Legal warning issued to Canadian Pension funds over LNG investments

The warning, delivered via a letter from Anne-Julie Asselin, partner at Trudel Johnston & Lespérance, was sent last week to the trustees of the Canada Pension Plan Investment Board (CPPIB), Public Sector Pension Investment Board (PSP Investments), Ontario Municipal Employees’ Retirement System (OMERS), Ontario Teachers’ Pension Plan, University Pension Plan, and Healthcare of Ontario Pension Plan (HOOPP).

Trudel Johnston & Lespérance specializes in class action lawsuits and public interest cases, with a track record including a significant settlement with tobacco companies and ongoing litigation against opioid manufacturers. The firm has also previously been involved in legal challenges related to pipeline projects.

Asselin’s letter emphasized the increasing scrutiny of fossil fuel investments and the potential legal ramifications of disregarding associated risks. She urged the pension funds to avoid investments in projects like LNG Canada and Ksi Lisims LNG unless they can demonstrate, through a transparent assessment, that such investments align with their legal and fiduciary duties. The letter was drafted in anticipation of investment news that surfaced last week.

A group led by U.S. asset manager Blackstone, including CPPIB, OMERS, Investment Management Corp. of Ontario, and PSP Investments, is reportedly planning to acquire a stake in the LNG Canada project. While the finality of the Mitsubishi deal remains unclear, Stand.earth intends to monitor developments closely.

LNG Canada, located in Kitimat, British Columbia, represents the first natural gas export facility on Canada’s West Coast. Its partners include Shell, Korean, Chinese, and Malaysian companies. Last month, the consortium approved an expansion to double the facility’s output, designated as a national-interest project under legislation passed last year.

Richard Brooks, climate finance director at Stand.earth, stated that direct communication with the pension plans regarding investment concerns proved ineffective. He described the legal letters as a means of reminding the funds of their responsibilities and potential liabilities. These pension funds collectively manage $1.6 trillion in assets for millions of workers.

Geoff Souter, managing director at CPP Investments, defended the LNG Canada investment, citing its strategic value and return potential. CPPIB, Ontario Teachers, and the University Pension Plan did not respond to requests for comment. OMERS and HOOPP declined to comment, while PSP Investments confirmed receipt of the letter and asserted that it does not share Stand.earth’s views on LNG investment risks.

Separately, a lawsuit filed last year by young Canadians against CPPIB alleges the fund is failing to protect the long-term interests of future retirees through its fossil fuel investments. A rally is planned outside Ontario Superior Court this Thursday as CPPIB seeks to have the suit dismissed. Stand.earth indicated a willingness to pursue legal action if the pension funds proceed with LNG investments despite the warnings.