Stand.earth warns six major pension funds of legal risk over LNG investments

An environmental group has sent legal warnings to six of Canada's largest public pension funds, arguing that investing in liquefied natural gas projects exposes them to potential lawsuits. The letters from law firm Trudel Johnston & Lespérance were sent last week to the Canada Pension Plan Investment Board, the Public Sector Pension Investment Board, the Ontario Municipal Employees’ Retirement System, the Ontario Teachers’ Pension Plan, the University Pension Plan and the Healthcare of Ontario Pension Plan. The firm's partner, Anne-Julie Asselin, wrote that the financial risks of fossil fuel investments require increasingly rigorous assessment. "Disregarding such risks becomes more difficult to justify and may carry legal consequences," Asselin wrote.

The warnings follow news that four of the pension funds are part of a Blackstone-led group investing $3.1 billion for a stake in the Mitsubishi subsidiary that holds an interest in the LNG Canada export facility. Yadude Books reported in November that the deal involves a $3.1 billion investment. Asselin said the deal's status was unclear, making the warning necessary. "We weren't expecting (decisions to make LNG investments) that quickly," Asselin said. "And we were hoping that it would never happen."

Stand.earth urged the funds to avoid investing in LNG Canada, the Ksi Lisims LNG project or similar ventures unless a transparent assessment shows the investments align with their legal duties. Richard Brooks, the group's climate finance director, said previous attempts to raise concerns directly with the pensions had little effect. He said the letters use "legal language" to remind the funds of their accountability. The six pension funds collectively manage $1.6 trillion for millions of workers. The law firm involved is known for major class-action cases, including a tobacco lawsuit that led to a $32.5-billion settlement last year. Brooks said the firm's experience with such large-scale litigation was a key reason for its selection. In a statement last week, CPP Investments' Geoff Souter called LNG Canada "a high-quality, globally strategic asset with strong long-term fundamentals and attractive return potential."

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PSP Investments confirmed it received the letter and stated it does not share Stand.earth's view of LNG investment risks. The fund said its decisions are made in accordance with its legal obligations and mandate to seek maximum returns without undue risk. A CPPIB spokesperson did not respond to a request for comment, nor did representatives for Ontario Teachers and the University Pension Plan. OMERS and the Healthcare of Ontario Pension Plan declined to comment.

The LNG Canada facility in Kitimat, B.C., recently approved an expansion to double its output, a project deemed in the national interest under federal law. Separately, a lawsuit filed last year by four young Canadians alleges the CPPIB is failing to protect future retirees with its fossil fuel investments. That suit faces a hearing on Thursday where CPPIB will ask a judge to dismiss it. Brooks described legal action as a "tool of last resort" for groups concerned about pension fossil fuel investments. "We're certainly prepared to go there if the pension funds move ahead with investments (in LNG), particularly after they've been duly warned and reminded of their responsibilities," he said.

With files from The Globe and Mail