Toronto-based pension fund OPTrust has announced an interim target of a 30 per cent cut to its greenhouse gas (GHG) emissions by 2030, following up on its 2050 net-zero target.
The new target (based on its 2022 GHG emissions) was announced in its climate strategy update, where the approximately $25-billion pension fund also unveiled its climate metrics and targets framework.
To date, OPTrust said it has developed a more climate-resilient real estate portfolio, shared its climate research and enhanced its governance, reporting and engagement.
"We understand the urgency of the climate crisis to ensuring the long-term sustainability of our investments,” Peter Lindley, president and CEO of OPTrust, said in a release.
“Building extensive data and meaningful targets into our investment process helps us ensure that we will have a sustainable pension plan for generations to come."
OPTrust is looking at 2024 as a year to focus on its highest-impact areas such as climate due diligence and risks and opportunities.
OPTrust’s investment portfolio carbon footprint
As of Dec. 31, 2022, the GHG emissions from OPTrust’s investment portfolio measured at 959,664 tonnes of carbon dioxide equivalent, according to OPTrust’s 2022-23 Task Force on Climate-Related Financial Disclosures.
Scope 3 emissions were not included “due to the early stage and unreliability of associated methodologies and data,” the report stated.
It also covered only emissions data that was available and of sufficient quality to OPTrust – currently at 40 per cent or $9.9 billion of its assets.
The emissions intensity was calculated at 97.2 tonnes of carbon dioxide equivalent per $1 million invested.
OPTrust’s climate actions
The pension fund listed the climate-resilient investments in its portfolio, such as Firelight Infrastructure Partners, a renewable energy partnership with 190 megawatts of wind and solar assets in Canada.
OPTrust is investing in sustainable real estate such as Portland Commons in Toronto, a 560,000-square-foot office tower aiming for LEED Zero Carbon and LEED Platinum certifications, and Sen'ákw, a purpose-built rental project of seven apartment buildings in Vancouver expected to be the largest net-zero carbon residential project in Canada.
The majority of its Canadian direct operating real estate portfolio has achieved environmental certification from BOMA BEST or LEED, and more than 30 per cent of direct development projects are targeting net-zero operational carbon upon completion.
Its investment into Canadian federal and provincial green bonds has reached $550 million since 2018 and OPTrust moved a “large portion” of its passive equity exposure to a low-carbon index.
To enhance investors’ understanding of climate risk, OPTrust published climate scenario analysis reports and developed the climate metrics framework to track carbon exposure, climate exposure, stewardship, solutions and process.
“We aimed to develop an intuitive framework that could use today’s accessible data as a starting point and evolve overtime with our portfolio and developing standards,” OPTrust stated.
As it began collecting ESG data across its portfolio in 2023, OPTrust said it helped establish refined targets such as the 2030 goal for a 30 per cent reduction in GHG emissions.
The pension fund has formally integrated climate change considerations into its corporate strategy and the annual qualitative performance objectives of every department, and engages with climate investor groups such as Climate Action 100+.
OPTrust’s priorities for 2024 and 2025
OPTrust’s priorities for 2024 will revolve around rolling out climate due diligence toolkits for direct investments, collecting more ESG and climate data across its assets for better integration into its operations, better identifying climate risks and opportunities, and engaging with companies that have higher-risk climate profiles.
A more comprehensive overview of its carbon footprint will be made in 2024, OPTrust said.
For 2025, OPTrust plans to cover real emissions coverage for over 50 per cent of its portfolio by value and over 75 per cent of its portfolio emissions. It has also set out to strengthen the climate stewardship of its investments and partners by 2025, such as implementing enhanced climate due diligence on all new direct investments and external investment partner commitments.
It anticipates over 80 per cent of its directly owned real estate properties will report energy use by 2025.