Ontario Teachers' Pension Plan sets targets to hit net zero greenhouse gas emissions

TORONTO — The Ontario Teachers' Pension Plan board has set new targets to accompany its plan to tackle climate change and curb greenhouse gas emissions tied to its multi-billion dollar portfolio.

Canada's largest single-profession pension plan said Thursday it aims to slash the carbon emissions intensity of its investments by 45 per cent by 2025 and by two-thirds by 2030, compared against its 2019 baseline.

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The targets come after the $227.7-billion fund announced in January a commitment to achieve net-zero greenhouse gas emissions by 2050.

The pledge reflects the mounting pressure on major institutional investors to bankroll clean energy and divest assets that contribute to climate change.

Advocates have long called on massive fund administrators around the world to invest in more ethical and sustainable ways, a call that some institutional investors appear to be heeding.

The manager of Norway's sovereign wealth fund, for example, said earlier this year that it plans to halt investments in a number of Canadian oil and gas companies after concluding they produce unacceptable levels of greenhouse gas emissions.

Canada’s large pension plans have also been targeted by environmental and human rights campaigns in recent years.

The Canadian Pension Plan Investment Board came under scrutiny for its stake in two private prison operators that ran migrant detention camps along the U.S.-Mexico border. The CPPIB eventually sold its shares in 2019.

In January, an environmental coalition appealed to Ontario teachers to pressure their pension fund to divest from companies that develop or transport fossil fuel products.

Weeks later, Teachers’ announced its commitment to achieving net-zero greenhouse gas emissions.

While the commitment stops short of outright fossil fuel divestment, it focuses on investing in green companies and encouraging its portfolio companies to decarbonize.

Ziad Hindo, Teachers' chief investment officer, said the fund’s targets are industry leading and could encourage other large funds to invest in environmentally-friendly assets.

"The entire global economy needs to be retooled towards climate transition," he said in an interview. "We see this as an opportunity for us to be an active, engaged investor."

Part of the fund’s commitment is to work with companies on developing decarbonization plans to make them more sustainable, Hindo said.

"We have more than 100 portfolio companies on the private asset side and part of our commitment is to work with our private holdings, through our governance channels, to make sure they can have their own Paris-aligned net zero targets," he said.

"Part of our secret sauce is value creation, to help those companies — given our meaningful stakes in them — to transition, decarbonize and play a role in helping the economy get to net zero."

Teachers', which invests and administers the pensions of the Ontario's 331,000 active and retired teachers, said it would report annually on its progress meeting its 2025, 2030 and 2050 targets.

Shift Action for Pension Wealth and Planet Health, part of the environmental coalition that appealed to Ontario teachers earlier this year, welcomed the new targets but said the pension plan needs to go further if it wants to be a global leader on climate.

"While this announcement describes how the OTPP will invest in solutions to the climate crisis, it makes no mention of how it will eliminate its exposure to the primary cause of it — namely high-risk fossil fuels," the advocacy group said in a statement.

Natasha Bartels, a high school teacher in Toronto, said the plan "still isn’t addressing the elephant in the room — its multi-billion dollar investments in oil, gas, coal and pipelines.

"I’ve asked the OTPP again and again to explain how their ongoing and growing investments in fossil fuel companies and infrastructure are aligned with their net-zero emissions commitment, and they’ve failed to provide a credible answer."

This report by The Canadian Press was first published Sept. 16, 2021.

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