TORONTO -- Ontario Teachers' Pension Plan Board says it has signed a deal with a subsidiary of NextEra Energy Inc. to buy a 50 per cent stake in a portfolio of 13 wind, solar and energy storage assets in the U.S. for US$849 million.
The pension fund manager has also committed to buy at least a 25 per cent interest in a US$824-million convertible equity portfolio financing announced by NextEra Energy in October.
NextEra Energy manages and owns contracted clean energy projects.
Chris Ireland, managing director, greenfield and renewables at Ontario Teachers', says the investment marks the beginning of what is expected to be a long-term partnership with the company.
The deal is expected to close later this year or in early 2022, subject to customary closing conditions and regulatory approvals.
The pension fund manager committed earlier this year to having net-zero greenhouse gas emissions across its portfolio by 2050.
Municipal employees pension fund commits to net-zero emissions by 2050
Author of the article: Brigid Goulem
Publishing date: Nov 29, 2021
The Ontario Municipal Employees’ Retirement System, the pension plan for municipal employees, committed this week to achieving net-zero emissions by 2050.
The recent announcement by OMERS follows in the footsteps of net-zero commitments by other major pension funds across Canada, including Caisse de depot et placement du Quebec, the Ontario Teachers’ Pension Plan and the Investment Management Corporation of Ontario, and only six weeks after city council passed a motion calling on the pension fund to implement targets to eliminate fossil fuels and invest in renewable energy.
“We’ve seen some action from municipal councils, and the resolution that was passed by Kingston I think was very significant and increased the pressure on the plan to have a coherent response to the climate crisis. I can also say that internationally a large and growing number of major pension plans have been moving towards finally setting up a plan for alignment for their investments (with the 2050 goal from the Paris Accord),” Adam Scott, director of Shift: Action for Pension Wealth and Planet Health, said in an interview with the Whig-Standard.
While this week’s announcement does not commit to divesting from fossil fuels, Scott believes it is an important step for both the health of the planet and the sustainability of the fund’s investments.
“The commitment that was made, they do not have a plan in place to meet yet, I think that’s fair to say. But we can give them some credit. They’ve just announced this long-term target, (so) they’re obviously going to come back with more detail,” Scott explained.
The goal of achieving net-zero emissions by 2050 builds on an existing commitment by OMERS to reduce the carbon intensity of the total portfolio by 20 per cent by 2025, which Scott says will require divestment from fossil fuels.
“It’s going to be very difficult for a pension fund like OMERS to remain heavily invested in fossil fuels and hit any interim target that it’s going to set for itself. The largest highest carbon in its portfolio needs to be removed quickly,” Scott said.
While he believes that some higher carbon industries have room to decarbonize, there is no viable pathway to net-zero emissions for fossil fuel production and transportation.
“Lots of companies have credible and profitable pathways to decarbonize themselves over time, but fossil fuel companies by and large, do not … there’s no credible pathway for companies that extract, produce and transport fossil fuels directly for combustion. So that’s why we single out of fossil fuels as being particularly high risk,” he said.
While Scott is glad to see a commitment to reduce emissions, he expressed concern regarding the ambiguity of “net-zero” emissions.
“The net-zero is sort of an attempt at providing some flexibility globally,” he explained. “It’s interpreted very problematically in most of these (commitments), and I’m assuming net-zero could mean that they (think they) can somehow purchase offsets or something, which just isn’t true. For an investor like OMERS, the portfolio needs to really reach absolute zero emissions by 2050.”
Despite some concerns, Scott is glad to see OMERS following the lead of other major pension funds across Canada and committing to achieve net-zero emissions.
“OMERS manages the investments of municipal employees across Ontario, and municipalities are leading on climate action in many cases. Most municipalities now have strong climate plans and they’re implementing them, and they’re also on the front lines of the impacts, so it’s about time that the pension fund manager for those employees is also aligning the strategy with the same goals. So that’s really good to see,” he said.
Author of the article: Brigid Goulem
Publishing date: Nov 29, 2021
The Ontario Municipal Employees’ Retirement System, the pension plan for municipal employees, committed this week to achieving net-zero emissions by 2050.
The recent announcement by OMERS follows in the footsteps of net-zero commitments by other major pension funds across Canada, including Caisse de depot et placement du Quebec, the Ontario Teachers’ Pension Plan and the Investment Management Corporation of Ontario, and only six weeks after city council passed a motion calling on the pension fund to implement targets to eliminate fossil fuels and invest in renewable energy.
“We’ve seen some action from municipal councils, and the resolution that was passed by Kingston I think was very significant and increased the pressure on the plan to have a coherent response to the climate crisis. I can also say that internationally a large and growing number of major pension plans have been moving towards finally setting up a plan for alignment for their investments (with the 2050 goal from the Paris Accord),” Adam Scott, director of Shift: Action for Pension Wealth and Planet Health, said in an interview with the Whig-Standard.
While this week’s announcement does not commit to divesting from fossil fuels, Scott believes it is an important step for both the health of the planet and the sustainability of the fund’s investments.
“The commitment that was made, they do not have a plan in place to meet yet, I think that’s fair to say. But we can give them some credit. They’ve just announced this long-term target, (so) they’re obviously going to come back with more detail,” Scott explained.
The goal of achieving net-zero emissions by 2050 builds on an existing commitment by OMERS to reduce the carbon intensity of the total portfolio by 20 per cent by 2025, which Scott says will require divestment from fossil fuels.
“It’s going to be very difficult for a pension fund like OMERS to remain heavily invested in fossil fuels and hit any interim target that it’s going to set for itself. The largest highest carbon in its portfolio needs to be removed quickly,” Scott said.
While he believes that some higher carbon industries have room to decarbonize, there is no viable pathway to net-zero emissions for fossil fuel production and transportation.
“Lots of companies have credible and profitable pathways to decarbonize themselves over time, but fossil fuel companies by and large, do not … there’s no credible pathway for companies that extract, produce and transport fossil fuels directly for combustion. So that’s why we single out of fossil fuels as being particularly high risk,” he said.
While Scott is glad to see a commitment to reduce emissions, he expressed concern regarding the ambiguity of “net-zero” emissions.
“The net-zero is sort of an attempt at providing some flexibility globally,” he explained. “It’s interpreted very problematically in most of these (commitments), and I’m assuming net-zero could mean that they (think they) can somehow purchase offsets or something, which just isn’t true. For an investor like OMERS, the portfolio needs to really reach absolute zero emissions by 2050.”
Despite some concerns, Scott is glad to see OMERS following the lead of other major pension funds across Canada and committing to achieve net-zero emissions.
“OMERS manages the investments of municipal employees across Ontario, and municipalities are leading on climate action in many cases. Most municipalities now have strong climate plans and they’re implementing them, and they’re also on the front lines of the impacts, so it’s about time that the pension fund manager for those employees is also aligning the strategy with the same goals. So that’s really good to see,” he said.
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