Ontario Teachers’ Pension Plan faced with growing pressure to divest from fossil fuels

On a cold afternoon in late February, a small group of teachers, students and activists gathered outside the Ontario Teachers.

Protest outside OTPP offices on Yonge Street March 2.

On a cold afternoon in late February, a small group of teachers, students and activists gathered outside the Ontario Teachers Pension Plan office on Yonge Street to offer up a fossil fuel-inspired rendition of Pink Floyds The Wall. Hey, teachers, keep it in the ground.

While some 700 institutions in 76 countries have committed to divesting a total of $5 trillion from fossil fuel companies, the OTPP continues to pour a hefty $24.8 billion of its $170 billion in total retirement holdings into dirty oil, coal and natural gas projects, and the pipelines that enable them.

Efforts are afoot to get divestment motions on the floor for debate at the annual general meetings of both the Ontario English Catholic Teachers’ Association (OECTA) and Ontario Secondary School Teachers’ Federation this weekend. For the past few years, an array of motions around urging the unions to divest in fossil fuels have been put forward but haven’t made it to the floor for voting.

But with Naomi Klein speaking at OECTA’s meeting, there is hope this year teachers will finally get moving on divestment.

Says elementary school teacher Kim Fry, a former Greenpeace forest campaigner and organizer of the OTPP protest, “There are some higher up folks in union that have been pretty aggressive with me about not talking about this.”

When reports emerged last month that Kinder Morgan was in talks with OTPP, the Canadian Pension Plan and others to help finance its $6.8 billion pipeline expansion, which is now due to begin construction in September, the OTPP was slow to distance itself from the project. The OTPP finally denied involvement in the project in a tweet February 27: Ontario Teachers is not in talks to finance Kinder Morgan pipeline expansion. Ontario Teachers also quietly ditched its Enbridge stock back in September in the face of violent police crackdown on protests in North Dakota over the gas giant’s $1.5 billion stake in the contentious Dakota Access Pipeline.

Fry says the decisions are a sign that growing pressure for divestment is working, even though the OTPP continues to hold significant investments in fossil fuels, including a whack of major oil companies. Among them: Chevron, Suncor, Imperial Oil and Phillips.

Its also got shares in Exxon, but as Toronto350.orgs Brian Young tells NOW, those shares became invisible in 2015 when OTPP raised the threshold for public reporting on its investments to $150 million.

Young says Cenovus may be the most troubling investment on OTPP’s books. OTPP bought the company’s Heritage Royalty assets (approximately 2 million hectares of royalty interest and mineral fee title lands in Alberta, Saskatchewan and Manitoba) for $3.3 billion off the tar sands extractor in 2015.

The sale saved Cenovass bacon at the time of dropping oil prices, says Young.

While OTPP has become the focus of recent divestment efforts, the Canadian Pension Plan is even worse, environmentally speaking, says John Bennett, a senior policy advisor with Friends of the Earth. Bennett says, If you look at what they bought in recent years (the Devon Energy Pipeline, Encana and Western Petroleum) they were literally bailing out big Canadian oil companies.

Besides investments in Enbridge, Kinder Morgan, Exxon, Chevron and more than 30 coal companies, more recently, Bennett says, the plan “has gone on a fracking binge, buying up all of Encanas assets in Colorado, including 95 per cent of the Denver-based energy giant, the Broe Group.

Given the current depressed state of oil markets Royal Dutch Shell sold its assets in the oil sands this week the real question is how prudent is it for the OTPP and CPP to continue to invest in fossil fuels.

Corporate Knights’ Clean Capitalist Decarbonizer has done the number crunching on how much the CPP, OTPP and others have lost for not dumping their carbon assets and shifting to green investments years ago. By CK’s calculations, CPP lost out on more than $7.8 billion more in returns and OTPP some $7.1 billion.

OTPP and CPP did not respond to interview requests from NOW, but both have been public about their preference not to divest from fossil fuels completely. The OTPP maintains on its website that, Engaging with companies directly is more effective and constructive than divestment, because we can use our influence to encourage changes in corporate practices.

The CPP emphasizes its support for climate change-related shareholder resolutions on its website. We do this because we recognize that climate change has the potential to significantly impact our investments. As an engaged owner, we believe we can have a powerful influence on the companies in which we invest.

Interestingly enough, Canadian pensions have actually been credited with boosting responsible investments in this country. The Responsible Investment Association reported recently that pension fund assets account for 75 per cent of the Canadian responsible investment industrys growth over the past two years, thanks in part to new regulations in Ontario that require pension plans to disclose whether, and to what extent, environmental, social and corporate governance factors (ESG) are considered when making investments.

But Fry doesnt buy it. Engagement works in some sectors, like forestry – there are more sustainable ways to do forestry than others. But when it comes to burning fossil fuels theres no better way to do it. Its all bad. We just need to stop.

Major pension funds in England, Sweden, Denmark and New York State seem to agree. Theyve all committed to greening their portfolios and shifting to low carbon investments.

As the Canadian Centre for Policy Alternatives noted in a 2015 report making the economic case for divestment, Canadian pension funds can be part of the solution to climate change, or continue to bank the retirement future of its investors on a dying planet.

ecoholic@nowtoronto.com | @ecoholicnation