Ontario Pension Manager Earns Praise for New Climate Targets, Concern About ‘Weasel Words’

A watchdog group is praising an Ontario public pension fund manager for promising to phase out new fossil fuel investments, but still accusing it of using “weasel words” for some of the details in the plan.

With the release of its interim net-zero targets last week, the C$79-billion Investment Management Corporation of Ontario (IMCO) pledged to cut the emissions intensity of its portfolio in half and pour 20% of its investments into climate solutions by 2030. It promised to prioritize relationships with fund managers and companies that have made their own net-zero commitments, “limit exposure to investments” in thermal coal mining and Arctic drilling, and “phase out new investment commitments in development of new unabated fossil fuel assets”—those that don’t include carbon capture technology.

New!

It also said it would step up its climate engagement with the companies it invests in and consider divesting if extensive engagement doesn’t improve their climate performance.

IMCO is the pension manager for more than 93,000 active and retired civil servants in Ontario, and also manages assets for the insurance and benefit funds of the province’s Workplace Safety and Insurance Board, as well as the Provincial Judges’ Pension Plan.

“The global transition to a net-zero economy will be one of the more powerful investment trends in the coming years. It will create material risks and opportunities for all investors, including our clients,” IMCO President and CEO Bert Clark said in a release. “The targets we have set for 2030 reflect our pragmatic approach to helping our clients mitigate the risks and benefit from the opportunities associated with the transition to a low-carbon economy.”

In an email to supporters, Shift Action for Pension Wealth and Planetary Health praised IMCO’s plan as a “big step toward its commitment to net-zero emissions by 2050 or earlier,” pointing to the phaseout language as well as the “climate guardrails” the fund manager is promising for investments that don’t match up with a net-zero future.

“The plan puts IMCO in the orbit of leading Canadian pension funds on climate, and shows that IMCO is listening to the hundreds of working and retired Ontario public servants who have raised concerns about how their retirement savings are being invested in the face of a worsening climate crisis,” Shift Action said.

A Shift Action release highlighted the 20% investment commitment, the 50% emissions intensity reduction, and the commitment to engagement. But it cautioned that the language on climate guardrails “contains some concerning and confusing loopholes”. It called on IMCO to clarify its timeline for phasing out new fossil investments, explain the role it sees for carbon capture, and commit to measuring and reporting on the Scope 3 emissions that account for the lion’s share of the carbon pollution in a barrel of oil.

Shift Action Executive Director Adam Scott went a step farther in an interview with Yahoo! Finance, warning that “weasel words” like “new,” “unabated,” and “appropriate” could undercut IMCO’s overall effort.

“There’s some stuff in [the plan] that we haven’t seen a lot of from Canadian pension funds, so we’re excited to see that,” he said. But when it comes to the detailed language, “this is where it gets tricky… I don’t know what ‘phase out new commitments’ means. You would phase out existing commitments, or you would screen new investment commitments. How are you phasing out new things that you haven’t done yet? That’s a head-scratcher.”

As well, “they use the weasel word ‘unabated fossil fuel’. They don’t provide a definition of what abated means,” he added. “There is no abating oil if you’re burning it as gasoline in your car.”

IMCO did not reply to an email requesting details on its timeline for phasing out new and existing fossil investments, the role it sees for carbon capture, and its plan for measuring Scope 3 emissions.