The group alleges the largest pension fund manager in Canada is breaching its fiduciary duty by exposing pensions to unnecessary risk
A group of young Canadians is taking legal action against the Canada Pension Plan Investment Board (CPP Investments), accusing the country’s largest pension fund manager of failing to protect their retirement savings from the growing financial risks of climate change.
Filed in Ontario Superior Court, the lawsuit is the first in Canada to challenge a pension fund’s climate risk strategy and the first globally to focus on the duty of impartiality across generations. The plaintiffs - Aliya Hirji, Travis Olson, Rav Singh, and Chloe Tse - are represented by legal teams from Ecojustice and Goldblatt Partners LLP.
The group alleges that CPP Investments, which manages nearly $732 billion in assets for over 22 million contributors, is breaching its fiduciary duty by exposing pensions to unnecessary risk through continued investments in fossil fuels and inadequate climate risk assessment. The case claims CPP’s climate modelling fails to account for the long-term financial fallout of global warming, especially for younger Canadians who will retire after 2050.
"The case argues that CPP Investments’ reported climate modelling drastically underestimates the financial risks of climate change to the Canada Pension Plan. This marks the first time a Canadian investor has been sued for mismanaging climate risks. Globally, it is the first climate case against a pension fund investment manager anchored in the duty of impartiality and even-handedness in a multi-generational context. In other words, the duty to act fairly towards young contributors who will retire after 2050 when climate-related financial risks will be even greater," the group said in a released statement.
The legal action follows CPP Investments’ recent decision to quietly step back from its net-zero commitment, a move that further intensified scrutiny from climate and pension advocacy groups.
Central to the lawsuit is the claim that CPP Investments is using flawed “black box” climate models that underestimate future economic damage and create a misleading sense of security. The plaintiffs argue this puts the fund and ultimately Canadians at risk of reduced retirement benefits or higher contribution rates.
"Without action to curb fossil fuels, we are on track for a 3°C warming by the end of this century. Economists warn that it would be like experiencing the Great Depression forever, yet CPP Investments reports only a 4 per cent net present value loss in a 'hot house world’. The case alleges that by recklessly downplaying one of the greatest threats to the pensions’ long-term value, CPP Investments is effectively flying blind to the real risks of climate change and failing to protect the pensions of young Canadians who will retire after 2050," said Karine Peloffy, lawyer and sustainable finance lead at Ecojustice.
For applicants like Rav Singh and Travis Olson, the case is about ensuring financial sustainability in a world that will look markedly different due to climate change.
"Thousands of people are fleeing their homes and losing their livelihoods, while entire towns are burning to the ground. Still, CPP Investments is investing billions of dollars in fossil fuel expansion. I’m concerned that CPP needs to be sustainable for the next 75 years and more, but it is using my pension contributions to fund the climate crisis, then telling me I should be confident in the future of the fund," said applicant, Aliya Hirji.
The plaintiffs are seeking a court ruling that would compel CPP Investments to better account for and disclose climate-related financial risks and align its investment strategy with a stable, sustainable future.
In a statement emailed to Benefits and Pensions Monitor, CPPIB said they will address the matter through the courts if necessary.
"CPP Investments has a clear legislated objective: we invest to maximize long‑term investment returns without undue risk of loss and manage the CPP Fund in the best interests of CPP contributors and beneficiaries," said Michel Leduc, senior managing director for public affairs and communications at CPPIB. "To be clear, an action against CPP Investments and its efforts to maintain the sustainability of the CPP, is an action against the retirement security of 22 million Canadians. We intend to do whatever is needed to uphold their interests."
"We respect the right of Canadians to express their views on how the CPP Fund is managed. Our focus remains on integrating climate-related considerations into our investment activities, all while remaining focused on disciplined, evidence-based investing and transparent reporting consistent with our mandate and Canadian law," Leduc added.
