Key Takeaways
- • Environmental advocacy group Stand.earth, through Montreal firm Trudel Johnston & Lespérance, sent a letter to six major Canadian pension trustees warning against investing in LNG Canada, Ksi Lisims LNG or comparable Canadian LNG projects, citing climate-related legal exposure.
- • The six recipients are CPP Investment Board, PSP Investments, OMERS, Ontario Teachers', University Pension Plan and HOOPP, which together manage $1.6 trillion according to Stand.earth.
- • Blackstone is leading a group including CPPIB, OMERS, IMCO and PSP planning to acquire a non-controlling stake in the Mitsubishi subsidiary that holds an interest in LNG Canada, a deal whose final terms remain unclear.
- • PSP says it does not share Stand.earth's views and that its investment decisions comply with statutory and legal obligations.
- • Stand.earth describes legal action as a "tool of last resort" and says it is prepared to pursue it if pensions proceed with LNG investments.
Summary
Environmental advocacy group Stand.earth has enlisted Trudel Johnston & Lespérance, a Montreal firm known for class action and public interest litigation, to warn six major Canadian pension plans against investing in liquefied natural gas megaprojects. The letter, written by partner Anne-Julie Asselin and sent last week, went to trustees of the Canada Pension Plan Investment Board (CPPIB), PSP Investments, OMERS, Ontario Teachers' Pension Plan, University Pension Plan and Healthcare of Ontario Pension Plan (HOOPP). It argues that climate-related and other financial risks could expose plan administrators to legal consequences if they disregard them.
Asselin wrote that "as the financial risks associated with fossil fuel investments become more significant, more foreseeable and better understood, prudence demands an increasingly rigorous assessment," and urged pensions to refrain from investing, directly or through a private fund, in LNG Canada, Ksi Lisims LNG or comparable projects unless they can demonstrate through a rigorous, transparent assessment that such investments meet their statutory and fiduciary obligations. The letters were prepared before news emerged that several pension funds plan to invest in LNG Canada. Blackstone is leading a group including CPPIB, OMERS, the Investment Management Corp. of Ontario and PSP that plans to acquire a non-controlling stake in a Mitsubishi Corp. subsidiary holding an interest in LNG Canada. Asselin said the final shape of that deal is unclear, so the warning remained relevant.
LNG Canada, the first natural gas export facility to start up on Canada's West Coast, is a partnership that includes Shell and Korean, Chinese and Malaysian companies. Partners decided last month to proceed with an expansion to double output at the Kitimat, B.C. plant, and LNG Canada Phase 2 has been designated a national-interest project under federal legislation. CPPIB's Geoff Souter, in a Nov. 2 release, called the project "a high-quality, globally strategic asset" with attractive return potential.
Stand.earth's climate finance director Richard Brooks said direct outreach to the pension plans had gained little traction, so the letters were intended to frame the issue in legal terms. He cited the pensions' collective $1.6 trillion in assets and the tobacco class action as the basis for the firm's relevance. PSP confirmed receipt of the letter and said it does not share Stand.earth's views, stating its decisions follow statutory obligations and its mandate to maximize returns without undue risk of loss. CPPIB, Ontario Teachers' and the University Pension Plan did not respond to requests for comment, and OMERS and HOOPP declined to comment.
Separately, four young Canadians sued CPPIB last year, alleging it is failing to protect contributors' long-term interests through fossil fuel investments. CPPIB is asking an Ontario Superior Court judge to strike that suit, and supporters plan to gather outside the court Thursday. Brooks said Stand.earth is prepared to pursue legal action if pension funds proceed with LNG investments after being warned.
Asselin wrote that "as the financial risks associated with fossil fuel investments become more significant, more foreseeable and better understood, prudence demands an increasingly rigorous assessment," and urged pensions to refrain from investing, directly or through a private fund, in LNG Canada, Ksi Lisims LNG or comparable projects unless they can demonstrate through a rigorous, transparent assessment that such investments meet their statutory and fiduciary obligations. The letters were prepared before news emerged that several pension funds plan to invest in LNG Canada. Blackstone is leading a group including CPPIB, OMERS, the Investment Management Corp. of Ontario and PSP that plans to acquire a non-controlling stake in a Mitsubishi Corp. subsidiary holding an interest in LNG Canada. Asselin said the final shape of that deal is unclear, so the warning remained relevant.
LNG Canada, the first natural gas export facility to start up on Canada's West Coast, is a partnership that includes Shell and Korean, Chinese and Malaysian companies. Partners decided last month to proceed with an expansion to double output at the Kitimat, B.C. plant, and LNG Canada Phase 2 has been designated a national-interest project under federal legislation. CPPIB's Geoff Souter, in a Nov. 2 release, called the project "a high-quality, globally strategic asset" with attractive return potential.
Stand.earth's climate finance director Richard Brooks said direct outreach to the pension plans had gained little traction, so the letters were intended to frame the issue in legal terms. He cited the pensions' collective $1.6 trillion in assets and the tobacco class action as the basis for the firm's relevance. PSP confirmed receipt of the letter and said it does not share Stand.earth's views, stating its decisions follow statutory obligations and its mandate to maximize returns without undue risk of loss. CPPIB, Ontario Teachers' and the University Pension Plan did not respond to requests for comment, and OMERS and HOOPP declined to comment.
Separately, four young Canadians sued CPPIB last year, alleging it is failing to protect contributors' long-term interests through fossil fuel investments. CPPIB is asking an Ontario Superior Court judge to strike that suit, and supporters plan to gather outside the court Thursday. Brooks said Stand.earth is prepared to pursue legal action if pension funds proceed with LNG investments after being warned.
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