Large pension funds lack Indigenous rights-focused investment policies: study

By Jeremy Appel

(ANNews) – None of Canada’s major pension fund managers have investment policies aligned with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), which could expose them to legal risk as the federal government pushes for increased investment in major infrastructure projects, according to a newly released report. 

The study, Indigenous Rights and Canadian Pension Funds, was published by Shift, a charity dedicated to aligning pension investment policies with climate goals. 

“Respect for Indigenous rights is directly relevant to a pension fund’s ability to maximize returns, minimize risk of loss, and invest in the best long-term interests of its members,” reads the report. 

“A pension fund’s ability to fulfill its long-term obligations to beneficiaries is dependent on a safe climate, which further underscores the importance of Indigenous rights to pension funds.”

At the core of UNDRIP is the right to “free, prior and informed consent” for projects being built on traditional Indigenous lands, which is also “at the heart of a lot of the conflicts that we’ve seen over major resource projects for decades in Canada,” explains Shift executive director Adam Scott. 

While governments and financial institutions have a “pretty patchy” track record on respecting Indigenous rights, he added, courts have been quite clear that governments have an obligation to consult Indigenous communities before projects can proceed. 

Truth and Reconciliation Commission Call to Action 92 calls on the corporate sector to adopt UNDRIP. 

The report examined 11 large Canadian pension funds to determine whether they have investment policies or proxy voting guidelines, which outline expectations for companies they invest in, that align with UNDRIP, as well as reconciliation action plans. 

Funds examined were the Canada Pension Plan Investment Board, AIMCo, British Columbia Investment Management Corporation, Caisse de dépôt et placement du Québec, Healthcare of Ontario Pension Plan, Investment Management Corporation of Ontario, Ontario Municipal Employees’ Retirement System, Ontario Teachers’ Pension Plan, OPSEU Pension Trust, Public Sector Pension Investment Board, and University Pension Plan. 

None of the funds examined have investment policies aligned with UNDRIP. Five pension funds have reconciliation action plans that are either in development or not comprehensive. 

Only the OPSEU Pension Trust and University Pension Plan have UNDRIP-aligned proxy voting guidelines. British Columbia Investment Management Corporation, Ontario Municipal Employees Retirement System and Public Sector Pension Investment Board have guidelines deemed non-comprehensive. 

The report points to two international examples – Sweden’s Andra AP-fonden and Scottish Windows in the U.K. – of pension funds that explicitly tie investment decisions to respect for free, prior and informed consent. 

Prime Minister Mark Carney has initiated a “politically driven push to lock in expansion projects for fossil fuels,” including LNG and a new tar sands pipeline, said Scott. 

The prime minister is pushing for institutional investors, including pension funds, to invest in these projects through the recently established Canada Strong Fund, and is seeking to attract global investors at a September summit in Toronto hosted by the Canada Pension Plan Investment Board.

“The economics of these expansion projects are highly questionable at the moment,” he said, referencing instability in the Middle East and the ongoing transition to renewable energy. 

This will lead to a situation in which we’re left with “stranded assets” that are no longer valuable in the near future or “carbon lock-in” that is detrimental to the planet, Scott added. 

“An Indigenous rights framework is likely to slow that process down, and it will have a measurable beneficial impact on the climate,” said Scott. 

He added that under the banner of “economic reconciliation,” some First Nations have become essentially coerced into becoming partners in fossil energy projects over the objections of their members, since the projects were going to proceed regardless of their objections.

Two Nisga’a Nation members are taking the Nisga’a Lisims Government to the Supreme Court of B.C., arguing that band leadership didn’t adequately consult its members when it became a partner in Ksi Lisms LNG, which Prime Minister Carney has designated a national interest project. 

While the leaders may have consented to the project, it doesn’t necessarily meet the higher bar of free, prior and informed consent set out in UNDRIP. 

“There still are rights at play that aren’t being considered, and so we’re urging major institutional investors like pension funds to take a rights-based approach and have that integrated into their Indigenous rights investment strategy,” said Scott. 

Pensions firming up their Indigenous investment policies will send a clear message to the corporate sector that they must get their projects approved properly, leading to increased certainty for investors. 

“That’s going to make the investments less risky over time and lead to better outcomes for everybody involved,” said Scott.

Jeremy Appel is a Local Journalism Initiative Reporter.