See French version of press release here

Toronto, Ont./ Traditional territories of several First Nations including the Williams Treaties First Nations, Huron-Wendat, the Anishnaabeg, Haudenosaunee, Chippewas, and the Mississaugas of the Credit First Nation — Four young people in Canada are taking the sixth largest pension fund manager in the world to court, claiming it is breaching its duty to invest in their best interests by failing to protect their pensions from climate risk. 

Represented by lawyers from Ecojustice and Goldblatt Partners LLP, Aliya Hirji, Travis Olson, Rav Singh, and Chloe Tse, allege that the Canada Pension Plan Investment Board (CPP Investments) is breaching its legal duties by subjecting pension contributions to undue risk of loss from poorly managed climate risk.  

The case argues that CPP Investments’ reported climate modelling drastically underestimates the financial risks of climate change to the Canada Pension Plan. This marks the first time a Canadian investor has been sued for mismanaging climate risks. Globally, it is the first climate case against a pension fund investment manager anchored in the duty of impartiality and even-handedness in a multi-generational context — in other words, the duty to act fairly towards young contributors who will retire after 2050 when climate-related financial risks will be even greater. 

The case alleges that by severely underestimating and failing to disclose climate-related financial risks, CPP Investments could expose Canadians planning to retire after 2050 to dramatically reduced retirement benefits, the need for substantially higher contribution rates, or both. Despite the legal duty to invest in contributors’ best interests, CPP Investments is failing to adequately consider what retirement will look like for Canadians if the world fails to phase out fossil fuels and avert dangerous climate impacts, the case argues. It underscores the problematic use of “black box” models in the financial sector, which often trivialize damages, provide inaccurate predictions, and create a dangerous sense of security in the face of catastrophic climate change.  

Following the pension fund’s backtracking on its net-zero commitment earlier this year, the filing also alleges that CPP Investments currently lacks adequate measures to manage climate-related financial risks, all while continuing to invest Canadians’ pension contributions in fossil fuels that worsen climate change. In particular, the applicants argue that CPP Investments has failed to address the systemic risks that climate change poses to the broader financial and economic systems, while investing Canada Pension Plan funds in companies and assets whose financial performance depends on the expanded and prolonged use of fossil fuels. 

Canada Pension Plan contributions are mandatory for most working Canadians outside Quebec between the ages of 18 and 64. As Canada’s largest pension investment manager, CPP Investments currently manages the retirement funds — with nearly $732 billion in assets under management — of more than 22 million Canadians. 

Legal and pension experts and the applicants said the following: 

“The Canada Pension Plan is the cornerstone of Canada’s social safety net, meant to ensure the retirement security of current and future generations of Canadians. Our clients are concerned and allege that CPP Investments is undermining the very retirement security of the young Canadians it is mandated to protect due to its poor management of climate risks. We hope the court’s eventual decision will provide guidance to CPP Investments and other Canadian pension funds about what they need to do to protect Canadians’ long-term best interests.” Simon Archer, Partner, Goldblatt Partners LLP 

“Without action to curb fossil fuels, we are on track for a 3°C warming by the end of this century. Economists warn that it would be like experiencing the Great Depression forever, yet CPP Investments reports only a 4% net present value loss in a ‘hot house world’. The case alleges that by recklessly downplaying one of the greatest threats to the pensions’ long-term value, CPP Investments is effectively flying blind to the real risks of climate change and failing to protect the pensions of young Canadians who will retire after 2050.” Karine Peloffy, lawyer and Sustainable Finance Lead at Ecojustice 

“Our case is alleging that CPP Investments is mismanaging our pension fund by failing to adequately respond to climate change. CPP is supposed to be one of our most reliable sources of retirement income. We should all be concerned that our CPP benefits may not be as dependable as we’d like to think.” Rav Singh, applicant, Ontario 

“I’m part of this case because I want to protect the financial interests of hardworking young people like me who want to be able to retire when we are older. If CPP Investments won’t step up and do the right thing when it comes to accounting for climate risks and protecting our financial contributions and benefits, then it’s the court’s duty to step in. My financial future is on the line.” Travis Olson, applicant, Alberta 

“Canadians from coast to coast are dying in fossil-fueled heatwaves and wildfires. Thousands of people are fleeing their homes and losing their livelihoods.  Entire towns are burning to the ground. Still, CPP Investments is investing billions of dollars in fossil fuel expansion. I’m concerned that CPP needs to be sustainable for the next 75 years and more, but it is using my pension contributions to fund the climate crisis, then telling me I should be confident in the future of the fund. A basic understanding of climate science and economics dispels CPP Investments’ claims that investing in fossil fuel expansion is compatible with sustainability, an adequate standard of living, and a functioning economy. Our pension managers are betting against our future. We deserve better, we expect better, and other financial actors should take note.” Aliya Hirji, applicant, British Columbia 

“For over six years, Shift has worked with thousands of Canadians to call on their pension managers to take the escalating financial risks of climate change seriously. CPP Investments has largely ignored those warnings, continuing to invest billions of dollars in coal, oil, gas and pipelines that lock us into a dangerous future. The science is crystal clear that fossil fuels cannot expand and must be phased out to avoid catastrophic climate change, but CPP investments managers continue to put their heads in the sand. CPP Investments most basic duty to invest in our best interest requires them to invest in a stable climate.” Adam Scott, Executive Director at Shift: Action for Pension Wealth & Planet Health (see Shift’s analysis of CPP Investment’s approach to climate risk) 

Background 

A media backgrounder is available here.

About    

Ecojustice uses the power of the law to combat climate change, defend nature, and fight for a healthy environment. Its strategic, public interest lawsuits and advocacy lead to precedent-setting court decisions, law and policy that deliver lasting solutions to Canada’s most urgent environmental problems. As Canada’s largest environmental law charity, Ecojustice operates offices in Vancouver, Calgary, Toronto, Ottawa and Halifax.