'These departures or removals of explicit targets can create a headline that doesn't tell the full story,' says Aaron White, of CPPIB's net-zero abandonment
When the Canada Pension Plan Investment Board (CPPIB) recently and quietly dropped its formal net-zero commitment, it didn’t revoke its interest in sustainability altogether. But the decision did turn heads for many in the industry.
Aaron White doesn’t see this as an isolated retreat but he’s also not convinced it marks the start of a widespread reversal.
“The challenge with sustainability is when individuals think about the approach to sustainable investing, they think about the opportunistic side. They think about divestment. But there's a whole other part of the picture which is risk management,” explained White, executive director and head of sustainable investing at CIBC Asset Management.
He emphasized that despite the churn of headlines and politics, long-term risk remains at the center of how pensions - like CPPIB - assess investments. Indeed, he cautioned against reading too much into the headlines when institutions step back from public climate targets.
“These departures or removals of explicit targets can create a headline that doesn’t tell the full story, or isn’t the full picture,” he said.
Instead, he urges stakeholders to look deeper, examining whether the core objectives remain intact and whether the organization is simply shifting toward a more cautious, risk-managed communication strategy in response to regulatory and public pressures. The real test, he says, is whether a firm’s actions reflect a genuine departure from decarbonization efforts.
However, White doesn’t dispute that the pension investment board’s decision could set a tone for others. While he acknowledged it’s possible that it’s a sign, particularly as global alliances like the Glasgow Financial Alliance for Net Zero (GFANZ) continue to see exits, he also highlighted that “we have yet to see an NZ AOA departure,” referring to the UN-convened Net-Zero Asset Owner Alliance. He suggests institutions with deep, collaborative commitments are staying the course.
Still, CPPIB’s move raises uncomfortable questions. Chief among them, what happens to accountability when public targets disappear?
For White, the real focus should be on “the realization of the execution,” rather than the symbolism of departing a public target. He sees the CPPIB move as emblematic of “a rising tension” within the industry, between fiduciary duty, real-world decarbonization, and the mounting complexity of regulatory scrutiny.
“You're seeing a lot of caution in terms of how public communication occurs and how those public facing commitments stand. But what I haven't seen, personally, in any firms that have conducted meaningful backtrack in Canada is the impact on how they're actually executing,” emphasized White.
“If you go to CPPs website today, they still have a robust climate policy. They still have plans for how they ultimately engage with investing companies, how they're approaching decarbonization, the risks and opportunities associated with that and how they're investing in sustainability initiatives. They're just being less explicit in terms of a commitment that could be measured or misinterpreted,” he added.
According to White, dropping explicit net-zero targets could undermine institutional accountability. Without clearly stated goals, he argues it becomes more difficult to assess whether organizations are genuinely aligning with climate commitments across their operations.
“The risk is that, you know, your traditional ‘what’s measured is managed,’ and if you don’t have an explicit net-zero target, how does that ultimately flow through to accountability across the organization?” he said. “Now you’re on to individual accountability within the organization,” he said, underscoring that dynamic needs to be critically examined at pension funds too.
White points to Canadian banks that withdrew from the Net-Zero Banking Alliance while still affirming climate commitments internally. In those cases, accountability shifted inward, leaving observers to question how, or if, progress is being monitored at the board and executive level. The same concerns now apply to pension funds like CPPIB.
“Do they still understand that climate change represents extensive investment risk and that they need to have robust policies practices in place to ensure that they've properly incorporated those risks across their investment portfolios? Are they still looking out for significant opportunities related to the climate transition in terms of delivering value for stakeholders and for pensioners? Those are still critical to evaluate. It's just maybe a little less specific in terms of the accountabilities related to their targets, and more internal, largely part of the broader strategy,” he explained.
What complicates this conversation further is the tension between fiduciary duty and climate action. especially when those targets might require taking on significant market risks for non-financial reasons.
“To have a specific target that may require you to take meaningful market risk on the basis of a non-financial factor creates a significant amount of tension within the organization and within investment teams,” he said.
For many asset managers and pension funds, that’s a fine line to walk, particularly as regulatory scrutiny increases and policy landscapes shift.
He pointed out that asset managers and pension funds ultimately rely on real-world decarbonization to achieve their climate objectives, yet this is heavily influenced by unpredictable policy shifts.
From the US backing out of the Paris Agreement to Canada's carbon tax facing political resistance, White says these developments highlight how fragile the policy foundation for decarbonization can be. It’s not just about whether an institution wants to decarbonize, it’s whether it believes the world will move with it.
“Real world decarbonization is ultimately a core requirement in order for any fiduciary who has total market investment solutions to meet those ambitions,” he said.
While White personally believes that climate action and fiduciary responsibility are aligned, he admits there are divergent views, particularly as governments and voters pull away from climate-forward policies. Balancing those forces, he said, is one of the industry's most pressing challenges.
“Sustainability ultimately drives long term performance,” underscored White. “We don't have an economy if we don't have strong biodiversity or a strong labour force that prioritizes equalization or living wages. These are all essential components of a strong and functioning economy that’s primed for growth. That’s what we’re here to support.”
