Canada Pension Plan Investments drops net-zero target after initially aiming for 2050

Canada Pension Plan Investments has dropped a net-zero by 2050 target for carbon emissions, according to an annual report released on Wednesday, following several Canadian financial institutions that have backtracked on climate commitments.

CPP Investments noted that there have been recent legal developments in Canada that have introduced new considerations around how net-zero commitments are interpreted.

Recent changes to Canada's Competition Act require companies to be able to substantiate environmental claims they make.

John Graham, chief executive of CPP Investments, said the fund continues to believe in the need to incorporate sustainability in how it manages its portfolio.

"We think it is really important to incorporate climate and incorporate sustainability into the portfolio when we take a long-term perspective and as a long-horizon investor," he said.

"Recent legal developments in Canada have introduced, kind of, new considerations around how net-zero commitments are interpreted, so that's caused us to change a little bit how we talk about it, but nothing's changed on what we're actually doing."

Shift Action for Pension Wealth and Planet Health, an advocacy group, criticized the move in a statement released Wednesday, asking how the pension fund will sustain benefits for future retirees "in a world of climate breakdown."

"In backing out of a promise to invest in line with its net-zero by 2050 commitment, [CPP Investment's] management has failed to undertake its most fundamental purpose — to responsibly manage the long-term collective savings of working and retired Canadians," the statement read.

Several major Canadian banks, including BMO, TD Bank and CIBC, have also backtracked on climate commitments this year, announcing they were leaving a Net-Zero Banking Alliance backed by the United Nations.

The comments by Graham came as the fund reported a net return of 9.3 per cent for its latest fiscal year, falling short of its benchmark portfolios' return of 10.9 per cent.