As 2020 came to a close, the federal government made laudable plans to cut carbon pollution faster and deeper. But we haven’t seen similar commitments to climate action from a massive pool of capital over which Canadians have real power: our pension funds.

Canada’s 10 largest public pension funds alone manage nearly $1.8 trillion — an amount approaching the size of the country’s annual GDP. These pension giants own sizable pieces of the real economy and hold significant shares in the world’s biggest companies. How they invest our retirement savings is a major factor in how quickly we transition to a zero-carbon economy while protecting and growing our pensions, as the climate crisis worsens.

Aligning our pensions with climate safety isn’t just the ethical thing to do, it’s the smart financial move.

In 2020, the financial sector finally woke up to the mounting risks of climate change. Increasingly, severe and frequent carbon-fuelled weather disasters like wildfires, hurricanes and floods ravaged infrastructure, supply chains and business operations, posing growing physical risks to pension fund investments and the wider economy.

The global transition away from oil, gas and coal also accelerated, driven by the plummeting costs of renewable energy and electric vehicles. The coronavirus crisis foreshadowed what bold climate action will bring. The value of clean technology investments soared, while fossil fuels, already the worst performing sector in the S&P 500 over the last 10 years, began their terminal decline. The year 2020 was marked by oil and gas companies filing for bankruptcy, slashing capital expenditures, writing off unburnable reserves, and even acknowledging that oil demand may have already peaked.

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