PSP closes five-year climate strategy with gaps unresolved

The Public Sector Pension Investment Board (PSP Investments) has ended its 2022–2026 climate strategy — with no equivalent framework publicly in place. 

The closure was announced in PSP's 2026 Annual Report and climate-related financial disclosures, released June 16, 2026. PSP manages more than $320 billion in assets on behalf of around 900,000 working and retired federal employees. That group includes public servants, RCMP officers, and Canadian Forces members. 

For pension and benefits professionals, the absence of a disclosed climate strategy raises a direct question. How is Canada's third-largest pension manager protecting members' retirement savings from climate-related financial risk? 

According to Shift Action for Pension Wealth and Planet Health, a charitable initiative focused on pension and climate risk, PSP now has no climate strategy, no net-zero commitment, and no climate-related targets to guide its investment and stewardship decisions. 

What it means for plan members and sponsors 

Plan sponsors overseeing federal employee pensions — and the HR executives who support those employees — have a fiduciary interest in how PSP manages long-term portfolio risk. Climate-related financial risk is increasingly treated as a material factor in that calculus. 

Ortec Finance research found Canadian pension funds could see returns drop by as much as 50 per cent by 2040. A pension manager without a published climate framework offers limited transparency to plan members and their employers about how those risks are being addressed. 

Shift's statement put the concern plainly. PSP has replaced a detailed, target-backed strategy with what the organization described as a vague pilot framework that lacks transparency and accountability. 

Missed targets and fossil fuel holdings 

PSP did achieve some goals under its 2022–2026 plan: 

• it increased investments in green and transition assets 
• it directed at least 10% of long-term debt financing toward green bonds 
• it reduced portfolio emissions intensity by 20% below 2021 levels 

But the pension manager fell short on other commitments. PSP missed its target to halve exposure to carbon-intensive assets by 2026, falling $1 billion short of that goal.  

It also did not meet its target to ensure assets representing 50% of its carbon footprint had science-based transition plans.  

A third missed target involved greenhouse gas data availability, which PSP had aimed to reach across 80% of its in-scope portfolio. 

Shift's analysis found PSP held at least $10 billion in fossil fuel production assets as of March 31, 2026 — an increase from the prior year. The fund has no restrictions on new investments in oil, gas, or coal. 

The statement also flagged a governance concern. The chair of PSP's Investment and Risk Committee concurrently serves as lead director of Imperial Oil, one of Canada's largest oil producers. BPM previously reported on fossil fuel board connections at major Canadian pension funds, including PSP, following a Shift report on the issue last year. 

New framework promised for fiscal 2027 

PSP has committed to introducing a new climate risk framework in fiscal 2027. The fund described the move as an "evolution in PSP Investments' approach to sustainability." 

Shift said it welcomed the commitment to ongoing learning. It warned, however, that the new framework must quickly fill the void left by the closed strategy. "The retirement security of 900,000 federal employees depends on it," the organization said. 

The 2026 disclosures arrive as Canadian pension funds face broader scrutiny over climate positioning. Shift's 2025 Canadian Pension Climate Report Card gave PSP a C across six climate criteria — a finding BPM covered earlier this year. 

PSP has not indicated a more specific timeline for publishing the new framework beyond the fiscal 2027 commitment. 

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