In the first case of its kind, four young Canadians are taking one of Canada’s largest financial institutions (Canada Pension Plan Investment Board (CPPIB) to court for putting their pensions at risk.
Tell me more
Just like more than 22 million other Canadians, Aliya, Chloe, Rav, and Travis make mandatory contributions to the Canada Pension Plan with every paycheck.
Our pensions are supposed to be safe for the day we’re ready to retire. Those in charge of managing our pensions have legal duties to invest in the best interests of their contributors and beneficiaries. This helps ensure the Canada Pension Plan can pay retirement benefits, both today and for young contributors 30 or 50 years in the future.
But instead of protecting your pension from climate-related losses, Canadian pension funds are investing billions of dollars of pension contributions in fossil fuel expansion, bankrolling the climate crisis — and ultimately, putting our pensions at risk.
What’s the problem?
Our clients are sounding the alarm to all Canadians: if you’re planning to retire after 2050, your pension could be at risk.
Research shows that Canadian pension funds are especially vulnerable to climate-related risks compared to other countries. In fact, a study by Ortec Finance warns that rising temperatures, more frequent and severe extreme weather events, and declining agricultural activity could cut investment returns by more than 50 per cent by 2050.
By failing to account for the financial risks of climate change, we allege Canada’s largest pension investment manager, CPP Investments, which manages the Canada Pension Plan, is putting our public pensions at risk in two ways:
- The pension manager risks the future value of our pensions by locking contributors into fossil fuel investments that will exacerbate runaway climate change and destabilize the economy and financial system.
- The pension manager risks the future value of our pensions by locking contributors into fossil fuel investments as the rest of the world pivots to climate solutions.
Ignoring (severely underestimating or failing to disclose) climate-related financial risks could mean that young people, particularly those planning to retire after 2050, could face an inadequately funded pension that requires reduced retirement benefits or the need for significantly higher contribution rates. Or both.
What are we fighting for?
This case is about protecting the financial interests of Canadians.
People often equate climate action with higher costs. But ultimately, climate risks are financial risks – and our case alleges that one of Canada’s largest financial institutions is putting our national pensions at risk.
Our clients’ argument is simple: CPP Investments is failing to protect us from climate risks. With young contributors’ retirement funds in particular on the line, it’s not just the role of the courts to step in and protect our contributions, it’s their duty.
