Pensions and the Climate Emergency: A Pastoral Care Issue for the Church
And the unveiling of a new name and logo for this newsletter!
Welcome! I am Jessica Hetherington, and this newsletter is about faith and climate action. You can subscribe by clicking here:
Unveiling a New Name and Logo!
With today’s essay, I am happy to unveil a new name for this newsletter and a logo that represents it visually. This newsletter is now called
While I love the name “Following in the World,” it does not let people immediately know what I’m writing about. With Faith. Climate Crisis. Action., potential readers know exactly what they will find here. I have been intentional with the punctuation (thank you, Sarah Fay, for your contagious love of punctuation!). Each period or dot in the title indicates a definitive statement. My newsletter is all about how people of faith can take action in response to the climate crisis: For those of us who are of faith, that is definitive to who we are and how we live. The climate crisis is now the global crisis, encompassing all other global issues. And, without action on the climate crisis, nothing else will matter.
To go with that, my 12-year-old helped me design this logo:
The purple represents me and my commitment to faith-based climate action. The orange represents the global heating that is the defining aspect of the climate crisis. The overall image of flames represents three things: the climate crisis itself; the need for fiery action; and the power of the Holy Spirit, which is understood within Christianity to empower and accompany us in our faithful work.
I write from within the Christian tradition; I cannot speak for others and I know that the Christian perspective is but one (multifaceted and complex) voice among many others. And so, I write this newsletter not just for Christians; it is for all people of faith, and those who sit outside religious tradition and value the voice of people of faith in the climate action movement. We need everyone at the table of climate conversations and the need for action.
Friday Notes is now Friday Nudge
And one other change that I have made: the weekly Friday Notes, available to both paid and free subscribers, is now called the Friday Nudge. My Friday posts will be shorter, offering just one idea or ‘nudge’ toward climate action. They will be easier to take in and consider, instead of overwhelming readers with many options each week.
I hope that you continue to enjoy what you read here! I’d love to hear from you. You can hit reply to this email or write to me at: jessica@jessicahetherington.ca.
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Pensions and the Climate Emergency: A Pastoral Care Issue for the Church
As a student minister, I was sent for a one-year internship at Bristol Pastoral Charge, which is comprised of two small rural churches in the Pontiac region, west Quebec. This area is a longstanding English-language community with deep Protestant roots. The churches, one in Bristol and one in Stark’s Corners, have deep roots within each community, going back more than 170 years in Bristol, and more than 125 in Stark’s Corners.
While I was there, I learned so much about what ministry is like in a rural place; how people know who you are before your first Sunday in the pulpit, and that they want to help. I learned about how they experience God in that place and learned to recognize the presence of the Holy Spirit among them. I learned about love and strength, worship and devotion, in a place that has struggled with the challenges of being rural in an increasingly urbanized world. And, I learned about how to consider the global issues of our world in light of their distinct, unique, local, rural context.
So, when I ran into a number of them at a recent church event, I was delighted! It felt good to sit with them and get caught up, on how my kids and their grandkids have grown, about their health concerns and my own, and to celebrate with them the ordination of their minister, who will be with them for many years to come, God willing.
It was also good to sit and talk about the work that I am doing now. Several of them are subscribed to this newsletter. One of them, though, had a concern. She challenged what I have been writing in this newsletter about the need to make radical and immediate changes to renewable sources of energy and away from fossil fuels. Her concern, she said, was for her pension. “My pension is paid for by those [oil and gas companies]!” Her worry, if I understood correctly, was about what would happen to the pension that she and her husband depend upon if we begin to disinvest from the fossil fuel industry. She didn’t voice them directly, but I could hear additional questions: Would her pension collapse? Would there no longer be the money to support her and her family? And what, more broadly, would these changes mean for her and her community?
I could hear additional questions: Would her pension collapse? Would there no longer be the money to support her and her family? And what, more broadly, would these changes mean for her and her community?
I’ll be honest; I hadn’t yet given a lot of thought to pensions or the pension fund industry. I had been reading about the ‘just transition’ that is needed in responding to the climate emergency, so as not to leave workers in the oil and gas industry behind. But I had not yet started reading up on where retired workers, particularly in Canada, might be situated.
I had already learned so much from her and the other faithful people in the Pontiac. So, when I heard her concern, I knew that it was time for me to read up on pension funds, how they are impacted by fossil fuel investments today, and how they might be impacted in the future. It was time for me to do some research, and then consider how I might offer some helpful words here, in Faith. Climate. Action.
“What About My Pension?”
If my friend in the Pontiac is asking the question, “What about my pension?” then many others are, too. And so, today’s reflection offers a short summary of what I have learned and invites people of faith, and in particular churches collectively, to consider how we can respond to the dilemma of pensions and climate change.
The Pension Fund Industry in Canada
Within Canada, pension funds hold approximately $2.2 trillion in assets. Canada’s giant pension funds are this country’s largest investors; thus, they also hold a lot of power and influence over the industries in which they are invested.[1] Pension fund managers have a fiduciary duty to protect these investments on behalf of the employees (current and retired) who have contributed, and who depend upon their pensions to provide a fair income in retirement. This means that pension funds are required to make responsible investments in the Canadian and global markets over the long term.
Pension funds are regulated by the federal and provincial governments to ensure that they are fulfilling their fiduciary responsibilities. However, it has become apparent, due to the climate crisis and the transformative changes it is requiring of society on every level, that the regulations in place are not sufficient for the current time.
It is entirely possible for pension funds to make the shift to decisive climate action in their investment policies; after all, pension funds in Canada got through the COVID-19 pandemic “relatively unscathed,” and have managed other financial crises quite well, affirming the financial strength that has been a marker of pensions over time. [2] However, the risks presented by the climate crisis pose a new and distinct level of challenge that status-quo forms of financial management are not adequate to confront. And, because they are not being regulated with the transparency and stringency that such a global crisis requires, pension beneficiaries and other stakeholders are extremely limited in determining how well Canadian pension funds are responding to the climate emergency. Shift: Action for Planet Wealth and Climate Health, a charitable organization seeking to protect pensions from the climate crisis and empower Canadian citizens to push for pension funds to move toward zero-carbon investments, says:
“Canadian pension strategies for climate engagement with owned companies lack the transparency, rigour, expectation-setting and escalatory measures to align business models with a plan to zero emissions and climate stability.”[3]
This is unacceptable. With more than $2 trillion dollars in assets, pension funds are playing chicken with Canadian pensions. Right now my bet is on the ‘car’ that is the climate crisis.
A Transformation is Coming
Here’s the thing, though: Pensions are going to be affected by the climate crisis, in one way or the other. My former congregant’s concern seemed to be about what negative impact there would be on her pension if we dramatically reduce the reliance on oil and gas energy. I’m not surprised that she fears this; the greenwashing campaigns undertaken by the oil and gas industry itself, big banks and other major investors who rely on the government subsidies and massive profits currently being made in that sector are highly effective. We have been told that moving to a low- and eventually zero-carbon future would be disastrous for the Canadian economy. That is a bald-faced lie.
We have been told that moving to a low- and eventually zero-carbon future would be disastrous for the Canadian economy. That is a bald-faced lie.
The fact of the matter is this: With respect to the economy in general, and the pension fund industry specifically: a climate transformation is coming, one way or another. We don’t get to decide whether there is a climate transformation, but we do get to decide, if we do so before it’s too late, which form it will take. We can choose between what the Smart Prosperity Institute calls the climate resilient approach,[4] or what I’m calling the climate collapse approach. Since the climate collapse approach is what we are primarily seeing so far among pension funds, let me describe it first.
Climate Collapse Approach
There are two forms of risk to Canadian pensions if fund managers continue with the current status quo of investing in oil and gas, making too few or weak attempts at climate change mitigation of their portfolios, and continuing to ignore or obfuscate what climate scientists have made clear about the need for a radical transformation in our energy use. These are physical and transition risks.
Physical risks are the direct threats to investments, such as real estate and other physical chattel, due to climate disasters and long-term changes to climate patterns. We see personal and commercial buildings being destroyed in storms and wildfires; as well there are changes happening in the insurance industry to mitigate against the increasing insurance costs of more frequent and extreme weather events in at-risk areas.
Transition risks are the risks to investments when they become increasingly sidelined or stranded as the rest of the world makes the move to a low-carbon future. When demand for oil and gas decreases, “these investments risk becoming ‘stranded’ as the world moves away from fossil fuels to sustainable sources of energy.”[5]
Physical and transition risks are likely to function together without significant changes to the way that pension funds are being managed right now. One unfortunate reality is that most pension funds are woefully understaffed with managers who are trained in analyzing the economic risks related to climate change, and how best to mitigate those risks.
In this form of status quo investing, the transformation to pensions will be one of eventual collapse, preceded by rapidly increasing instability and volatility as the physical and transition risks of global heating increase with the rise in temperature.
Climate Resilient Approach
There is a different possibility for Canadian pensions; they can become climate resilient by investing in markets which are aligned with what the IPCC has determined will lead us to net-zero greenhouse gas emissions.[6] This includes investing in the alternative energy sector, such as wind and solar energies. These are already proven technologies that hold excellent potential in a pension fund portfolio.
A climate resilient approach can only mean disinvesting from the fossil fuel industry. Despite greenwashing messages that suggest otherwise, natural gas is not a transition fuel in the shift to a low- or zero-carbon future. As I discussed in a recent Friday Notes, natural gas is better-termed methane gas, since it is composed primarily of methane, a much more dangerous greenhouse than carbon dioxide.
Because the pension fund industry holds such asset power, it has the potential to sway wider markets to move more quickly to becoming carbon-neutral. Smart Prosperity Institute, a national research organization out of the University of Ottawa, says
“In order for pension funds to be truly climate resilient, they must invest only in areas that are aligned to net-zero pathways, as well as guarding against physical risks – including in companies with clear, real, and verified net-zero transition plans of their own. With their supersized financial strength, pension funds could set credible net-zero plans as a condition for lending.” (emphasis added)[7]
Finally, to be truly climate resilient, pension funds must also be able to demonstrate that they are. Full and transparent disclosure of their investments, how they are tracking those investments, how nimbly they are responding to increasing global heating and its effects, and to what extent they are holding the companies to whom they are lending accountable, is a critical part of being climate resilient. Climate resilience requires that the institutions that claim to have the interests of their stakeholders, most importantly the citizens who depend upon those institutions for their well-being, be accountable to their stakeholders. Pension fund holders have the right to know exactly how the pension funds are being responsive to the reality of the climate crisis.
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It's Not Whether Pension Funds will be Impacted by the Climate Crisis, but How
Pension funds are already being impacted by the climate crisis, and will continue to be. Our pensions will be safer if their managers make bold moves toward a net-zero world than if they don’t. If our pensions continue to fund the status quo, especially with respect to the oil and gas industry, then what is happening to the status quo will happen to the pensions: increasing market volatility, stranded assets, and the bottom falling out of many major industries. The status quo will lead to catastrophe in our pensions and their future ability to pay out into our retirements as promised.
If we want our pensions to be able to continue to support us in our retirement, then we need to hold the pension fund managers accountable for taking decisive investment actions toward a net-zero future. These managers need to do a lot more than they are doing now to meet their fiduciary obligations to pension fund plan members. Indeed, there needs to be more happening on every level. We need to see leadership from pension fund sponsors and trustees; and, as Shift argues,
“Climate-related expertise and experience should be a required competency for corporate directors, especially in the governance of pensions funds, which have a long-term investment horizon…”[8]
Response to the Climate Crisis among Pension Plans is Variable
To be fair, the response to the climate crisis among pension plans has varied. There are a few major pension plans taking some of the decisive steps needed in light of the climate crisis. Shift provides a report of Canada’s 11 large pension funds in their “2022 Canadian Pension Climate Report Card.” The funds have been graded on several areas of opportunity, including whether they have aligned their targets with the Paris Agreement, the urgency of the climate crisis, the exclusion of fossil fuel investments, and more. It then provides an overall score and shows them against several comparable international funds.
Part of the challenge, of course, is the lack of disclosure requirements in reporting. Further, it can be difficult to find out information about how our employers have invested our pension funds. I reached out to Shift to ask about the Royal Bank of Canada (RBC) since that is the employer of many in the community I served as a student. This is what Patrick Derochie, Senior Manager at Shift had to say:
“Unfortunately, we don't know who the investment manager for RBC pensions is and don't have any RBC employees in our network of pension beneficiaries. To move this work forward, you will need to identify RBC employees and work with them to find out who's investing their pension and how it's invested.”[9]
What Can Churches Do?
I am thankful to Mr. Derochie for his timely response; he also sent some links to campaigns that are fighting against RBC’s fossil fuel investments. The links, which I offer below, inspired me to think about how, specifically, communities of faith can respond to the concerns of their congregants, and people in the wider community, regarding their pensions and the climate crisis.
If my former congregant is worried, so are many others. And while the future of our pensions might not be on everyone’s radar in terms of how we are being impacted by the climate crisis, it is a real concern for those who are retired, or nearing retirement, in Canada and elsewhere. To be frank, most of the people who are sitting in our pews at church are soon to be retired if they aren’t already! 19% of the Canadian population was retired as of 2022, and nearly ¼ of our population will be retired by 2030.[10]
Pension Funds and Climate Crisis: A Pastoral Care Issue
What that means is that the issue of pension funds and how they are and will be impacted by the climate crisis is, among other things, a pastoral care issue within communities of faith. Offering pastoral care in the form of information sessions and workshops, within the church and into the wider community, is vitally important. Dispelling the greenwashing myths perpetuated by the oil and gas industry and their investment funders (including the big banks), showing what is possible with climate resilient investment strategies, and empowering individuals to get in touch with their pension plan managers and demanding change, are all concrete actions that church leadership can make in this time of climate emergency.
Some Resources
Here are a few organizations that are working to bring accountability and encouragement to pension plans to become climate resilient:
Shift: Action for Pension Wealth and Planet Health “is a charitable initiative that works to protect pensions and the climate by bringing together beneficiaries and their pension funds on the climate crisis. We help Canadians understand where their retirement wealth is invested by tracking pension fund investments and strategy. We educate and empower Canadians on how to engage constructively with their pension funds to address the climate crisis. Now is the time for Canada’s pension funds to shift their investment approach and invest in a prosperous zero-carbon future.” Take action here: https://www.shiftaction.ca/take-action
Smart Prosperity Institute “is a national research network and policy think tank based at the University of Ottawa. We deliver world-class research and work with public and private partners – all to advance practical policies and market solutions for a stronger, cleaner economy.” Their work on pensions can be found here: https://institute.smartprosperity.ca/publications/climate-resilience-pensions
And on the issue of RBC and their fossil fuel investments, Patrick Derochie provided the following links:
Banking on a Better Future Contact: Evelyn Austin: evelyn@bankingonabetterfuture.org
Re_Generation Contact: Gareth Gransaull: associatedirector@re-generation.ca
Stand.Earth Contact: Richard Brooks: richard@stand.earth
I hope that this information is helpful. While the issue of pension funds isn’t necessarily as high-profile as some other ways that the climate crisis is impacting Canadians, it is an important dimension that needs to be considered in a just transition to a net-zero world. Offering information and pastoral care on this within our churches and in the wider community can encourage one more way that we can take climate action.
[1] Rick Spence, “Canadian pension funds are starting to embrace the green transition,” Corporate Knights March 22, 2023. https://www.corporateknights.com/category-finance/canadian-pension-funds-are-starting-to-embrace-the-green-transition/. Accessed June 2, 2023.
[2] Smart Prosperity Institute, “Building Climate Resilience in Canada’s Pension Funds,” July 2022. https://institute.smartprosperity.ca/sites/default/files/Building%20Climate%20Resilience%20in%20Canada%E2%80%99s%20Pension%20Funds.pdf. Accessed June 2, 2023.
[3] “2022 Canadian Pension Climate Report Card,” Shift: Action for Pension Wealth and Planet Health, January 2023, p.4. https://static1.squarespace.com/static/5b9a9754d274cbec1ca7f8f8/t/63c0611d245081108437cd2e/1673552159584/2022+Canadian+Pension+Climate+Report+Card+-++Report.pdf. Accessed May 23, 2023.
[4] "Building Climate Resilience in Canada's Pension Funds: Executive Summary," Smart Prosperity Institute, July 2022. https://institute.smartprosperity.ca/sites/default/files/Building%20Climate%20Resilience%20in%20Canada%E2%80%99s%20Pension%20Funds.pdf. Accessed July 10, 2023.
[5] “Fossil fuel investments could put Canadians’ pensions at risk,” ecojustice.ca https://ecojustice.ca/news/fossil-fuel-investments-could-put-canadians-pensions-at-risk/ . Accessed July 5, 2023.
[6] You can find the IPCC’s Sixth Assessment Report on Climate Change Executive Summary here: https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_SummaryForPolicymakers.pdf. Accessed July 12, 2023.
[7] "Building Climate Resilience in Canada's Pension Funds: Executive Summary," Smart Prosperity Institute, July 2022.
[8] “2022 Canadian Pension Climate Report Card,” Shift: Action for Pension Wealth and Planet Health, January 2023, p.5.
[9] Patrick Derochie, email to author, May 29, 2023.
[10] https://www.fraserinstitute.org/blogs/canadas-aging-population-what-does-it-mean-for-government-finances#:~:text=In%202010%2C%2014.1%20per%20cent,65%20and%20up)%20is%20falling. Accessed July 11, 2023.
I thought you might appreciate this article written by a pension engagement manager with Shift. Her main advice? Investors can better protect their beneficiaries’ savings by eliminating their fossil fuel exposure and pushing governments to use all available tools to responsibly oversee a managed decline of oil and gas production and demand while ensuring a just transition for the sector’s workers. https://www.corporateknights.com/category-finance/time-for-engaging-with-fossil-fuel-companies-over-divestment/?fbclid=IwAR1f9uIhpZl9mp5CbC8-p-cqPv7rKJw7DBBMu5MmmkO0B7fY42mNSyia8Kk