Stakeholders urge for even more ambitious measures
In response to the escalating climate crisis, OMERS, Ontario's municipal pension plan, has released its first-ever climate action plan. Against the backdrop of Canada experiencing its hottest summer on record, marked by wildfires, air quality warnings, extreme heat, and floods across municipalities, OMERS' climate action initiatives aim to safeguard pensions and the environment.
OMERS' climate plan outlines its commitment to achieving net-zero greenhouse gas emissions across its entire portfolio by 2050.
Key highlights of OMERS' Climate Action Plan
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Climate-compensation link: Executives and investment team leads will now have their compensation linked to climate change performance measures, including progress on implementing the Climate Action Plan.
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Credible transition plans: OMERS commits to ensuring that the top 20 companies contributing most to its financed emissions intensity have credible net-zero transition plans in place by 2030.
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Green investment: A goal to reach $30 billion in green assets by 2030, with these assets aligning with recognized taxonomies like the International Capital Market Association Green Bond Principles and Climate Bond Initiative Taxonomy.
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Transition sleeve: Detailed information on OMERS' $3 billion plan to finance companies transitioning to zero emissions. Eligible companies must be high-carbon, pursuing decarbonization, and aligned with a net-zero 2050 pathway.
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Limitations on carbon offsets: A commitment that carbon offsets and credits will not be counted toward achieving OMERS' interim targets.
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Coal exclusion: OMERS will exclude direct investments in companies generating over 25% of their revenues from thermal coal.
While the move shows that OMERS is OMERS, climate action plan, climate, some stakeholders are urging even more ambitious measures, particularly concerning fossil fuel investments.
“I want a world where my children don’t suffer in 35°C days throughout the summer,” said OMERS member Ben Gomberg. “I want my pension fund to do everything possible, and to go faster, and not beat around the bush with just a limit on investing in coal. We must stop burning fossil fuels, and pension funds must stop financing them while pretending they’re part of a responsible future.”
Shift: Action for Pension Wealth and Planet Health, a charitable initiative that aims to foster collaboration between beneficiaries and their pension funds, addressing both climate concerns and pension protection, outlined areas for further improvement:
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Fossil fuel assets accounting: The climate action plan does not address OMERS' private co-ownership of fossil fuel companies, raising questions about how these holdings align with the sustainability goals.
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Balancing fossil fuel supply: OMERS acknowledges the need to move away from fossil fuel dependency but claims a balance must be maintained. Critics argue that this approach poses unacceptable financial and societal risks.
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Oil and gas on par with coal: Advocates urge OMERS to apply exclusions and divestment to oil and gas sectors as stringently as it does with coal.
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Engagement with fossil fuel companies: Some argue that engagement efforts with fossil fuel companies have limitations, and divestment may be a more effective strategy.
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Formalizing indigenous rights policy: While OMERS mentions the importance of indigenous rights in Canada's energy transition, it has yet to formalize a policy requiring companies to secure indigenous peoples' free, prior and informed consent for projects impacting their traditional lands.
"OMERS members and staff should be proud that the pension fund has taken the important step of crafting an inaugural climate action plan, but plan members will continue to hold their pension fund to account,” Shift said in a release. “OMERS’ next climate announcement should build out its commitments to a just transition and indigenous rights, acknowledge the limits of engagement with fossil fuel companies, and institute required exclusions.”
