UPP launches roadmap to net zero portfolio emissions by 2040, reports on 2021 Year

Today, University Pension Plan Ontario (UPP) launched its formal commitment and action plan to achieve net-zero portfolio emissions by 2040 or sooner, with an emphasis on decarbonizing the real economy. 

Released in conjunction with UPP’s inaugural Annual Report, UPP’s Climate Action Plan focuses on driving down greenhouse gas emissions in the real economy while hitting portfolio emission reduction milestones for 2025 and 2030 on the path to a net zero portfolio by 2040 or sooner.

“This Climate Action Plan speaks to two deeply connected objectives,” explains Barbara Zvan, President and CEO of UPP. “The first is to grow a strong, resilient fund that secures retirement benefits for our members today and far into the future. The second is to invest in a stable, healthy world for our members to retire into”, Zvan says.

The release of the plan follows dedicated engagement efforts centered on understanding UPP members’ responsible investing values and priorities. “It was important to us to hear directly from our members about their priorities, and it became clear that climate action was at the top of that list, as both a financial and social imperative” says Brian Minns, UPP’s Managing Director of Responsible Investing. “While we have a diverse membership with broad views, we’re hearing a clear call for UPP to address climate-related risks and opportunities not only through our investments, but in how we influence public policy and market systems more broadly.”

UPP’s Climate Action Plan outlines four strategic pillars for action: evaluate, invest, engage, advocate. Commitments under these pillars include:

• Reducing the carbon footprint of UPP’s portfolio by 16.5% by 2025 and 60% by 2030 from a 2021 baseline.
• Implementing a Climate Transition Investment Framework and investing only in new mandates and assets that align with a net zero transition and reduce the emissions intensity of UPP’s assets.
• Developing processes and tools to evaluate climate-related investment risks, opportunities, and impacts across the portfolio
  • Engaging (at a minimum) with the 20 top-emitting companies in its portfolio to encourage a swift transition to a net-zero, climate-resilient future and strong climate-related disclosures.
• Joining the UN-Convened Net Zero Asset Owner Alliance, which includes a commitment to annual, public disclosures on portfolio emissions profile and reductions against interim targets. UPP will be one of only four Canadian organizations and two pension funds to join the Alliance.
  
  

“This is a legitimate and very impressive net zero commitment by UPP,” says Dr. Sean Cleary, Chair of the Institute for Sustainable Finance based at Smith School of Business at Queen’s University. “It is ambitious in setting a 2040 net zero target and pragmatic in recognizing that true impact lies in reducing emissions not just in the fund’s portfolio but in the real world. It demonstrates both strategy and substance—setting interim targets and establishing focused engagement efforts. It’s clear how UPP will move forward and how members and other stakeholders can hold them accountable. These are central components that are critical in a net zero commitment.”

It is no coincidence that UPP is releasing its Climate Action Plan alongside its first Annual Report, says Zvan. “Impact is one of our core values, which we define as fostering a financially, socially, and environmentally resilient future for members in all we do. This value is embedded in our core investment beliefs and approach, as a means for fulfilling our pension promise well into the future. Delivering this Climate Action Plan is a concrete expression of what we have been working toward since day one. More importantly, it is a commitment to how we will grow and make an impact going forward—for our members and the community we all share.”

UPP’s inaugural Annual Report, Building a Bright Future, provides detailed reporting on the Plan’s first six operating months from July 1 to December 31, 2021. Highlights include UPP’s 111% funded status, growing list of participating employers, and six-month return of 5.7%, bringing the Plan’s net assets to $11.8 billion at December 31, 2021.

For further details on UPP’s Climate Action Plan and Annual Report, visit: MyUPP.ca