Ontario Teachers’ Joins Net-Zero Climate Pledge for 2050

The Ontario Teachers’ Pension Plan Board (OTPPB) is the latest pension fund to join the pledge to achieve net-zero carbon emissions by 2050, calling it an “ambitious but achievable” goal the institutional investor will outline targets for in the coming months.

“While the transition to the low-carbon economy presents many challenges, it also presents many opportunities to earn the returns we need to pay our members’ pensions while more broadly benefiting society and the environment,” Ontario Teachers’ Chief Investment Officer Ziad Hindo said in a statement.

Ontario Teachers’ manages about 80% of its $161 billion portfolio in house. It has gained about 9.5% annually over the past 30 years.

For more stories like this, sign up for the CIO Alert newsletter. 

However, without announcing concrete targets alongside the pledge, climate advocates argued the commitment from the educator-only fund had “little credibility.”

“Without a plan for major changes to the way the pension fund makes investment decisions, a net-zero commitment runs the risk of becoming a cynical example of greenwashing,” read a statement on Ontario Teachers’ from advocacy group Shift: Action for Pension Wealth & Planet Health.

Investments the pension fund made just in the past year run contrary to what it has pledged, the advocacy group said. In June, the OTPPB took part in a global consortium to invest $10.1 billion for a 49% stake in parts of Abu Dhabi’s gas pipeline network. In December, it took a 69.4% stake in a major Italian gas pipeline operator.

“These are not the actions of an institutional investor that is serious about mitigating the climate crisis,” the advocacy group said.

Ontario Teachers’ did not respond to a request for additional comment.

The Toronto-based pension fund has made other strides toward sustainability. Last year, Ontario Teachers’ and investment manager Wellington Management partnered with climate change think tank Woods Hole to integrate sustainability into the pension fund’s investment strategies, including mapping assets across geographies for physical climate-related risks.

Goals the pension fund promised to establish in the coming months include increasing targets for climate-friendly investments. It will also continue working with portfolio companies to manage and report emissions annually, and help them set targets to reach the net-zero emissions goal for 2050.

Ontario Teachers’ will use the proceeds from its first green bond offering last year, an $890 million 10-year bond, to fund sustainable investments. It will also continue to test the physical risk of direct holdings and advocate for environmental policies.

Ontario Teachers’ Finance Trust Issues First Green Bond

Ontario Teachers’, PE Firm to Acquire Allworth Financial Stake

Tags: Asset, Canada, Investment, Ontario, Ontario Teachers’ Pension Plan Board, Pension, Pension Funds, Teachers

The Roofers Local No. 88 Pension Fund of Merrillville, Indiana, has applied to the US Department of the Treasury for permission to enact a 10% across-the-board cut in benefits to stave off impending insolvency.

In their application to the Treasury Department, the trustees of the pension said the fund had a projected funded ratio of 61.4% as of May 1, and the plan is projected to become insolvent by the 2035-2036 plan year. If approved, the suspension would take effect Nov. 1 with no expiration date, and would not affect participants with age-based or disability limitations.

“Decreases in benefit levels under the pension plan have reduced union membership, participant numbers, and morale,” the trustees said in the application. “Given the very low accrual rate offered by the pension plan, it is generally known by the union members that the pension plan is in critical and declining status and heading toward insolvency.”

The trustees said one of the factors hurting the fund is that the contributing employers to the plan in Indiana “face an increased non-union presence as well as general anti-union animus in the legislatures, which impact the local’s jurisdiction.” They cited data showing that the union has been experiencing greater losses than comparable local unions in northeast Ohio, which is within the union’s jurisdiction and where there is a more union-friendly government.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

For example, US Department of Labor (DOL) statistics show that the Local 88 union’s membership has plummeted 44.4% since 2005, while the Local 71 union in Youngstown, Ohio, only saw a 25% decrease in membership since 2005, and the Local 44 in the Cleveland area actually saw a 9% gain in membership since then.

The trustees said an analysis of both qualitative and quantitative data suggests that if changes aren’t made to stabilize the plan, insolvency could come even sooner than currently predicted due to an increased flight to neighboring local unions or non-union contractors. However, they also noted some positive signs such as a strong work outlook and steady membership levels, which they said are evidence that there is work for the members and that the drop-off in membership numbers may be slowing.

“Without a suspension, though, the board of trustees has grave concerns about what the looming plan insolvency will do to membership numbers,” said the trustees. “The board worries that while work hours will be strong, without a suspension those hours will be worked by members of neighboring locals or former Local 88 members who have left the union.”