Ontario Teachers’ Pension Plan to double transition-aligned private investment by 2030
OTPP’s new climate investment strategy includes a goal to invest $70bn in transition-aligned private assets by the end of the decade
Ontario Teachers’ Pension Plan (OTPP), a Canadian asset owner with $269bn in net assets, has launched a 2030 climate investment strategy. By the end of the decade, OTPP will target $70bn in transition-aligned private market investment.
That would double its current holdings of transition assets in private markets. In a statement, the fund said the strategy will target not only climate solutions but also companies that are decarbonising their operations.
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OTPP’s president and chief executive Jo Taylor says the energy transition is a ‘generational investment opportunity’.
“Our mission is to deliver retirement security for our members, and that includes effectively addressing material long-term opportunities and risks that come with climate change and the energy transition”, commented Taylor.
“Our climate strategy recognizes that the world’s shift to cleaner energy is underway and represents a generational investment opportunity that stands to reshape economies”, he added.
Transition-aligned
Taylor says the 2030 climate investment plan is intentionally focused on private markets and active ownership. Since 2019, OTPP has reduced the emissions intensity of its holdings by around 50%. Now, the fund says, it will prioritise ‘real-world impact’.
“Accelerating the global energy transition will require a significant role for private capital, and we are pleased to set out an ambition that can have a real-world impact through working with our companies to advance transition planning and directing capital toward attractive investments in sectors tangibly enabling the energy transition”, explains OPTT’s senior managing director and global head of sustainable investing Anna Murray.
The expands OTPP’s focus from reducing financed emissions to financing reduced emissions. Murray says the evolution is ‘impactful and pragmatic’.
OTPP’s strategy will be guided by a Climate Transition Aligned (CTA) framework. The framework rests on two pillars – investing in climate solutions and backing credible and comprehensive transition plans.
The framework has been reviewed and endorsed by the Climate Bonds Initiative (CBI).
“Ontario Teachers' CTA Framework is an example of what leading investors globally are doing to help deliver a more impactful approach to investing in and accelerating the much-needed energy transition” said Sean Kidney, CBI’s chief executive and co-founder.
Devil in the details
While noting that OTPP’s new transition investment plan is ‘smart and strategic’, research and advocacy group Shift has warned that the devil is in the details. Without guardrails and credible climate commitments, the group says OTPP’s transition investment plans risk being ‘short-sighted and incomplete’.
According to Shift’s Canadian Pension Climate Report Card, OTPP is yet to disclose transition plans for its existing fossil fuel private assets or publicly commit to excluding new fossil fuel investments. In addition, Shift has questioned CBI’s endorsement of OTPP’s framework, citing concerns that details released so far do not fully align with CBI’s green or transition framework guidance.
“As the chair of the IPCC said last week, net-zero isn’t a political choice, but the only option available to face the unrelenting physical reality of climate change”, commented Adam Scott, Shift’s executive director. “The leadership of major pension funds like Ontario Teachers’ needs to question if they fully understand the gravity of the climate crisis for their institutions and their members”, he adds.
