voting Guidelines.
Made a new commitment to allocate approximately $5 billion to “High Carbon Transition (HCT) assets” (defined as “very high-emitting companies with credible decarbonization plans that we believe we can accelerate through our capital and expertise”), with a focus on power generation, heavy industry, mining and transportation (p.16).
But despite the growing calls from working and retired teachers to stop investing their pension savings in the fossil fuel companies that are imperiling their retirement security, the OTPP’s Responsible Investing and Climate Strategy Report says nothing about its massive investments in oil, gas, pipelines and related infrastructure. The use of OTPP capital to decarbonize hard-to-abate sectors through its new HCT assets commitment is smart, but it’s unclear why it leaves out the primary cause of the climate emergency– fossil fuels. The Climate Strategy does not mention oil, gas, pipelines and related infrastructure, even though these assets, labeled “energy” and “utilities”-- which compose 13% of OTPP assets– are responsible for 38% of portfolio emissions (p.13).
If the OTPP is serious about climate risk, working and retired Ontario teachers need to know how their pension managers intend to eliminate exposure to the high-risk fossil fuel and related infrastructure assets in its portfolio, including:
$7.4 billion invested in oil and gas exploration and production, as of April 2022;
At least $200 million in Aethon Energy, a Texas-based private investment firm focused on direct investments in North American upstream oil and gas assets. An OTPP Managing Director sits on Aethon’s Board;
100% ownership of HRG Royalty, an oil and gas land titles holding company that the OTPP bought from Cenovus in 2015 for $3.3 billion. Three senior OTPP staff sit on HRG Royalty’s Board;
At least $200 million in Aspenleaf Energy, a private oil and gas exploration and production company that is pursuing an “acquisition and exploitation strategy” in western Canada. Two senior OTPP staff sit on Aspenleaf’s Board.
A 37.5% stake in SGN (Scotia Gas Networks), the U.K.’s second largest fossil gas distribution company. Two senior OTPP staff sit on SGN’s board;
An undisclosed stake in the state-owned Abu Dhabi National Oil Company’s fossil gas pipelines;
A 69.4% stake, in partnership with Macquarie, in Società Gasdotti Italia S.p.A (SGI), which owns and operates a 1,700-km fossil gas pipeline network in Italy. Two senior OTPP staff sit on SGI’s board;
A 15.8% stake in Puget Sound Energy (PSE), a Washington-based integrated electric and gas utility that derived two-thirds of its electricity from fossil fuels in 2019 and is trying to build a fossil gas export facility in Tacoma. A senior OTPP staff person sits on PSE’s Board.
The OTPP’s Climate Strategy claims to “provide significant transparency on our decarbonization efforts and progress” (p.12) and includes case studies and highlights of its investments in climate solutions, but lacks transparency on investment in the causes of the problem. For the OTPP’s net-zero target and Climate Strategy to be credible, it must be transparent on how its fossil fuel linked assets have credible, profitable, science-based transition plans. If it can’t do so, the OTPP should remove these assets from its portfolio.
Contact information for interview requests:
Patrick DeRochie, Senior Manager, Shift Action for Pension Wealth & Planet Health
416-576-2701
Shift Action for Pension Wealth and Planet Health is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds to engage on the climate crisis.
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