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G21-P010 Align the Canada Pension Plan Investment Board with the Paris Agreement

Official proposal

02/06/2021 17:27

Submitter Name

Jackie DaSilva

Ratification Vote Results: Adopted

Proposal

Amend the Canada Pension Plan Investment Board Act to enshrine the Canada Pension Plan's fiduciary responsibility to mitigate climate-related financial risks and mandate the CPP to align its portfolio with the Paris Agreement goal to limit global heating to 1.5℃ and with Canada's commitment to net-zero carbon emissions by 2050.

Objective

To protect Canadian retirement savings by amending the mandate for the Canada Pension Plan (CPP) to invest in the transition to a net-zero economy and aligning the CPP's portfolio with the Paris Agreement goal to limit global heating to 1.5℃ and with Canada's commitment to net-zero carbon emissions by 2050.

Benefit

Shifting large pools of capital, such as pension funds, away from fossil fuels and into profitable climate solutions will help Canada and the planet avoid the worst catastrophic effects of climate change. Ending investments in fossil fuels and financing the green transition is morally right, will protect the 20 million member beneficiaries of the CPP from the financial risks of climate change, and will cement Canada’s leadership position on the international climate policy stage.

Supporting Comments from Submitter

Oil, gas and coal have been the worst-performing sector of the economy over the last ten years, and the COVID-19 pandemic and economic crisis has only accelerated the terminal decline of fossil fuels in the face of an accelerating energy transition. In contrast, renewable energy companies and utilities with strong green transition plans have continued to grow despite the global economic slowdown.

Already, nearly $15 trillion of global capital, including endowment funds, cities, sovereign wealth funds, pension funds and other institutional investors, have at least partially divested from fossil fuels. Fossil-free portfolios have consistently outperformed portfolios that continue to invest in oil, gas and coal. Even without the moral arguments for ending the financing of fossil fuels, the financial case for divestment is strong. Study after study supports fossil fuel divestment as a prudent financial choice, with portfolio managers and investors who have already done so reporting that their investments have either not been affected, or benefited from divestment.

Here in Canada, the Caisse des Dépôt et des Placement du Québec, the investment manager for the Québec Pension Plan, has set targets to decrease the carbon intensity of its portfolio and increase its investments in climate solutions, and tied executive compensation to emissions reductions. By continuing to double down on fossil fuels, the CPP is betting Canadian pension savings on stranded assets while locking in carbon pollution and making the climate crisis worse.