The financial sector funds climate change. It’s an undeniable fact. And as this becomes more front and centre, both beneficiaries and contributors to pension funds are questioning how their money is invested. As Canadians become increasingly concerned about climate change, most want their pension money invested in climate solutions, not fossil fuels.
How climate change is a threat to the stability of the financial system has garnered the full attention of money managers in banks, pension funds and insurance companies. But the more pertinent question should be how does the financial system threaten our climate and our environment?
(The remainder of this piece is sourced from the Shift Action for Pension Wealth and Planet Health website and campaign literature and the Ontario Municipal Employees Retirement System (OMERS) website.)
Your Pension Money – Fossils or Climate Solutions?
Canada’s top ten pension funds alone manage nearly $1.8 trillion.
How these funds invest your retirement dollars is a major factor in how quickly we can transition to a low-carbon economy while growing your pension in a warming world. The decisions of pension funds influence whether businesses in Canada and in other countries build electric cars and solar panels, or diesel engines and gas-fired power plants.
As leading pension funds around the world increasingly exclude fossil fuels from their portfolios and make major investments in climate solutions, Canadian funds are lagging behind and continue to invest billions of our retirement dollars in the companies and infrastructure responsible for climate breakdown.
The above chart shows Canada’s 10 largest pension funds. “No Canadian pension has yet to catch up to global leaders in responding to the climate crisis,” according to the Canada’s Pension Funds and Climate Risk 2019 report.
Falling behind on climate change puts your pension at risk. The climate crisis presents serious risks for many industries, companies and the wider economy– which could impact your retirement savings.
OMERS – Ontario Municipal Employees Retirement System
I’ve selected OMERS from the chart above for two reasons: 1. It’s the pension fund from which I draw a monthly retirement income; 2. it’s one of the 10 Canadian pension funds still on the starting line in adopting an investment strategy that is responsive to the growing climate crisis.
On Its Climate Change website page, OMERS indicates that:
- We have endorsed the Task Force on Climate-Related Financial Disclosures (TCFD) as we believe it is the most effective standard to deliver the information investors need to assess climate risk.
- We approach climate change by applying the four overarching principles that underpin our Sustainable Investing Policy: integration, engagement, collaboration and adaptation.
- We incorporate climate change considerations into our investment guidance and decision-making and evaluate on a case-by-case basis where financial exposure to climate-related risks could be material.
- OMERS will continue to collaborate with other institutional investors, governments, regulators and other parties with a view to further understand climate change implications for markets and economies in which we invest.
OMERS has no climate policy or clear acknowledgment of the scope and magnitude of the climate crisis. The climate crisis is an all-hands-on-deck moment, and clearly, OMERS is missing in action.
In its Exclusions section , OMERS states that:
“Any industry or sector exclusions are determined based on a set of criteria approved by our Senior Executive Team that consider risks posed by ESG factors, as well as OMERS fiduciary duty. We believe that investments in companies engaged in the following activities meet those criteria, and therefore do not meet our risk-return requirements:
- civilian firearms manufacturers;
- cluster munitions manufacturers; and
- tobacco producers and manufacturers.”
The glaring omission from this list is the fossil fuel sector which poses a greater risk—than all three exclusions combined—to the survival of millions of species including humans.
Take Action Now with Shift
If you want your pension fund to protect your retirement savings and tackle the climate crisis, take action now. Shift Action provides the following tools to get you started. You don’t have time to wait.
I want my pension money to be transitioned to fossil-free investments by fund managers. Our economic future is not in fossils. I want my pension money to tackle climate change and provide the financial stability that the the transition to a zero-carbon economy will bring.
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