Canadian Pension Boards Face Scrutiny Over Ties to Oil and Gas Industry

 

A new report by climate advocacy group Shift is raising concerns about potential conflicts of interest on the boards of Canada’s largest public pension funds due to the presence of individuals with ties to the oil and gas industry. The report, released Thursday, highlights that as of June 1, five major public sector pension funds had board members affiliated with fossil fuel companies.

Shift argues that pension funds are legally obligated to prioritize the long-term best interests of their members. It warns that the interests of fossil fuel companies could clash with efforts to mitigate climate-related financial risks and reduce carbon emissions. Adam Scott, executive director of Shift, said that fossil fuel-affiliated directors could face real or perceived conflicts that might compromise sound pension governance.

CPP Investments, Canada’s largest public pension fund, is singled out for having three of ten board members connected to the oil and gas sector. The fund recently abandoned its goal of reaching net zero financed emissions by 2050. In response, CPP Investments rejected the report’s findings. Michel Leduc, head of public affairs, defended the board’s composition, stating that top governance talent often comes from the energy sector due to its economic importance to Canada.

Other funds named in the report include the Ontario Teachers’ Pension Plan, the Public Sector Pension Investment Board, Alberta Investment Management Corporation, and the Ontario Municipal Employees Retirement System. AIMCo had the highest industry representation, with two out of six board members tied to oil and gas.

Shift noted some progress since its last report in 2022, with the number of boards with fossil fuel ties dropping from seven to five. Funds now free of fossil fuel board representation include Healthcare of Ontario Pension Plan, Investment Management Corporation of Ontario, and CDPQ.

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