PensionsJanuary 25, 2021

Ontario Teachers’ Joins Net-Zero Climate Pledge for 2050

The Canadian pension fund will establish defined portfolio targets in the coming months.

Reported by Sarah Min

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.

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.