Climate change poses one of the most urgent and pressing systemic challenges of our time. It presents unique risks and opportunities that requires coordinated action from governments, corporations, individuals and institutional investors like HOOPP. While the issue of climate change is complicated and constantly evolving, it can no longer be approached solely as a long-term issue.

HOOPP recognizes climate change may impact and influence our investment strategy through:

• physical impacts such as increased risk of flooding and other severe weather events, or changes in agricultural growing seasons
• transition impacts such as policy interventions, technological innovations and changes in consumer preferences

These impacts can affect individual companies, entire sectors, geographies and economies.

Our Board of Trustees and executive management team have made climate change considerations a key priority. We recognize that climate change poses both material risks and opportunities, and managing these is important. As a pension plan, we have a fiduciary responsibility to deliver on our pension promise to Ontario healthcare workers. We consider climate risk as part of our investment management process. You can read more about the steps we are taking below.

HOOPP’s net-zero portfolio emissions goal and plan to achieve it

Achieving net-zero portfolio emissions by 2050

HOOPP has a goal of achieving net-zero emissions¹ in our portfolio by 2050. Our goal and plan to achieve it is a multi-decade effort. To achieve that long-term target, we have thoughtfully designed interim targets that work in tandem, with each reinforcing the other.

Our plan’s areas of focus are:

• Encouraging companies to adopt credible, science-based transition plans that can directly reduce the greenhouse gases that enter the atmosphere. A credible transition plan combines having an ambitious climate target and a plan that can be fully and effectively implemented. We employ a list of criteria, based on external frameworks, to assess the credibility of companies’ transition plans². These criteria include having near-term targets that are based on a science-based trajectory towards achieving net zero, a plan that applies across the company’s main business activities and major sources of greenhouse gas emissions, and reporting on progress at least annually.
• Increasing the capital made available for green investments³ that support our net-zero portfolio emissions goal and help us deliver on our pension promise.
• Focusing on emissions reductions by prioritizing actual emissions reductions over selling assets that may reduce our carbon footprint but not the world’s footprint.

We will continually monitor, review and adjust our plan, putting the best interests of our members first. For example, we may need to respond to external changes, such as regulatory developments. As we approach 2030, we will assess our progress against our 2030 targets as part of our preparation for the next five- and ten-year periods of 2035 and 2040. Our performance against the interim targets will give us visibility on how we are tracking towards our 2050 goal.

HOOPP’s Climate Change Strategy

HOOPP will report annually on the progress of our Climate Change Strategy in our Annual Report, which includes climate disclosure reporting that provides further information on how we manage climate risk and invest in climate-related opportunities.

Building on what we’re already doing

Driving change through active stewardship

Being a responsible steward of our investments is a key pillar of how we address climate change. We have taken steps to further strengthen our stewardship, which you can read about below.

Expanding our climate disclosures

In 2008, HOOPP released a carbon emission policy for our real estate portfolio. At the same time, we also began measuring carbon emissions for our real estate holdings and have since expanded this to other portfolios. You can learn more in our Annual Report.

Our approach to divestment

Our net-zero portfolio emissions goal seeks to lower our carbon footprint through actual emissions reductions. Our portfolio’s emissions could be reduced by simply selling a high-emitting investment to another investor, who may not be concerned about carbon emissions. Our portfolio emissions would decrease, but the actual emissions would not: the high-emitting investment would continue to produce emissions.

We believe that engaging with high-emitting companies can lead to better outcomes when compared to divesting ownership of these companies without first seeking to use our influence as an investor.

HOOPP conducts engagements both directly with companies and through involvement with external initiatives, such as CEC, of which HOOPP is a founding member.

By urging and encouraging corporations to develop credible decarbonization plans, and by voting in support of climate-related proposals, HOOPP seeks to influence corporate behaviour. In the long term, we believe remaining an active investor in companies can lead to actual impacts while enhancing value for our members.

¹ Our net-zero portfolio plan covers our investments’ Scope 1 and Scope 2 greenhouse gas emissions, and references guidance provided by the Science Based Targets initiative (SBTi) and the Net-Zero Asset Owner Alliance.

² External frameworks referenced: Science Based Targets Initiative, United Nations Environment Program, IGCC Corporate Climate Transition Plans: A guide to investor expectations, TCFD Guidance on Metrics, Targets and Transition Plans, Climate Policy Initiative Credible Transition Plans.

³ To define green investments in our private portfolios, we reference the Climate Bonds Initiative (CBI) taxonomy, a set of criteria used globally by investors, issuers and governments, and financial markets to prioritize investments which contribute to addressing climate change. To define green investments in our publicly traded assets, we use a third-party that maps companies’ activities to the United Nations Sustainable Development Goals. We also consider investments in green and sustainability bonds, typically developed in accordance with the International Capital Market Association’s Green Bond Principles and Sustainability Bonds Guidelines.

⁴ We may make exceptions for high-emitting assets with credible and fully costed decarbonization plans.