A group of four young workers is suing pension giant, CPP Investments, alleging that its approach to managing climate-related financial risks is inadequate — imperilling the plan’s ability to pay benefits to future retirees.
The plaintiffs in the case, who are represented by lawyers with advocacy group Ecojustice and Goldblatt Partners LLP, are suing the pension giant in the Ontario Superior Court of Justice, arguing that it’s “breaching its legal duties by subjecting pension contributions to undue risk of loss from poorly managed climate risk.”
Among other things, they argue that the pension plan’s “climate modelling drastically underestimates the financial risks of climate change” to the CPP.
In a statement, CPP Investments said that a legal action against the fund manager, which is statutorily mandated to to maximize returns and to manage the fund in the best interests of plan members and beneficiaries, “is an action against the retirement security of 22 million Canadians.”
“We intend to do whatever is needed to uphold their interests,” it said. “We will respond through the proper legal channels. And we will continue to publish decision‑useful disclosures and updates on our approach to sustainability and risk management, consistent with recognized reporting standards and Canadian law.”
According to Ecojustice, the case represents both the first time that a Canadian pension manager has been sued for allegedly mismanaging climate risks — and it’s the first case, globally, arguing that the fund manager is breaching its obligations to young workers, and future retirees.
“The case alleges that by severely underestimating and failing to disclose climate-related financial risks, CPP Investments could expose Canadians planning to retire after 2050 to dramatically reduced retirement benefits, the need for substantially higher contribution rates, or both,” the group said in a release.
It also alleged that the pension manager “lacks adequate measures to manage climate-related financial risks, all while continuing to invest Canadians’ pension contributions in fossil fuels that worsen climate change.”
“The case alleges that by recklessly downplaying one of the greatest threats to the pensions’ long-term value, CPP Investments is effectively flying blind to the real risks of climate change and failing to protect the pensions of young Canadians who will retire after 2050,” said Karine Peloffy, lawyer and sustainable finance lead at Ecojustice, in a statement.
“Our clients are concerned and allege that CPP Investments is undermining the very retirement security of the young Canadians it is mandated to protect due to its poor management of climate risks. We hope the court’s eventual decision will provide guidance to CPP Investments and other Canadian pension funds about what they need to do to protect Canadians’ long-term best interests,” said Simon Archer, partner with Goldblatt Partners, in a release.