Canadian Pension Fund Faces Scrutiny for Investments in U.S. Fossil Fuels and AI
The Canada Pension Plan Investment Board (CPPIB), the entity responsible for managing Canada’s largest public pension fund, has faced increasing criticism for its substantial investments in the United States’ fossil fuel and artificial intelligence (AI) sectors. These investments, occurring under the current U.S. administration, have drawn concern from pension fund watchdogs who argue they contradict the fund’s stated commitment to addressing climate change and align with policies that could destabilize international relations.
Established by an Act of Parliament in 1997, the CPPIB operates as an independent investment management organization accountable to the Canadian Parliament. Its primary mandate is to maximize the long-term returns of the Canada Pension Plan while maintaining a prudent level of risk. The fund has a published sustainable investing policy, last updated in May 2025, which acknowledges climate change as a significant risk and encourages the integration of decarbonization pathways into its investment strategy. However, the policy also emphasizes a long-term approach to the energy transition rather than immediate divestment.
Despite this stated policy, the CPPIB has made considerable investments in U.S. entities involved in fossil fuels and AI. This includes partnerships with private equity firms and direct investments in companies spanning sectors like healthcare, hospitality, and technology. Recent assessments, such as Shift Action’s latest climate report card, have indicated a decline in the CPPIB’s climate performance, resulting in a ‘D’ grade overall. This poor performance is attributed to shortcomings in meeting Paris Agreement-aligned targets, intermediate goals, and a lack of exclusion of fossil fuel investments.
A significant portion of the CPPIB’s recent investments has been directed towards the U.S. fossil fuel industry and companies supporting its expansion, particularly in the context of AI development. Notably, the CPPIB invested US$300 million in xAI, a company focused on developing AI technologies, specifically to construct a gas-powered AI data center in a low-income neighborhood in Memphis, Tennessee. This investment has drawn criticism from environmental advocacy groups who have highlighted the potential for environmental racism and significant pollution emissions associated with xAI’s facilities. Furthermore, xAI’s AI chatbot, Grok, has recently faced controversy for generating inappropriate and harmful content. The CPPIB has stated it does not endorse the use of Grok but continues its investment.
The fund also recently invested US$1.2 billion to acquire a substantial stake in Tallgrass Energy, a pipeline company that has been involved in discussions with the White House regarding the development of Venezuelan oil resources. Tallgrass Energy operates an extensive network of pipelines and terminals across multiple U.S. states and is actively developing fossil fuel infrastructure to support the growing demand for data centers fueled by AI. This includes a proposed pipeline project from the Permian Basin and a partnership with Crusoe to build an AI-focused data center powered by natural gas.
According to reports, the CPPIB has also committed hundreds of millions of dollars to VoltaGrid, a company specializing in modular natural gas systems for data centers and fossil fuel operations. Despite VoltaGrid’s marketing of natural gas as a “low-emission” solution, the company’s CEO is a Republican donor who has supported the U.S. administration’s push for increased fossil fuel production. VoltaGrid has also partnered with companies owned by major Trump donors and is involved in a controversial project to build a gas plant to power a data center in New Brunswick, Canada.
Shift Action’s analysis reveals that approximately 47 percent of the CPPIB’s investment portfolio is allocated to the United States, a figure significantly higher than its share of the global economy. Several fossil fuel companies within the CPPIB’s portfolio also hold positions on the U.S. Department of Energy’s National Petroleum Council. In the final quarter of 2024 alone, the CPPIB invested US$807 million in U.S. fossil fuel expansion, including investments in midstream energy assets, pipeline projects, and partnerships with private equity firms focused on the energy sector.
Critics argue that the CPPIB’s continued investment in U.S. fossil fuels and AI, particularly under the current political climate, represents a significant risk to the long-term financial security of Canadian retirees. They contend that these investments are inconsistent with the fund’s stated commitment to sustainability and could expose the pension plan to undue risks associated with U.S. economic and political instability. The CPPIB has not responded to requests for comment regarding these criticisms.
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