ONTARIO
Queen's faculty members call on pension plan to divest from fossil fuels

Author of the article: Brigid Goulem

Publishing date: Dec 15, 2021 

More than 100 faculty members from Queen’s University, Guelph University and the University of Toronto are calling on the University Pension Plan to divest from fossil fuels and become a climate leader among pension plans.

The UPP is a new pension plan that began in July 2021 and controls the pension funds of faculty at Guelph University, University of Toronto and Queen’s University, totalling more than $10.5 billion.

As the fund establishes policies, pension managers have expressed a commitment to climate-responsible investing and have asked for feedback from members on responsible investing practices. Concerned faculty members who work in the areas of climate change and environment are calling on the fund to commit to net-zero emissions and to take on a leadership role in climate investment.

“It is the ethical thing to do, but there’s actually a lot of evidence now to suggest that it’s also the fiscally responsible thing to do. Those pension plans that are heavily invested in fossil fuels or carbon intensive industries are at the most risk as government policy shifts resources away from these areas,” Marcus Taylor, a professor of global development studies at Queen’s University, explained in an interview with the Whig-Standard.

In recent years, many pension funds, including OMERS, Caisse de Dépôt et Placement du Québec, the Ontario Teachers’ Pension Plan, and the Investment Management Corporation of Ontario, have committed to net-zero emissions, citing both the environmental concerns and profit motivation.

“Some of the biggest investment houses on the planet have done intensive studies that show divestment actually would have benefited pensions over the last five years, so if Queen’s had done what we asked five years ago, actually our pensions would have been bigger now,” Taylor said.

Taylor explained that internal and external political pressures have made the university sector slow to respond to climate concerns regarding pension funds.

“One of the reasons that universities have not divested their endowments and pension funds in the past is links to the fossil fuel sector, through alumni donations and so forth. It’s made the university sector in Canada quite slow to respond to the pressure for divestment,” he explained.

However, as the UPP is a separate entity from the university, Taylor is optimistic that it will be free from such pressures.

“It’s kind of independent of some of those political pressures from fossil fuel lobbies, other universities themselves, through alumni, donations, endowments and so forth, so we’ve asked the UPP to do something to bring their investment policies in line with what we think of as the cutting edge, to be a climate leader,” he said.

While Taylor sees the new entity as an excellent opportunity, he is cautious in his optimism and believes the fund may try to be more conservative in its climate policies.

“Pension managers like to try and create as much flexibility as possible for their operations, whereas I feel that they should be much more determined in following the best practices that we’ve seen in other places. I think this is a unique opportunity to jump on board, and because it’s starting from nothing, it can actually put something really special in place, make it a sector leader to make it a climate positive fund,” Taylor said.

Beyond the ethical and financial commitment, Taylor hopes the fund will represent the climate commitment of its largest members, the University of Toronto and Guelph University, which have both committed to divesting from fossil fuels.

“The emphasis on the UPP is not just to say, ‘All right, we’ll hit net-zero by 2050.’ It needs to be more ambitious than that. We need really clear targets by 2030 and 2040, not something pushed off into the long-distance future. (And) we also need a really clear policy on fossil fuel sector, and it should follow what the biggest contributor, U of T and Guelph, have already set as their standard policy,” Taylor said.