{"id":19612,"date":"2020-09-18T09:20:45","date_gmt":"2020-09-18T13:20:45","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/legal-analysis-suggests-cppib-not-doing-enough-to-transition-to-lower-carbon-assets-149975"},"modified":"2020-09-18T09:20:45","modified_gmt":"2020-09-18T13:20:45","slug":"legal-analysis-suggests-cppib-not-doing-enough-to-transition-to-lower-carbon-assets","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/09\/18\/legal-analysis-suggests-cppib-not-doing-enough-to-transition-to-lower-carbon-assets\/","title":{"rendered":"Legal analysis suggests CPPIB not doing enough to transition to lower-carbon assets"},"content":{"rendered":"
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Staff<\/span> | September 18, 2020 <\/p>\n

The Canada Climate Law Initiative is calling into question whether the Canada Pension Plan Investment Board is sufficiently aligning its investments with the transition to a low-carbon economy.<\/p>\n

In a legal analysis, the organization said the pension fund\u2019s current allocations to high-carbon assets reveal a \u201ctroubling incrementalism\u201d within its efforts to mitigate Canadians\u2019 exposure to material financial risks relating to climate change.<\/p>\n

\u201cClimate change poses systemic risks, impacting supply chains, future cash flows and disrupting business models across industries,\u201d said Nick Silver, managing director of Callund Consulting, in a press release from the CCLI. \u201cCPP Investments would best fulfill its investment mandate and serve the best interests of Canadians by transitioning out of declining fossil fuel assets and into industries of the future which will create the jobs, infrastructure and growth today that Canada will need to become a thriving economy in the 21st century.\u201d<\/p>\n

Read: B\u00e2tirente sets new climate commitment for 2025<\/a><\/strong><\/p>\n

The analysis also suggested that exposure to these assets may be inconsistent with the CPPIB\u2019s fiduciary duty. It highlighted the duty corporate directors have to clearly communicate the impacts, current and future, of climate change on the company to their investors.<\/p>\n

\u201cLike other fiduciaries, pension fund administrators have a duty to consider material risks and return factors in making their investment policies and decisions,\u201d said Simon Archer, pension expert and partner at Goldblatt Partners LPP. \u201cEach year, we get better and better analysis about the risks of carbon assets.<\/p>\n

\u201cToday\u2019s report highlights some apparent inconsistencies in CPP Investments\u2019 stated policy objectives in addressing the risks associated with climate change and its expanding portfolio of high-carbon assets. Plan beneficiaries deserve a better explanation of how and when CPP Investments will transition away from these carbon-based assets.\u201d<\/p>\n

The report took a deep dive into six of the CPPIB\u2019s current private investments in the energy and resources sector and analyzed its overall exposure to the sector through other asset classes, such as its public equity portfolio.<\/p>\n

\u201cCPP Investments has an opportunity for leadership in Canada\u2019s future zero-carbon economy by supporting new technologies, companies and jobs in its investment strategy,\u201d said report author Cynthia Williams, Osler chair in business law at Osgoode Hall Law School at the University of Toronto.<\/p>\n

Read: UTAM joins institutional investors calling on aviation sector to address climate change<\/a><\/strong><\/p>\n

\u201cCompared to business-as-usual investments that expand carbon assets, investing in the clean energy transition would be more consistent with CPP\u2019s mandate to manage the CPP funds in the best interests of contributors and beneficiaries. We urge CPP Investments to fundamentally re-evaluate its role in Canada\u2019s economy and align its investment strategy with the needed clean energy transition.\u201d<\/p>\n

In reaction to the report, Michel Leduc, senior managing director and global head of public affairs and communications at the CPPIB said in an email to Benefits Canada<\/em> that the investor\u2019s allocations range among all conceivable sectors. <\/em><\/p>\n

\u201cThe so-called pattern of investing in energy is only one of those many sectors, with an exposure that has been very stable over the last five years, even as our investments in renewables has grown dramatically.\u201d<\/p>\n

The pressure from such reports to divest from the energy and renewables sectors is misguided and would eliminate the CPPIB\u2019s ability to influence higher standards at its portfolios companies, he added. \u201cMore urgently, it would stifle efforts to produce much cleaner, more sustainable forms of energy.\u201d<\/p>\n

Read: Ontario Teachers\u2019 expanding relationship with Wellington to tackle climate risk<\/a><\/strong><\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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