Skip To Main Content
HOOPP
Investments Sustainable Investing Climate Disclosure

Climate Disclosure

HOOPP supports standardization and adoption of sustainability and climate disclosures. In 2023, along with other leading Canadian pension plans, we called on companies focused on long-term value to adopt the International Sustainability Standards Board (ISSB) standards. The ISSB standards help consolidate existing disclosure standards that HOOPP has long supported, including the Sustainability Accounting Standards Board (SASB) standards, and incorporates the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) framework.

As part of our commitment to reporting, we have included below our own climate-related disclosures consistent with the TCFD framework. This year, we have augmented our reporting by including the absolute emissions and percentage of reported emissions of our portfolio carbon footprint (PCF) for all years presented. As shown within the metrics and targets section, the absolute emissions and emissions intensity of our PCF have decreased both year-over-year for 2023 and compared to 2021, which is the baseline of our interim climate targets.

On this page:

Governance 

Describe the board’s oversight of climate-related risks and opportunities.

Climate change is a key priority that is overseen by the HOOPP Board of Trustees (Board), with the Governance, Asset-Liability Management (ALM) and Audit and Finance (A&F) Committees each playing a critical role in HOOPP’s climate change governance:

  • The Governance Committee oversees HOOPP’s climate change strategy to ensure it aligns with HOOPP’s strategic objectives. It oversees reporting on the progress HOOPP is making on the strategy. The Governance Committee also maintains an awareness of governance-related environmental, social and governance (ESG) issues and trends.
  • The A&F Committee oversees the Management’s Discussion & Analysis section of the Annual Report, which includes climate-related disclosures. The A&F Committee also maintains an awareness of audit- and finance-related ESG issues and trends.
  • The ALM Committee oversees key investment policies and frameworks that relate to sustainable investing, including the Sustainable Investing Policy, Statement of Investment Policies & Procedures, and Statement of Guidelines and Procedures on Proxy Voting. The ALM Committee reviews advocacy initiatives and investment management reports from HOOPP staff, all of which may relate to HOOPP’s sustainable investing activities and climate change strategy. The ALM Committee also maintains an awareness of ESG issues and trends.

On an annual basis, climate-related objectives are included in the Investment Management divisional performance scorecard, which factor into compensation. Our Board reviews and approves the annual scorecard objectives.

Describe management’s role in assessing and managing climate-related risks and opportunities.

HOOPP’s management team has established a Climate Change Standing Committee, chaired by the Chief Executive Officer (CEO), focused on implementing our climate change strategy. This committee includes the Chief Investment Officer (CIO), Chief Risk Officer (CRO), Chief Operating Officer (COO), Chief Financial Officer (CFO) and General Counsel, and is advised by HOOPP’s internal sustainable investing subject matter experts.

Additionally, all investment proposals that are brought to the Investment Risk Committee (IRC) include relevant climate change factors. The IRC, chaired by the CEO, reviews and approves key investment decisions. The IRC Sustainable Investing Sub-Committee, which includes the CIO and CRO, oversees the development of ESG-related policies, strategies and frameworks.

Strategy

Describe the climate-related risks and opportunities the organization has identified over the short, medium and long term.

Climate change presents risks and opportunities for the Fund, through physical and transition impacts. Physical impacts can include value impairment due to the effects of more frequent and severe extreme weather events. Transition impacts can result from changes in policies and regulations, technological innovation, and consumer behaviour. In the near term, rapid policy change to curb emissions is one of the potential impacts, and could lead to increased costs for carbon-intense companies and opportunities for carbon-efficient alternatives. Longer term, chronic effects could significantly alter multiple aspects of the global landscape, such as the spread of vector-borne diseases, agricultural yields, and human migration patterns. The depth and breadth of these long-term consequences depend on the actions we, as a society, take in the present.

Describe the impact of climate-related risks and opportunities on the organization’s business, strategy, and financial planning.

Transitioning to, and achieving, a net-zero global economy will require vast amounts of capital. This presents opportunities for investors like HOOPP to prudently invest in the solutions that can help alleviate the climate crisis while generating risk-adjusted returns.

Areas that can enable and benefit from the transition to a net-zero economy include clean energy production, low carbon transport, agriculture, building energy efficiency, and water and waste management. Reducing emissions in these areas is key to making meaningful progress towards global net zero and to avoid the worst impacts of climate change. It is expected that there will be investment opportunities related to the decarbonization of these areas, and where opportunities meet our strict investment criteria, we may participate and deploy capital across asset classes.

Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. 

We conduct top-down climate scenario analysis to assess the resilience of our long-term asset allocation and funding ratio. We use multiple scenarios including Net-Zero, Net-Zero Financial Crisis, Limited Action, and High Warming scenarios. In both the Net-Zero and Net-Zero Financial Crisis scenarios, the Paris Agreement is achieved, and average global warming is kept well below 2 degrees Celsius by the end of the century. However, the pathways of these two scenarios differ. The Net-Zero scenario sees disruption in the near term as immediate climate action comes into effect. The Net-Zero Financial Crisis scenario results in greater disruption and potential market dislocation and sentiment shock later on the pathway to align the global trajectory with the Paris Agreement. Both the Limited Action and High Warming scenarios fall short of meeting Paris Agreement goals and lead to a 3-degree and 4-degree Celsius increase in global temperature, respectively. In these scenarios, the physical impacts of climate change continue to increase in severity. The High Warming scenario results in the most negative economic impacts over the long term.

Climate scenario analysis is a useful exercise to illustrate potential directional impacts to the Fund. However, standards and best practices for climate scenario analysis are still in development globally. The results rely heavily on the underlying assumptions, which vary based on who has developed the scenario, and the methodologies to translate climate pathways into economic impacts. As such, we continue to monitor the leading scenario analysis practices and tools.

Risk management

Describe the organization’s processes for identifying, assessing, and managing climate-related risks.

Our Investment Management division, including our Sustainable Investing team, can be considered our ‘first line of defence.’ Our Risk division acts as an additional line of oversight, or ‘second line of defence.’ Investment teams assess relevant climate-related impacts as part of the due diligence on new potential investments. This can include physical risk assessments, evaluating opportunities to transition assets, and conducting stranded asset analysis. For externally managed funds, we review and evaluate the external manager’s approach to assessing and managing climate risk in their investment process.

We integrate climate risk analysis throughout the investment life cycle, including incorporating climate risk into our portfolio stewardship activities. When voting our proxies for public companies, we consider withdrawing support for the relevant board director if a company does not provide disclosure consistent with the TCFD framework. We support climate-related proposals, including those that would lead to improved disclosure of relevant sustainability information to shareholders. We engage companies to provide the information we need as an investor to assess climate risk. We also engage them to take action on climate risks to increase the resilience of their business models. We do this directly with companies and through collaborative investor initiatives like Climate Engagement Canada and Climate Action 100+.

Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organization’s overall risk management.

Climate risk is identified in our investment risk frameworks, alongside other key risks to the Fund. These risk frameworks are regularly reviewed by the Board. The Risk division ensures our risk management and compliance systems, practices and monitoring continue to evolve to meet our future needs. We continue to collaborate with peers on climate analysis best practices and evaluate tools that enable assessment of physical and transition risks. For example, we participated in a project with the Bank of Canada and the Office of the Superintendent of Financial Institutions to conduct top-down climate transition scenario analysis. We have also assessed multiple tools that model physical and transition impacts at the asset level to complement the bespoke analysis currently undertaken.

Metrics and targets

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

In 2022, HOOPP committed to achieving a net-zero portfolio by 2050. Our commitment and plan to achieve net zero is a multi-decade goal. To achieve that long-term goal, in 2023, we thoughtfully designed interim 2025 and 2030 targets that work in tandem, with each reinforcing the other.

We continue to measure and monitor the PCF and the percentage of the portfolio covered by the footprint measure, aiming to increase this coverage over time. PCF metrics are not a complete measure of climate risk, and so we also continue to review alternative measures of climate risk.

Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse (GHG) emissions, and the related risks.

Currently, our PCF includes the following asset classes: public equities, real estate, private equity, and infrastructure.

 202320222021
Portfolio carbon footprint intensity (tCO2e/million dollars invested)1364041
Absolute greenhouse gas emissions (tCO2e)2,194,7712,418,1692,477,468
Portfolio carbon footprint reported emissions (% of in-scope net asset value)66%61%65%

In 2023, for the asset classes presented, our PCF intensity dropped by 10% and 12% compared to 2022 and 2021, respectively. Absolute emissions decreased by 9% and 11% compared to 2022 and 2021, respectively. The reductions are attributed mainly to changes in the sector weights within our largest public equity indices from market movements and new investments in low-carbon sectors in HOOPP’s private portfolios, such as renewable power generation and telecommunications.

We do not expect the trajectory of our climate metrics to follow a linear path. The progress towards our goals and targets will be impacted by a variety of factors including, but not limited to, policy, technology and market developments.

We use the enterprise value method recommended by the Partnership for Carbon Accounting Financials (see formula below). Our PCF metric includes the Scope 1 and Scope 2 emissions of the assets in the in-scope portfolio2. We have initiated the calculation of our Scope 3 PCF for a portion of our portfolio.

We have used year-end net asset values of in-scope investments for the reported years. Due to different reporting timelines, companies may provide greenhouse gas emissions data after publishing their financial data. The most up-to-date greenhouse gas emissions data available at time of calculation was used. When greenhouse gas emissions were considered outdated or not available, we used estimates based on comparable publicly listed companies or industry average.


PCF Formula

At the individual investment level 𝑖, 𝐸𝑉𝐼𝐢 = enterprise value including cash in $CAD million and π‘†π‘π‘œπ‘π‘’ 1+2 π‘’π‘šπ‘–π‘ π‘ π‘–π‘œπ‘›π‘  are measured in tonnes of carbon dioxide equivalent (tCO2e). Emissions for each investment are aggregated (numerator) and then divided by HOOPP’s total in-scope 𝑁𝐴𝑉 in $CAD million (denominator).

Emissions data is a combination of reported and estimated data. The data quality score for each of 2023, 2022 and 2021 is 2.7 based on the Partnership for Carbon Accounting Financials (PCAF) data quality scoring methodology, where 1 is the highest quality, most certain level and 5 is the lowest quality, least certain level.

A PCF is a backward-looking measure and, as such, does not factor in forward-looking plans to reduce emissions. Data can be dated and unavailable to investors, requiring estimation of emissions or exclusion from the portfolio footprint measure. A PCF is not a comprehensive measure of climate risk or opportunity and can fluctuate due to changes in market pricing, rather than changes in carbon emissions or holding size.

Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

In 2022, HOOPP set the goal to achieve a net-zero portfolio by 2050. We designed a set of interim targets that work in tandem and help us align our shorter- to mid-term actions with the long-term pathway to net zero. Our interim targets for 2025 and 2030 include percentage of portfolios covered by reported emissions data, capital made available for green investments, percentage of portfolios covered by credible transition plans, and portfolio emissions intensity in CO2e per $1M invested. Together, these targets are designed to put us on the pathway to net zero in a manner that contributes to actual decarbonization. Please refer to Our climate strategy: good for the Plan and the planet for more information on our net-zero portfolio targets.

1 Previously disclosed PCF values have been updated to conform with current year presentation. Our 2021 portfolio carbon footprint intensity was updated to 41 tCO2e/million dollars invested (from 40.4 previously reported) and our 2022 disclosure was updated to 40 tCO2e/million dollars invested (from 39.2 previously reported).

2 The PCF related to public equities includes long-only exposure to shares in public companies, equity futures and total return swaps in our beta portfolio. Short equity positions are not included and have not been netted. The PCF also includes directly held real estate assets, private equity investments through HOOPP Capital Partners and all infrastructure assets.

This document provides a simplified overview of HOOPP's benefits based on the terms of the HOOPP Plan Text at the time of publication. From time to time, HOOPP may amend the HOOPP Plan Text. In cases where the information provided in this document differs from that contained in the HOOPP Plan Text, the HOOPP Plan Text will govern. More details, including the full HOOPP Plan Text and a complete description of the Plan and its benefits, can be found on hoopp.com.