The boards of Canada’s largest pension funds are already inundated with fossil fuel connections and the Ontario Teachers’ Pension Plan is about to add a former executive with ongoing ties to the industry to the mix.
The Ontario Teachers’ Federation, a union representing 160,000 teachers, announced Sept. 12 that two new directors would join the pension plan board in January.
Former Alberta oil and gas executive Deborah Stein is one of the appointees. Stein spent 11 years as chief financial officer of AltaGas and currently sits on the boards of four different fossil fuel companies: Parkland Corporation, Washington Gas, Trican Well Service and NuVista Energy — none of which have net-zero commitments. The OTPP, on the other hand, has committed to achieving net-zero greenhouse gas emissions by 2050.
More than 160 Ontario teachers are pushing back against their union’s recent decision to appoint Stein with an open letter. It demands the OTF retract its appointment of Stein to OTPP’s board of directors and “instead appoint someone with the climate literacy and sustainable finance expertise needed to protect our pensions and ensure we have a livable future to retire into.”
The announcement is “perplexing” from a financial standpoint, Natasha Bartels, a 50-year-old teacher with the Toronto District School Board, told Canada’s National Observer in an interview.
“It sort of feels, to me, the writing on the wall is that there’s a lot of things happening in the gas and oil industry that makes it a less and less safe financial investment,” said Bartels pointing to the fact that some new oil projects struggle to get insurance. There’s also the very real risk of fossil fuel infrastructure losing its value as the world transitions from fossil fuels to other forms of energy and making investments, many of which are held by pension funds, worthless.
Bartels said she’s curious why the OTF selected two individuals with former or current involvement in the fossil fuel industry to join the board of directors. She wonders if it’s “part of a larger push” given the incredible power of the oil and gas lobby in Canada.
“It’s like putting a cigarette company executive on the board of public health and expecting teachers to believe that they’re going to advocate a ban on smoking,” said Patrick DeRochie, senior manager at Shift Action for Pension Wealth and Planet Health, the organization hosting the open letter.
The four fossil fuel companies which Stein is affiliated with have a vested interest in the continued use of fossil fuels, and Stein has a legal duty to advance their interests, the letter reads.
“We are not publicly addressing this at this time,” OTF president Nathan Core told Canada’s National Observer via email. “The Ontario Teachers’ Federation has responded to any inquiries from plan members regarding the most recent OTPP director appointments.”
The other appointee is Timothy Hodgson, formerly a director for MEG Energy, a Canadian oil producer.
“There’s obviously a less direct conflict there than somebody who has a current legal obligation to these companies,” said DeRochie. But it’s illustrative of the “deep entanglement” that exists between the country’s 10 biggest pension funds (including the OTPP) — which collectively manage more than $2 trillion in assets — and the fossil fuel industry, a Shift Action analysis found earlier this year.
When Stein and Hodgson join the board in January, four of 11 directors, or 36 per cent, will have current or former ties to the fossil fuel industry. Current board member Kathleen O’Neil sat on the board of Canada’s third-largest fossil gas producer — ARC Resources — for 13 years before retiring in May and another director, M. George Lewis, previously served on the boards of Cenovus Energy and Enbridge Income Fund Holdings.
The interests of the oil and gas companies Stein sits on are not compatible with OTPP directors’ fiduciary duty to invest in the teachers’ best long-term interests, the open letter says.
In addition to its 2050 commitment, the OTPP has set interim goals to reduce the intensity of carbon emissions 45 per cent by 2025 and 67 per cent by 2030. On the other hand, NuVista Energy has increased production every year between 2017 and 2021 and lists “production and share value growth of 10 per cent to 20 per cent per year over the next five years” on its website.
These oil and gas companies are trying to expand their fossil fuel infrastructure. Washington Gas is part-owner of the controversial Mountain Valley Gas pipeline, AltaGas is a Canadian Gas Association member and Parkland and NuVista are members of the Canadian Association of Petroleum Producers, two lobby groups trying to weaken, undermine and delay ambitious climate policy, said DeRochie.
“It’s impossible for us to ascertain if this pension director would oversee OTPP decisions on climate risk and fossil fuel investments in the interest of Ontario teachers — or the fossil fuel companies on whose boards she serves,” the letter says.
Osgoode Hall law professor Barnali Choudhury sees it differently.
“From what I understand, under corporate law, (Stein is) not doing anything wrong,” Choudhury told Canada’s National Observer. “There isn’t a conflict of interest, per se.”
The OTPP’s annual investment report doesn’t say anything about reducing or abstaining from investing in fossil fuel companies, so “there’s nothing that says that (Stein) couldn’t be in line with the teachers’ pension fund,” at least based on the annual report, said Choudhury.
The Elementary Teachers’ Federation of Ontario members voted for OTPP to divest from fossil fuels in 2018 and the president of the Ontario English Catholic Teachers’ Association more recently called for “divestment at a quicker pace,” the letter points out.
However, Stein’s duty will lie with the pension fund’s stated strategy, which doesn’t mention divestment, according to Choudhury.
She doesn’t have an obligation to the teachers, she has an obligation to the fund itself, Choudhury explained.
That said, the makeup of a board of directors naturally informs how it approaches investment, she added. A board where 36 per cent of directors has ties to the fossil fuel industry is “going to take more of a laggard approach, they’re going to be much more cautious because they are all invested in this industry,” she said.
Independent Sen. Rosa Galvez tabled a new Climate-Aligned Finance Act earlier this year that would seek to ensure board members have climate expertise and are not affiliated with any organization that fails to line up with Canada’s climate commitments.
Bartels said with all the labour issues going on in Ontario, teachers are feeling like “our entire education system (is) feeling very under attack at the moment.”
It’s likely hard for members to focus on issues like this, she added.
“So many of my personal, selfishly motivated retirement plans are under threat, like how much time I’d like to spend seeing parts of Canada, and what sort of environmental damage will be done to them by the time I’m in a position to enjoy that part of my life,” said Bartels. Every day, Bartels spends time with students between 14 and 18 years old and often wonders what the world is going to be like when they’re her age.
“The fact that, you know … my pay is going into this destruction, basically, I find … it gets me emotionally,” she said.
By Natasha Bulowski, Local Journalism Initiative Reporter
Original Published on Nov 28, 2022