Report urges B.C.'s public sector pension funds to divest from fossil fuels

The pensions of more than 500,000 British Columbians who work in the public sector are too dependent on the fossil fuel industry, the Canadian Centre for Policy Alternatives argues in a new report.

More than $3 billion of the $135.5 billion managed by the British Columbia Investment Management Corporation (BCI) is invested in the top 200 publicly traded oil and gas companies, according to the study, titled "Canada's Fossil-fuelled Pensions."

Co-author Zoë Yunker, a graduate student at the University of Victoria, said that's troubling in light of Canada's commitment to the Paris Agreement, meant to limit the global increase in temperature to 2 C above pre-industrial levels.

"The two-degree limit is not a choice. We absolutely need to limit fossil fuels and transition toward a clean energy economy," Yunker said.

BCI is the fourth largest pension fund manager in the country, and it handles the funds of everyone from university employees, to municipal workers, teachers and members of the public service.

The report calls BCI's investment in fossil fuels "both a moral failing and a financial risk" and says the corporation should divest from oil and gas companies and reinvest in more sustainable stocks.

BCI promises climate action plan

BCI spokesperson Gwen-Ann Chittenden said the corporation looks for investments "that generate reliable returns" — and that includes the oil and gas industry.

But that doesn't mean the fund manager is ignoring the Paris Agreement, she added.

"Climate change is increasingly becoming a focus of both long-term investment risk and opportunity among global investors. And over a number of years, BCI has been researching and formalizing our approach to climate action in response to the two-degree Celsius limit," Chittenden said in an email.

She said BCI has created new tools for addressing concerns about climate change through investment and developed a climate action plan that will be released to the public soon.

Disadvantages to 'cut and run' approach

And it's not always realistic for pension fund managers to divest completely from the fossil fuel industry, according to Christie Stephenson, the executive director of UBC's Peter P. Dhillon Centre for Business Ethics.

A corporation like BCI could shed its shares in companies that are refusing to transition to more sustainable energy sources, Stephenson said.

But, she wrote in an email, "there is power in owning some companies in the energy sector to influence them to move quickly to low carbon strategies while a 'cut and run' approach gives up that leverage."

She said pension fund managers like BCI could also shift more of their money into renewable energies and use their power as shareholders to lobby companies to take more action on climate change.

"An investment manager like BCI has an opportunity to be a real leader in not only acknowledging climate change as an investment risk, but to help drive the change in corporate behaviour that is crucial to ensuring we don't exceed 2 C," Stephenson said.

With files from Deborah Goble