Canada’s largest pension investment manager sued over alleged climate risk mismanagement
Four young Canadians are taking one of the world’s largest pension fund managers to court, claiming it is breaching its duty to invest in their best interests by failing to protect their pensions from climate risk.
Represented by lawyers from Ecojustice and Goldblatt Partners LLP, Aliya Hirji, Travis Olson, Ravneet Singh, and Chloe Tse, allege that the Canada Pension Plan Investment Board (CPP Investments) is breaching its legal duties by subjecting pension contributions to undue risk of loss from poorly managed climate risk.
The case argues that CPP Investments’ reported climate modelling drastically underestimates the financial risks of climate change to the Canada Pension Plan. The case alleges that, by severely underestimating and failing to disclose climate-related financial risks, CPP Investments could expose Canadians planning to retire after 2050 to dramatically reduced retirement benefits, the need for substantially higher contribution rates, or both.
Despite its legal duty to invest in contributors’ best interests, CPP Investments is failing to adequately consider what retirement will look like for Canadians if the world fails to phase out fossil fuels and avert dangerous climate impacts, the case argues.
Following the pension fund’s backtracking on its net-zero commitment earlier this year, the filing also alleges that CPP Investments currently lacks adequate measures to manage climate-related financial risks, all while continuing to invest Canadians’ pension contributions in fossil fuels that worsen climate change. In particular, the applicants argue that CPP Investments has failed to address the systemic risks that climate change poses to broader financial and economic systems, while investing Canada Pension Plan funds in companies and assets whose financial performance depends on the expanded and prolonged use of fossil fuels.
Canada Pension Plan contributions are mandatory for most working Canadians outside Quebec between the ages of 18 and 64. As Canada’s largest pension investment manager, CPP Investments currently manages the retirement funds — with nearly $732 billion in assets under management — of more than 22 million Canadians.
“The Canada Pension Plan is the cornerstone of Canada’s social safety net, meant to ensure the retirement security of current and future generations of Canadians. Our clients are concerned and allege that CPP Investments is undermining the very retirement security of the young Canadians it is mandated to protect due to its poor management of climate risks. We hope the court’s eventual decision will provide guidance to CPP Investments and other Canadian pension funds about what they need to do to protect Canadians’ long-term best interests.”
Simon Archer, Partner, Goldblatt Partners LLP
See the following articles for more information:
Bloomberg News: Canada Pension Plan sued by young people over climate risks
Globe & Mail: Lawsuit alleges CPPIB failing to properly factor climate risk
Toronto Star: CPP Investments accused of failing to properly factor climate risk
See also:
Ecojustice: Canada’s largest pension investment manager sued over alleged climate risk mismanagement
Shift Action: Four young Canadians take CPPIB to court to protect their pensions from climate risk
Lawyers
Simon Archer, Louis Century, Tina Yang