Climate Change and its impact on pension investment

Climate change is one of the most important and relevant issues to our members and OPB recognizes that climate change poses a material and increasing risk to a range of assets we may invest in.

OPB and our investment manager, Investment Management Corporation of Ontario (IMCO), are committed to making meaningful progress in managing climate change risk through our investments. We believe it’s important to inform plan members on the progress we’ve made so far.

One significant step is the creation of an Environmental, Social and Governance (ESG) Policy, which was recently approved by our Board of Directors. This policy clearly sets out the mandate for OPB and IMCO when it comes to managing our investments.

In addition, in early 2021 IMCO took a key step to address climate change risk by conducting climate scenario analysis of our asset allocation strategy. That analysis informed the work IMCO undertook to establish a robust Climate Strategy and Climate Action Plan to help it reach net-zero greenhouse gas (GHG) emissions by 2050 or sooner. This plan is based on four pillars: capital deployment, asset ownership, portfolio management, and climate guardrails (minimize exposure to investments incompatible with the transition to a net zero economy while supporting transitioning assets). Visit imcoinvest.com(opens in a new tab) to learn more. Another step that IMCO is taking on behalf of its clients include completing its emissions baseline expected to be released by mid-2022.

We know a range of activities is vital to make considerable progress to address climate change risk. IMCO have begun to address the recommendations from the Task Force on Climate-Related Financial Disclosure and will report against these recommendations this year. Late last year, IMCO announced that it joined the growing list of asset managers who have committed to achieve net-zero alignment by 2050 or sooner. By joining the Paris Aligned Investment Initiative on climate action, IMCO also became part of the United Nations Race to Zero(opens in a new tab) and the Glasgow Financial Alliance for Net Zero(opens in a new tab). For more detail on these commitments, visit imcoinvest.com(opens in a new tab).

Consistent with these net zero targets, in October 2021, both OPB and IMCO were founding signatories of the Canadian Statement on Climate Change and there is an urgent need to accelerate toward a net-zero economy.

Moving forward, we expect IMCO to continue to make significant progress on addressing the impact of climate change, including consideration of divestment of positions in companies where there is insufficient action. And, to ensure OPB’s expectations are being met we regularly engage with and monitor IMCO on its progress on ESG issues.

See more updates on ESG initiatives in our 2021 Annual Report. If you have feedback regarding our ESG activities, please contact us at feedback@opb.ca and ensure you indicate “ESG feedback” in the subject line.