Canada’s largest pension managers increased their investments in the country’s leading oil sands companies in the first quarter of 2021, raising questions about recent commitments by funds to green their portfolios.
The cumulative investment of the country’s top five pension funds in the US-listed stocks of Canada’s top four oil sands producers jumped to $ 2.4 billion in the first quarter of 2021, up 147% from compared to a year ago, according to a Reuters analysis of US 13. -F filings show. Much of that increase, which has resisted a downtrend since 2018, came from rising prices of stocks already held, but funds also bought more stocks.
The five funds, in order of size, are the Canada Pension Plan Investment Board (CPPIB), the Caisse de dépôt et placement du Québec (CDPQ), the Retirement Plan for Teachers of the Ontario (Teachers’), the British Columbia Investment Management Corp (BCI) and the public Sector Pension Investment Board (PSP), which together manage more than $ 1.4 trillion ($ 1.2 trillion) in assets.
Governments, businesses and investors around the world have stepped up their promises of drastic reductions in greenhouse gas emissions linked to global warming. Some large pension managers, including the New York State Pension Fund and Norway’s largest pension fund, KLP, have left the oil sands companies.
Canadian pension plans face pressure to balance their mandate to be environmentally responsible and their fiduciary duty to maximize returns. Canada’s oil sands are a high carbon industry, but rising stock prices are tempting to investors.
Some Canadian pension funds say they prefer to continue investing in fossil fuel producers to help these companies make the transition to cleaner energy production.
“We have a big problem with pension funds saying we believe in engagement, not divestment, but there is no sign of that engagement,” said Adam Smith, director of the activist group. Shift retreats. “The very fact of owning them (the oil sands companies) means that the funds are not supporting the transition.”
As first-quarter exposures to oil sands companies increased, annual reports show that three of the five pension funds decreased their overall energy exposure in 2020 from 2019. But 13-F filings exhibit a more up to date picture.
For more details on the exposure of Canadian pensions to major oil sands producers:
Compared to the same period in 2018, fund investments in the four oil sands companies were down 0.9%.
While Reuters ‘analysis is limited to four companies – Canadian Natural Resources Ltd, Suncor Energy, Cenovus Energy, and Imperial Oil – it provides insight into the funds’ investments in the oil sands of northern Alberta, the strongest source. emissions per barrel of oil. on the planet, according to a 2020 report by consulting firm Rystad Energy.
CDPQ, Teachers’ and PSP reduced their cumulative energy exposure to C $ 22.2 billion in 2020, from $ 28.2 billion in 2019, according to annual reports.
But the Board, which manages C $ 497.2 billion in assets, saw its exposure to fossil fuel producers increase 51.5% to C $ 17.6 billion at the end of March 2021, after have been declining for at least five years. By comparison, the fund’s investments in renewable energy producers increased 16% to C $ 7.7 billion.
The Office declined to comment on the data on 13-F holdings.
BCI’s annual reports do not break down energy investments as a percentage of total assets. Spokesman Ben O’Hara-Byrne said many factors affect changes in holdings, so percentages should not be used to derive assumptions about BCI’s response to environmental “integration efforts” , social and governance (ESG).
A spokesperson for PSP Investments said many of the investments were held in so-called “passive” portfolios containing a mix of assets based on a stock index designed to match overall market movements.
The CDPQ did not specifically comment on its oil sands holdings, but a spokesperson said fossil fuels made up a very small share of the total assets held by the fund, which targets a carbon neutral portfolio of by 2050.
The Office of the Prosecutor is also committed to a net zero portfolio by 2050 and will focus on climate-friendly investments that help move away from fossil fuels, a spokesperson said.
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