At a time when the federal government is encouraging Canadian financial institutions to invest in nation-building projects, the country’s biggest pension fund keeps investing in fossil fuels and backing away from climate commitments.
The Canada Pension Plan Investment Board (CPPIB) invested at least $7.1 billion in new fossil fuel and pipeline assets between October 2024 and October 2025, pension watchdog Shift Action estimated in its annual report grading the quality, depth and credibility of climate progress of 11 of Canada’s largest pension managers. The pension fund was also recently in the spotlight for investing about $416 million into Elon Musk’s AI company xAI, which runs the controversial AI chatbot “Grok” and currently relies heavily on natural gas to power the data centres that support it.
The fund — which manages $777.5 billion in assets on behalf of 22 million Canadians — saw its score drop from a C- to a D this year thanks to the new fossil fuel investments, a quiet walk-back of its net-zero commitments and an apparent abandonment of its commitment to invest $130 billion in “green and transition assets” by the end of the decade.
The CPPIB has not reported on that $130 billion commitment since 2024, suggesting the fund has abandoned it, said Patrick DeRochie, a senior manager at Shift Action, in a phone interview with Canada’s National Observer.
CPPIB did not respond to a request for comment by deadline.
“We know that the government is looking for private capital, for institutional investors, for asset managers to invest in some of these projects of national interest, whether it be clean electricity or whether it be LNG terminals,” DeRochie said.
“It’s very clear that they’re reaching out to these Canadian pension funds to spur interest in these projects. And there’s a real question here for these pension funds about what the world looks like for their members if they choose to invest in fossil fuel expansion.”
The pension fund’s backslide is troubling on its own — but particularly so in the context of Carney’s major projects push and buzz about a possible oil pipeline, DeRochie said.
In an article published in July, the CPPIB proudly highlighted its decade of investment in Canada’s largest oil and gas producer, Canadian Natural Resources Limited, and praised its “long-term production stability.”
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Then, in September 2025, CPPIB CEO John Graham said “Here in Canada, we like pipelines. We like oil and gas pipelines,” nodding to Wolf Midstream Inc. in Alberta, a private company 99 per cent owned by the CPPIB, according to reporting by The Financial Post. Most recently, a group of youth launched a lawsuit in which they allege CPPIB is violating its legal obligations to protect their pensions from climate risk.
Other pension funds stepping up
Despite this, there are still bright spots and improvements at other pension funds, DeRochie said.
La Caisse, which manages half a trillion dollars on behalf of Quebeckers, is leading the pack with an A-, in stark contrast to laggards like CPPIB and the Alberta Investment Management Corporation (AIMCo), the latter of which did not mention climate or climate risk in its 2024 annual report and has not put out climate-related financial disclosures since 2023.
With $496 billion in assets, the Quebec pension fund has divested its oil and coal assets and has an exclusion on any new oil or coal investments. In 2025 it sold its 16.6 per cent ownership stake in Colonial Pipeline.
“[La Caisse has] been consistently saying that their portfolios are performing, that it’s been a good financial decision for them to pull out of those fossil fuels and that their renewable energy and sustainable infrastructure assets are performing quite well,” DeRochie said.
“It’s really encouraging to see La Caisse stepping up like this in an era when so many institutional investors are either greenwashing, green hushing or backsliding on their climate commitments,” DeRochie said. The pension fund did not respond to a request for comment by deadline.
La Caisse and some smaller funds such as Ontario’s University Pension Plan are showing what is possible by “really taking this seriously and acknowledging the urgency and severity of the problem and acting accordingly,” DeRochie said. The Ontario Municipal Employees Retirement System moved up a full letter grade.
Broadly, DeRochie said it’s encouraging to see some funds create good climate-related expectations of companies in their portfolio by advocating for better reporting and disclosure, voting with climate in mind and pressuring companies to start handling climate risk.
La Caisse is not fully divested from fossil fuels, the report noted. Its “achilles heel” is gas: the pension fund has an 80.9 per cent ownership stake in Énergir, the main distributor of fossil gas in Quebec, as well as ownership stakes in companies operating gas pipelines: Transportadora Associada de Gás S.A. and Southern Star Central Gas Pipeline.
CPPIB an outlier in new investments in oil and gas
With the exception of CPPIB’s estimated $7.1 billion committed to new fossil fuel assets, there actually are not a lot of new fossil fuel investments from the other big pension funds in the past couple of years, DeRochie noted.
He posited this could be related to the makeup of the board: three of CPPIB’s 10 board members also sit on the boards of fossil fuel companies, which he says raises questions about how they can fulfill their fiduciary responsibilities.
“How can you have somebody in the boardroom who is committed to climate action at the same time that they’re on the board of a company that wants to expand and prolong the use of gas?” DeRochie said.
There are also politics at play. The Alberta government shook up AIMCo in 2024 by firing the CEO and board and installing former prime minister Stephen Harper at the helm and has clearly expressed desire to withdraw from the Canada Pension Plan.
“I think that, in part, CPP is responding to that threat by appeasing those Alberta interests and showing continued support for an oil and gas industry that’s facing decline,” DeRochie said.
Some pension funds in the middle of the pack pulled back or stayed quiet about climate, which the report terms a “green hushing” problem. The Ontario Teachers’ Pension Plan (OTPP) was one of the first funds to commit to net zero and come out with a climate strategy but hasn’t updated that strategy in over three years.
“We’re really perplexed as to why Ontario Teachers, which was an early leader, has kind of started coasting or gone silent and really fallen out of that leadership position,” he said. OTPP declined to comment on the report.
Similarly, the British Columbia Investment Management Corporation (BCI) and Public Sector Pension Investment Board (PSP Investments) have no emissions reduction or climate investment targets beyond 2025 and 2026, respectively.
One of the report’s top recommendations to improve their grades is for the funds to just acknowledge the consensus climate science and the need to rapidly phase-out fossil fuels.
“Obviously, scientists are screaming at the top of their lungs about this, we’re already feeling these impacts, not just in terms of the smoke in our lungs and the evacuation of cities, but the real drag on economic growth, the real destabilisation of economic and financial systems because of climate impacts,” DeRochie said.
“We’re seeing this in real time, yet these funds still can’t acknowledge the problem, which is fossil fuels, and it just seems a little bit shocking to me, because they’re supposed to be independent, they’re supposed to be arms lengths from governments, they’re supposed to have the best financial risk analysis and management out there.”
— With files from John Woodside