The Canadian Pension Plan Investment Board (CPPIB ) is under fire
for its ownership of Crestone Peak Resources, a Colorado company involved in the controversial practice of fracking.
What is the CPPIB? The CPPIB is the body that oversees and manages the Canadian Pension Plan, a retirement pension eligible to all Canadians over the age of 60 who have contributed through their working years. The CPPIB has $434.4 billion in assets under management.
What is Fracking? Fracking is the process of drilling into the ground and shooting a pressurized fluid into that hole in order to release and recover gas in in the earth.
CPPIB setup Crestone in 2015 to purchase 51,000 acres of producing oil and gas land from Encanna Corp for about $600 million USD. Earlier this year the company spent another $400 million USD, with a commitment to spend up to another $310 million USD to buy 100 acres from ConocoPhilips.
What's the Big Fracking Deal?
- Fracking is one of the most controversial forms of fossil fuel extraction, known to damage the environment and send pollution, including the toxic chemical benzene, into the air.
- In 2017 Crestone allowed volatile organic compounds to drift towards children on a playground just 25 metres away. The company was fined, and the site was shut down.
- Another 19 notices of violations have been issued to Crestone from Colorado's oversight body.
- 1,100 citizen complaints regarding noise, smell and air quality have been lodged against Crestone since 2015.
- Crestone is a uniquely complained about company, 1/3 of all complaints to the state regulator are about them.
Canada's pension managers talk the talk when it comes to climate change, calling the issue "one of the world’s most significant physical, social, technological and economic challenges.” But they continue to hold $11.6 billion of assets in conventional energy. A spokesman for the CPPIB says "there are attractive opportunities in the oil and gas sector that remain today, and, we believe, into the future.”
On the other hand, the pension doubled their investment in renewable energy year over year to $6.6 billion.
Big Picture: Institutional investors are no longer insulated from politics, people are increasingly insistent the businesses and organizations they transact with are aligned with their values. CPPIB works for all Canadians, although protected from undue political influence, shifts in public opinion and activism may force them to shift their allocations.