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Canadian Pension Funds Face Criticism for Fossil Fuel Investments Despite Climate Impacts

Pension funds' heavy investment in fossil fuels defies climate risks. As the energy transition accelerates, funds must reassess their portfolios to protect members' future.

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1 min read
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In this picture there are bicycles in the center of the image, on the grassland and there are plants at the top side of the image.

Canadian Pension Funds Face Criticism for Fossil Fuel Investments Despite Climate Impacts

Canadian pension funds, including the Canada Pension Plan Investment Board (CPPIB) and the Public Sector Pension Investment Board (PSP), face criticism for not aligning their portfolios with members' long-term interests and the Paris Agreement. Despite climate impacts, they maintain significant investments in fossil fuels.

In 2023, Canadians endured record-breaking wildfires, evacuations, and heatwave deaths, highlighting the urgent need for climate action. Yet, pension funds continue to invest heavily in fossil fuels. As of 2024, CPPIB holds around $22.6 billion in fossil fuel assets, while PSP's exposure ranges from $6.2 billion to $8.1 billion. Both funds have financed oil and gas infrastructure expansion, worsening carbon pollution and climate risks. Although most funds have climate strategies aiming for net-zero emissions by 2050, none have acknowledged the need to rapidly phase out fossil fuels. Some funds invest in climate solutions and influence companies through shareholder actions, but many still have partial exclusions on new fossil fuel investments and remain heavily exposed to oil and gas assets. The pace of the energy transition is accelerating, increasing the risk of asset stranding. CPPIB received a lower score due to inconsistent public statements and new fossil fuel investments.

Pension funds' continued investment in fossil fuels, despite climate impacts and risks, raises concerns about their fiduciary duty to protect members' long-term interests. As the energy transition accelerates, funds must reassess their portfolios and consider the scientific imperative to rapidly phase out fossil fuels.

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