The C$114 billion (US$89 billion) Ontario Municipal Employees’ Retirement System (OMERS) has joined a growing number of institutional investors pledging to make their portfolios net-zero of greenhouse gas emissions. The Canadian pension fund said it aims to hit that target by 2050.
OMERS, which has already pledged to reduce the carbon intensity of its total portfolio by 20% by 2025, in line with the Paris Agreement, said it currently owns more than C$18 billion in green assets, based on the International Capital Market Association (ICMA) Green Bond Principles.
“As investors, we play an important role in working with our portfolio companies and making capital allocation decisions during the transition to a lower-carbon economy,” OMERS CIO Satish Rai said in a statement. “We believe that integrating ESG [environmental, social, and governance] factors into our investment approach is a more holistic way of assessing both value drivers and risk to deliver long-term, stable returns to our members.”
OMERS said it will follow the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to reach its net-zero goal. TCFD is a global standard that promotes climate-related disclosures by corporations and other entities. Its framework recommends making public details about governance, strategy, risk management, and metrics and targets that are related to climate change.
The pension fund has formed a climate risk working group, which is comprised of risk professionals from each investment team and representatives from OMERS’ sustainable investing committee. The mandate of the group includes developing a framework to evaluate climate risk within the portfolio, as well as measuring the portfolio’s overall carbon footprint.
OMERS said it analyzes potential impacts to value or to risk—both positive and negative—where climate change impacts are considered material to a proposed investment. It also said that each of its asset classes has developed assessment procedures that are tailored to its investing approaches and strategies, and that it uses its influence to address climate change risks through engagement and proxy voting activities.
In October, fellow Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) announced a new climate change strategy that it will use as a road map to achieve a net-zero portfolio by 2050. And in January, the Ontario Teachers’ Pension Plan Board (OTPPB) also pledged to achieve net-zero carbon emissions by 2050.