If you’re a pension fund beneficiary or contributor, how your retirement savings are invested is of utmost importance as the world enters the era of climate crisis. Is your pension fund contributing to climate change? Is it making global warming worse? These are questions Shift Action will explore in upcoming webinars on November 24.
(This post will focus on OMERS — Ontario Municipal Employees Retirement System — for two reasons. Firstly, I’ve been an OMERS beneficiary since my retirement some 18 years ago. And I’m concerned that OMERS is investing my retirement money in fossil fuels, offsetting any positive impact and contribution I’m having as a climate activist. And secondly, we’re in a climate crisis. The content of the post is sourced from Shift Action.)
My Pension Fund (OMERS) Is Fueling the Climate Crisis
The climate crisis is already costing our communities: threatening infrastructure, flooding basements and underpasses, and creating life-threatening heat events. According to UNDER WATER: The Costs of Climate Change for Canada’s Infrastructure, Canada’s infrastructure isn’t prepared for the climate crisis, and “these risks are leaving Canadians under water, physically and financially, threatening our future well-being and prosperity.”
In a warming world, your pension fund’s investment decisions matter. OMERS manages over $114 billion in municipal workers’ retirement savings. OMERS’ investments can have a huge impact on how quickly we can build a zero-emissions economy and rein in devastating community impacts. The decisions of pension funds like OMERS influence whether businesses in Canada and other countries build electric cars and solar panels, or diesel engines and gas pipelines.
OMERS Must Do More
OMERS has a long way to go in its approach to climate change, and continues to invest in climate breakdown. Many leading funds have gone much further than OMERS in understanding and protecting pensions from the financial risks of climate change. Some pension funds have set targets for investments in clean energy. Others have set goals to cut climate pollution across the assets they own. Leading pensions have completely eliminated fossil fuels from their portfolios.
Shift is Asking OMERS to:
- Disclose a complete list of assets aligned with a zero-carbon economy, and a complete list of assets allocated to high-carbon investments;
- Explain how such high-carbon investments are aligned with Canada’s commitment and the Paris agreement goal to limit global temperature increases to 1.5°C;
- Immediately place an exclusionary screen on new oil, gas, coal and pipeline investments;
- Phase out all current oil, gas, coal and pipeline investments by 2025;
- Decarbonize its portfolio by 2030;
- Establish ambitious targets for increased investments in profitable climate solutions that help build a zero-carbon economy; and
- Develop a robust engagement strategy to ensure owned companies are on a rapid decarbonization pathway.
OMERS and Climate-Related Risk
OMERS has begun to assess and respond to the financial risks of climate change, for example by:
- calculating its carbon footprint and setting a short-term target to reduce the carbon intensity of its portfolio;
- in 2020, reducing the carbon intensity per square foot of its real estate portfolio by 23 percent (against a 2015 baseline), and planning to build Canada’s first two zero-carbon office towers; and
- increasing its investments in renewable energy, such as its ownership of Leeward Renewable Energy, a wind, solar, and energy storage company; its 19.4% stake in Azure Power, a renewable power producer in India; and its investment in Northvolt, a Swedish company that makes the lithium-ion batteries used to power electric cars.
However, OMERS continues to invest hundreds of millions of dollars in fossil fuel infrastructure and companies fueling the climate crisis:
I’m concerned that OMERS is investing my retirement money in fossil fuels, offsetting any positive impact and contribution I’m having as a climate activist. — RMontpellier, OMERS beneficiary
- A February 2021 report from German finance NGO Urgewald showed that OMERS had US$46.5 million in shares in companies across the global coal value chain.
- OMERS’ public filings to June 30, 2021 show that two of its top five holdings are pipeline companies Enbridge (USD$251 million) and TC Energy (USD$289 million). OMERS also holds USD$130 million in oil sands producer Canadian Natural Resources.
- OMERS private equity portfolio includes a 24 percent stake in Puget Sound Energy (PSE), an electric and gas utility in Washington state. While PSE touts its commitment to clean energy and carbon-neutrality, in 2020, 35 percent of PSE’s electricity generation came from its stake in the Colstrip coal plant in Montana and another third from its nine gas-fired power plants. PSE has lobbied to block legislation by city councils to ban natural gas hook-ups in new buildings. In early 2021, PSE faced criticism for failing to align its long-term resource plan with Washington’s legislated requirement to transition to carbon neutrality by 2030 and 100 per cent clean energy by 2045, due to PSE’s plan to build nearly 1,000 MW of new gas-fired power between 2026 and 2045.
- OMERS private equity portfolio also includes a 25 per cent stake in Scotia Gas Networks, the second largest natural gas distribution network in the United Kingdom. SGN is engaged in pilot projects to feed green hydrogen through its pipelines, invest in district energy systems, and use sewage to create biomethane for heat and power, but has no credible explanation for how natural gas networks will play an important role in the transition of the energy sector to a net zero future. In its 2020 annual report, SGN explicitly says one of its priorities is “keeping the gas flowing.”
- Additional private equity holdings include BridgeTex, a Texas-based pipeline company that transports 440,000 barrels per day of crude oil; GNL Quintero, the largest natural gas regasification terminal in Chile; Midland Cogeneration Venture, one of the largest natural gas-fired electricity cogeneration facilities in the U.S.; and NET4GAS, which operates more than 3,800 km of natural gas pipelines in the Czech Republic.
- 2021 proxy voting records show that OMERS also holds shares in AltaGas Ltd., ARC Resources, Fortis Inc., Pembina Pipeline Corporation, Entergy (an integrated energy utility with significant generation from coal and gas), Evergy (an energy utility with a “goal of carbon neutral by 2045”, but currently coal-fired plants generate the majority of Evergy’s electricity (52%), with a further 38% generated from oil and gas), and Kinder Morgan, Inc. (pipelines).
Take Action Now
Join municipal employees across Ontario and climate and energy experts from Shift Action to learn how you can help protect your pension and tackle the climate crisis.
Register for this free online workshop for working and retired members of OMERS. Learn about your pension fund’s approach to the financial risks of climate change and fossil fuel investments, and what it means for your retirement savings.
Tell OMERS to protect your pension and the planet. Send a LETTER to fund managers and your union leaders.
For more information, download the #ShiftOmers Toolkit.
If you belong to a public pension fund other than OMERS, for example, Ontario Teachers or HOOPP, you can still take action here.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International