Environmental advocacy group Stand.earth has taken a bold step by enlisting a high-profile law firm to warn six major Canadian pension funds against investing in liquefied natural gas (LNG) megaprojects. The group argues that climate-related and other risks could expose plan administrators to legal action. The letter, sent by Anne-Julie Asselin of Trudel Johnston & Lespérance, targets trustees of the Canada Pension Plan Investment Board, Public Sector Pension Investment Board, Ontario Municipal Employees' Retirement System, Ontario Teachers' Pension Plan, University Pension Plan, and Healthcare of Ontario Pension Plan.
The warning comes as U.S. asset manager Blackstone leads a group, including CPPIB, OMERS, the Investment Management Corp. of Ontario, and the PSP Investment Board, planning to acquire a non-controlling stake in the Mitsubishi Corp. subsidiary that holds an interest in LNG Canada. Asselin emphasized that the financial risks associated with fossil fuel investments are becoming more significant and foreseeable, urging pensions to refrain from investing in LNG Canada, Ksi Lisims LNG, or comparable projects unless they can demonstrate consistency with statutory and fiduciary obligations.
Stand.earth's climate finance director, Richard Brooks, noted that attempts to communicate concerns directly with pension plans had little traction. The letters are an attempt to remind them of their legal responsibilities. The pension funds collectively manage $1.6 trillion in investments on behalf of millions of workers. Brooks highlighted the firm's experience with class-action lawsuits, particularly the tobacco case, as a reason for their choice.
Responses from the pension funds varied. Geoff Souter of CPP Investments described LNG Canada as a high-quality asset with strong long-term fundamentals. The Public Sector Pension Investment Board confirmed receiving the letter but disagreed with Stand.earth's views on the risks. Meanwhile, four young Canadians launched a lawsuit last year against CPPIB, alleging the fund is failing to protect the long-term interests of contributors with its fossil fuel-related investments. Brooks stated that legal action has been a 'tool of last resort' among groups concerned about pension funds' investments in fossil fuels.