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‘Troubling Incrementalism’: Is the Canadian Pension Plan Fund Doing Enough to Advance the Transition to a Low-carbon Economy?

By Cynthia A. Williams - Canada Climate Law Initiative, September 2020

The Canada Pension Plan (CPP) is one of the world’s largest public pension funds, with $409.5 billion in assets under management as of March 31, 2020. The mandate of the CPP Investment Board (CPPIB) is to manage the funds of the CPP in the best interests of Canadian Pension Plan contributors and beneficiaries, and to maximize investment returns without undue risk of loss.1 As CPP Investments CEO and President Mark Machin has recently observed, “our investment mandate and professional governance insulate our decision-making from short-term distortions and gives us license to help shape the long-term future.”2 (In 2020, CPPIB rebranded itself CPP Investments.3 Since CPPIB is the legal entity with the statutory authority to manage CPP assets, and since many of the quotes in this report or actions being described were taken prior to the rebranding, we will continue to use the term CPPIB in those quotes and in discussing those actions. We will use the term CPP Investments if we are specifically quoting from the 2020 Annual Report, where CPPIB uses the term CPP Investments, or if we are specifically referring to actions taken in 2020. Both “CPPIB” and “CPP Investments” refer to the asset management entity that has the statutory authority to invest CPP assets under the CPP Investment Board Act.)

The Canada Climate Law Initiative agrees with CEO Mark Machin’s statement: the CPP has the license, and we would argue the responsibility, to help shape the long-term future in Canada. CPP Investment’s recognition of this power to shape the future that Canadians will retire into is missing in most of its public communications, although it often emphasizes the advantages that accrue to a large, patient-capital investor. We have produced this Report to encourage CPP Investments to be more focused on shaping the future we need in Canada. In specific, we urge CPP Investments to do more to support the transition to a low-carbon economy in Canada, both for purely financial reasons, and for reasons of intergenerational equity necessary to fullfil its fiduciary duties.

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