A new “climate action plan” from the manager of B.C.’s $211 billion portfolio of public sector pension and insurance fund investments has received a failing grade from an environmental watchdog group.
The group, Shift Action for Pension Wealth and Planet Health, says the BC Investment Management Corp. (BCI), which is partly managed by oil and gas company directors, is offering a “weak attempt at a credible climate strategy” by continuing to invest in new oil, gas and coal projects while not committing to net-zero emissions by 2050 or sooner, unlike other Canadian pension funds.
The corporation manages pensions for teachers, nurses, municipal employees, BC Government employees and most college and university staff, amounting to $164 billion. It also manages $43 billion of insurance funds for credit union deposits, ICBC and WorkSafeBC. Over $4 billion of public trusts and endowments round out the portfolio.
While the portfolio is expansive and diversified, Shift Action argues BCI still has billions of dollars invested directly in fossil fuel companies, with no commitment to divest. The groups says BCI's carbon emission plans, which would ostensibly line up global ambitions to keep the Earth from warming two degrees Celsius above pre-Industrial levels, remains “unclear.”
Among key fossil fuel investments, BCI has $453 million in TC Energy Corp., $240 million in Enbridge, $186 million in Pembina Pipeline Corp., $188 in Petroleo Brasiliero and $143 million in Suncor.
BCI is also a private owner of fossil fuel companies and infrastructure around the world through its “infrastructure and renewable resources” private portfolio, noted Shift Action.
Last May, a group of B.C. teachers staged a protest in Vancouver calling for the BC Teachers’ Federation (BCTF) to pull all of its investments out of companies supporting the fossil fuel industry.
Now, Shift Action’s Patrick DeRochie and Adam Scott note BCI’s November 2022 Climate Action Plan has no interim targets for reducing its public equity portfolio’s carbon footprint, beyond a target to reduce the “carbon intensity” by 30 per cent by 2025.
The corporation’s overall assertion it “will track and report the total portfolio carbon footprint with the expectation that it will decrease over time,” without clearer targets in mind makes it “impossible for beneficiaries to hold BCI accountable,” asserted the group.
And whereas Ontario’s public service pension manager committed to invest 20 per cent of its portfolio in “climate solutions “by 2030, Shift Action notes BCI only has an “unclear commitment” to invest $5 billion in sustainable bonds, including green bonds, by 2025.
Climate solutions, according to the plan, may include a coal-fired electric utility that generates 10 per cent of its revenue from renewable energy, the group noted.
The corporation is also not pledging to divest from such companies but is choosing to keep money with them so long as most (80 per cent) have set net-zero commitments for 2050, by 2030.
“This suggests, alarmingly, that BCI plans to continue investing in high-risk fossil fuel companies in 2030 and beyond, even if another eight years of engagement efforts fail to achieve climate alignment,” said DeRochie and Scott in a joint written statement.
Presently, only 25 per cent of the potfolio’s “carbon-intensive” investments have a so-called “mature” commitment. While 53 per cent have an “emerging” commitment.
BCI spokesperson Olga Petrycki said the 2030 goals will be achieved with “direct or collaborative climate engagement” with companies, adding that BCI acknowledges climate change as a key financial risk.
“As a significant investor with a global portfolio, we continue to use our influence to meaningfully drive the green energy transition by engaging with our investment companies, as well as work to reduce climate risk across the portfolio,” said Petrycki.
“We will advocate for supportive regulatory policies that help create the conditions needed to move as close to net-zero as possible.”
Public companies are increasingly moving toward an international system that requires them to disclose the risks and opportunities they are running in the face of climate change. But Shift Action says there’s little evidence to suggest mere collaboration or pressure from BCI will influence the companies it invests in.
“There is no indication that BCI’s engagement and advocacy efforts have resulted in even a single oil and gas company aligning its business model with a safe climate future,” the group stated.
“It is difficult to understand why BCI would continue to pursue this engagement strategy into 2030 and beyond, while explicitly writing off the critical tool of divestment for unfounded reasons.”
But Petrycki noted BCI has used its voting power to improve carbon plans from within companies. BCI, Petrycki said, supported 80 per cent of climate-related shareholder proposals in 2021, compared to 52 per cent in 2020. And it voted against 51 directors at 34 companies for “weak” responses to climate change risk.
BCI claims divestment is not effective; rather, “ownership gives an investor the right and avenue to raise concerns and influence a company on… its environmental and social practices.”
Shift Action also criticized BCI executives for taking positions as board directors for oil and gas companies.
In its May 2022 report, “Canada’s Climate-conflicted Pension Managers,” Shift Action identified nine BCI executives who are directing fossil fuel companies.
The report cites BCI’s senior managing director Jerry Divoky, a director for Endeavour Energy, GasNet CZ and Pacific National, according to his LinkedIn profile. And according to his company information, Lincoln Webb is BCI’s executive vice president and global head of infrastructure and renewable resources, while sitting on the boards of two fossil fuel companies.