Details sought on OMERS climate strategy

Municipal employee pension provider says it won’t shed asset for non-financial reasons

One of Canada’s largest pension providers is under scrutiny at Toronto city hall over climate change.

The Ontario Municipal Employees Retirement System (OMERS) is being asked to provide more details to the city regarding its major investments, in order to better assess its alignment with the city’s new stance on climate change.

The city is the largest employer within the plan, which has more than 500,000 members.

“The need to act decisively and quickly to reduce CO2 emissions and address climate change is clear to us all,” said retiree Eve Wyatt, addressing the city’s general government and licensing committee this week following a presentation made by OMERS.

Wyatt said that while OMERS, which has $100 billion under management globally, does have a sustainable investment committee, the terms of reference are “vague and passive.”

“You who are managing a hundred billion dollars of our retirement assets do not seem to be proactive in managing climate risk,” she said of OMERS.

The members of the committee, which met Monday, voted to set up a meeting between city officials and OMERS management to discuss how OMERS directs its portfolio, including its major investments.

At the meeting, representatives from OMERS, including George Cooke, chair of the board of directors of OMERS Administration Corp., outlined some of the policies already in place around climate change, but also pointed out that the organization has a statutory requirement to act in the financial interest of its clients.

“We wouldn’t shed an asset for nonfinancial reasons,” OMERS executive vice-president and general counsel Michael Kelly told the committee.

In response to questions from the Star after the meeting, OMERS spokesperson Neil Hrab confirmed the company is invested in oil, gas and pipelines, but is not invested in coal. Three per cent of the total fund is invested in clean energy and renewables, he added.

“We believe that OMERS can have a greater positive impact through engagement, rather than divestment,” Hrab wrote.

“While OMERS continues to carefully and selectively invest in traditional energy assets as part of a balanced energy portfolio, clean energy is a significant and growing part of our strategy.”

Hrab said the upcoming 2019 annual report will include climate change disclosure aligned with the Task Force on Climate-related Financial Disclosures, a global effort to develop voluntary, consistent climaterelated financial risk disclosures for use by companies.

“OMERS is committed to becoming a leader in this space,” said Hrab, adding that the company’s real estate arm, Oxford Properties Group, is building Canada’s first two zero-carbon office towers (in Toronto and Vancouver), and Oxford has committed to make a 30 per cent reduction in carbon emissions from its global property portfolio by 2025.

In October, Toronto city council declared a climate emergency, joining 800 governments in 16 countries that had already done so.

At the time, environmentalists warned that the city would have to back the declaration with substantial action in order for it to have any impact. OMERS has made progress, but could be doing more, according to Patrick DeRochie, pension engagement manager for Shift: Action for Pension Wealth and Planet Health, an initiative that promotes lobbying institutional investors to encourage them move away from oil, gas and pipeline investments.

“They’re still, when it comes down to it, investing in highcarbon assets,” DeRochie said, pointing out that pension funds in California and Europe have already divested of investments in all fossil fuels, and the Caisse de dépôt et placement du Québec has set targets for lowering the carbon intensity of its portfolio. The meeting with OMERS and city officials is slated to take place sometime in the first quarter of 2020.

“The move is on towards renewables,” said Rosemary Boissonneau, a co-chair of ClimateFast, who also addressed the city committee on Monday.

“To be investing in pipelines and tarsands, it doesn’t make any sort of financial sense as long-term investments for pension funds.”