Canada’s largest pension plan has quietly ditched its commitment to net zero.
The Canada Pension Plan Investment Board (CPPIB) revealed the decision in its latest annual report, and in a list of frequently asked questions published on its website this week.
The C$700bn scheme, which is part of the national retirement system, said “forcing alignment with rigid milestones could lead to investment decisions that are misaligned with our investment strategy”.
“To avoid that risk – and to remain focused on delivering results, not managing legal uncertainty – we have made a considered decision to no longer maintain a net zero by 2050 commitment,” it continued.
Elsewhere in the statement, CPPIB implied that the decision has been driven in part by changes to Canada’s Competition Act, which mean entities must now prove the environmental claims they make.
This time last year, the act was updated to include a paragraph preventing companies from making claims about their commitment to tackling climate change without “adequate and proper substantiation in accordance with internationally recognised methodology”.
“Recent legal developments in Canada have introduced new considerations around how net-zero commitments are interpreted,” said CPPIB, which first pledged to become net-zero by 2050 back in 2022.
“In particular, there is increasing pressure to adopt standardised emissions metrics and interim targets, many of which don’t reflect the complexity of a global investment portfolio like ours.”
‘Communication change only’
Campaigners have criticised the pension fund’s decision.
Non-profit Shift Action said the fact CPPIB appears to be responding to an anti-greenwashing rule “could be a tacit admission that CPPIB was aware that its statements on net zero weren’t in line with internationally recognised standards”.
It also accused the scheme of “an unacceptable abdication of responsibility” when it came to managing the long-term risks of climate change.
But, CPPIB’s chief executive officer John Graham told local media it had only changed how the pension fund communicates its net-zero commitments.
“Nothing’s changed on what we’re actually doing,” he told Business in Vancouver.
“We think it is really important to incorporate climate and incorporate sustainability into the portfolio when we take a long-term perspective and as a long-horizon investor.”
Seven of Canada’s other largest pension funds have so far retained their net-zero commitments.
Last week, the CEO of the University Pension Plan Ontario, Barb Zvan, was named as the founding chair of a new initiative in Canada called Business Future Pathways.
The project will develop “practical, investor-endorsed, and internationally-aligned guidance” to help companies in the country produce climate transition plans and “forge even stronger connections with investors and markets in the EU, UK, and across the globe”.
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