TORONTO — A climate advocacy group, Shift Action, has raised alarms regarding the representation of oil and gas sector members on the boards of Canada’s major public pension funds, indicating potential conflicts of interest. In a report released on June 1, it was highlighted that five of Canada’s largest public sector pension funds currently have board members who are also affiliated with fossil fuel companies.
The report draws attention to CPP Investments, recognized as Canada’s largest pension fund, which is reported to have a significant overlap, with three out of ten members on its board having ties to the fossil fuel industry. This revelation comes shortly after CPP Investments made the controversial decision to abandon its commitment to achieve net-zero financed emissions by 2050, prompting criticism and scrutiny regarding the management of climate-related risks.
Shift Action's findings are not limited to CPP Investments. The report identifies other notable funds with similar cross-appointments, including the Ontario Teachers’ Pension Plan, Public Sector Pension Investment Board, Alberta Investment Management Corporation, and Ontario Municipal Employees Retirement System. These findings suggest a pervasive influence of the fossil fuel sector within the governance structures of Canada’s public pension funds.
According to Shift Action, pension funds hold a legal obligation to prioritize the long-term interests of their beneficiaries. However, the interests of fossil fuel companies are seen to conflict with the necessary strategies aimed at managing climate risks and reducing greenhouse gas emissions. Adam Scott, the executive director of Shift Action, articulated concerns regarding the implications of such conflicts, stating, “It’s easy to see how fossil fuel company directors could potentially find themselves with real or perceived conflicts, and how such conflicts, if not addressed, could undermine prudent pension governance.”
The report further details that a total of nine current board members across these funds are affiliated with the boards or executive teams of twelve different oil and gas companies, or investment firms focused on the fossil fuel industry. Notably, the report indicates a slight improvement, as the representation of fossil fuel interests on boards has decreased from seven to five since the previous report published in 2022.
One of the positive developments highlighted by Shift Action is that the boards of the Healthcare of Ontario Pension Plan, Investment Management Corporation of Ontario, and CDPQ no longer feature members connected to the fossil fuel industry. This trend could be indicative of a broader shift in governance practices toward more climate-conscious decision-making.
These findings from Shift Action shed light on the intricate connections between Canada’s public pension funds and the fossil fuel industry, raising crucial questions about governance, fiduciary responsibilities, and the future of investment strategies in a world increasingly focused on sustainability and climate resilience.
