Industry

Canadian Pension Fund Makes C$1 Billion Renewables Investment

OTPP adds to renewable infrastructure portfolio with global offshore wind deal.

Canada’s Ontario Teachers’ Pension Plan (OTPP) is making a C$1 billion (US$770 million) investment in a portfolio of offshore wind projects.

The C$241.6 billion asset owner has been orientating its investment strategy toward climate goals by investing in renewables over the last year, and has now partnered with an offshore wind specialist, Corio Partners, to generate up to 9 GW of offshore wind capacity at sites around the world, with the deployment of C$1 billion in development capital.

The partnership with Corio involves 14 projects across South Korea, Taiwan, Japan, Ireland, and the UK, currently in development. OTPP will purchase a 50% stake in the projects, driving development and construction across the portfolio.

“Offshore wind is poised for significant growth in the years ahead as countries work towards ambitious decarbonisation goals,” said Chris Ireland, Managing Director, Greenfield Investments and Renewables Infrastructure and Natural Resources at OTPP.

OTPP already holds more than C$26 billion in infrastructure assets across five continents, including a sizeable portfolio of renewable assets.

Last September, OTPP committed to reduce its portfolio carbon emission intensity by 45% by 2025 and 67% by 2030, compared to a 2019 baseline. The targets cover the fund’s real assets, private natural resources, equity and corporate credit holdings across public and private markets, including external managers.

Canadian pension funds have been criticised for being slower than international peers when it comes to integrating climate targets into their investment strategies.

In September last year, the 10 largest pension fund boards were sent letters requesting information on how they were fulfilling their fiduciary responsibilities to beneficiaries in the face of escalating climate-related financial risks, by members in collaboration with Canadian NGO Shift.

Shift said many pension funds in Canada were still taking the line that changing their investment strategies to account for climate change would prohibit them from carrying out their fiduciary duty.

Raising the bar

But OTPP was described as “raising the bar for climate leadership among Canadian pension funds”, following the publication of its 2021 Annual Responsible Investing and Climate Change Report.

According to a Shift analysis, among the private companies it owns, it boosted emissions reporting to 56% in 2020, up from 37% in 2019. Last year it held C$30 billion in green investments, including in renewable energy (Equis Development), sustainable agriculture (Vayda), and real estate (Cadillac Fairview’s waste diversion efforts).

Earlier in the year, Canadian pension fund trustees were warned to consider climate change as part of their legal responsibilities. The Canada Climate Law Initiative issued a legal opinion detailing that pension fund trustees must  consider climate impacts as part of their obligations, or ignore them “at their own peril.”

A report from the Thinking Ahead Institute released earlier this year urged pension funds globally to Paris-aligned plans into action now to meet targets.

“It is time for the investment industry to translate their net zero announcements into concrete strategies, with 2030 serving as an essential way point to net zero greenhouse gas (GHG) emissions,” said Roger Urwin, Co-founder of Thinking Ahead Institute.

“While pension funds so far have put in a lot of effort to produce these plans, they aren’t yet fit for purpose, aligned and ready to deliver on those 2025-30 commitments.”

 

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