OPTrust Outlines Climate Change Investment Strategy

$15 billion fund has 7.6% of it portfolio invested in renewable energy and green real estate.

Canada’s C$20 billion ($15.1 billion) OPSEU Pension Trust has released its Climate Change Action Plan, which outlines broad measures it will take in order to better address the investment implications of climate change.

“Climate change is one of the most significant challenges facing us today,” Hugh O’Reilly, OPTrust’s CEO, said in a release. “As investors in so many sectors around the world, we need to better understand its impact so we can protect our members’ interests.”

The funds’ plan highlights eight areas of action it says it needs to focus on.

  1. Disclosure: OPTrust said better disclosure is needed to price carbon risk. It will base its disclosure framework on the FSB’s Task Force on Climate-related Financial Disclosures.


  1. Collaboration; The fund will work with peers, regulators, and companies in which it is invested to achieve meaningful change.


  1. Awareness: The fund will create awareness and alignment among its investment professionals and investee companies through education.


  1. Define a Baseline: OPTrust will assess climate-related risks to the fund by measuring exposure to industries and geographies that are at higher risk for climate change impact.


  1. Portfolio Construction: The fund will consider climate risk impact on the total fund, and in portfolio construction framework. It will focus on exploring and developing climate change scenarios integrated with its risk-based portfolio construction framework, and analyze the impact on the total fund portfolio.


  1. Process and Metrics: It will incorporate climate change-related metrics when evaluating new investments on an asset class or by asset basis.


  1. Performance: OPTrust will use its influence among companies and regulators to push for improved performance on environmental, social, and governance (ESG) issues.


  1. Transparency: The fund said it will continue to publicly report its efforts in managing climate change risk, and will request the same disclosure from the companies in which it invests.

Approximately 7.6%. or more than $1.1 billion of OPTrust’s portfolio is invested in renewable energy and green real estate. This represents its direct investment in the transition to a low-carbon economy.

“Whether we take action or not, climate change is already having profound impacts, and markets are responding accordingly,” said O’Reilly. “It is in our members’ best interests to take action and consider the financial implications. The complexity of the challenge ahead of us requires new ways of thinking and an innovative mindset.”

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