Ontario teachers: Demand climate transparency about OTPP’s Heritage Royalty "Carbon Bomb"

The Ontario Teachers’ Pension Plan (OTPP) is the 100% owner of Heritage Royalty, a private company that holds royalty rights for approximately 4 million acres of oil and gas producing lands in Western Canada, Pennsylvania and Texas. Since OTPP’s $3.3-billion purchase of Heritage Royalty in 2015, the company has been leasing land to oil and gas producers and collecting royalties based on production. Three senior OTPP staff sit on Heritage Royalty’s advisory board.

Through Heritage Royalty, OTPP makes money from a portfolio of "carbon bombs"—oil and gas projects that would drive the climate past internationally agreed temperature limits, causing catastrophic global impacts. OTPP committed to net-zero emissions in 2021 and released a climate strategy in 2022. But in nine years of owning Heritage Royalty, OTPP has facilitated the production of millions of barrels of oil and gas while disclosing virtually nothing about Heritage to the working and retired teachers whose pension savings were used to buy the company. By continuing to enable the development of fossil fuels underneath Heritage lands, OTPP is risking the retirement savings of Ontario teachers on a long-term bet that the energy transition will fail.

As the climate crisis accelerates and jeopardizes the retirement security of thousands of Ontario teachers, their families and their students, OTPP members deserve answers from their pension managers about the role this investment has quietly played in increasing oil and gas production and pumping carbon pollution into the atmosphere—and the associated risks Heritage Royalty raises for the pension fund.

Ontario teachers, please sign the following open letter to OTPP demanding transparency about your pension fund’s ownership of the Heritage Royalty carbon bomb.

For more information about OTPP’s ownership of Heritage Royalty, read Shift’s analysis.

Send your letter to OTPP!

First Name *

Last Name *

Email Address *

Please confirm you are a member of the Ontario Teachers' Pension Plan *

Yes

Dear [recipient name will go here],

Your Letter *

I am writing to request information about Heritage Royalty, which is 100% owned by the Ontario Teachers’ Pension Plan (OTPP). I would like transparency on how Heritage Royalty is aligned with net-zero emissions by 2050 and whether the company respects Indigenous rights. 

I am deeply concerned that this investment carries profound risks for the climate and my retirement security. I am concerned that my pension savings are being used to facilitate oil and gas production and that Heritage Royalty is incompatible with OTPP’s net-zero by 2050 target and Canada’s climate commitments. I am also concerned that OTPP has disclosed virtually nothing about Heritage Royalty’s business after nine years of ownership, despite spending $3.3 billion of my retirement fund to purchase this company. And I am concerned that Heritage Royalty is operating on stolen Indigenous lands without the free, prior and informed consent of affected Indigenous communities. 

I am hoping you can provide more transparency on how my retirement savings are being invested and how Heritage Royalty is aligned with OTPP’s net-zero commitment by answering the following questions:

1. How much oil and gas has been extracted from lands owned by Heritage Royalty since OTPP acquired the company in 2015? How much oil and gas remains undeveloped underneath lands covered by Heritage Royalty’s portfolio?  

2. What are the lifecycle greenhouse gas emissions associated with the oil and gas already extracted from the lands in Heritage Royalty’s portfolio since OTPP acquired the company? What are the lifecycle greenhouse gas emissions associated with the undeveloped oil and gas under the lands in Heritage Royalty’s portfolio?

3. OTPP reported in 2018 that the greenhouse gas emissions associated with Heritage Royalty’s oil and gas holdings are not included in OTPP’s carbon footprint. Is this still the case? If not, how are the lifecycle greenhouse gas emissions associated with Heritage Royalty’s portfolio now counted in OTPP’s carbon footprint?

4. Has OTPP recouped its investment in Heritage Royalty after using $3.3 billion of my retirement fund to purchase the company in 2015?

5. How much does OTPP expect the value of Heritage Royalty's assets to diminish in a Paris-aligned energy future?

6. Which companies have extracted oil and gas from lands in Heritage Royalty’s portfolio?

7. Has/is NuVista Energy and Trican Well Service, on whose boards OTPP Director Deborah Stein sits, extracted/extracting oil and gas or serviced/servicing wells on lands owned by Heritage Royalty?

8. Is Heritage Royalty’s business model aligned with OTPP’s net-zero emissions commitment and climate strategy?

9. Is Heritage Royalty’s business model aligned with Canada’s commitments to reduce greenhouse gas emissions 40-45% below 2005 levels by 2030 and reduce oil and gas sector emissions by 31% over this period?

10. Is Heritage Royalty’s business model aligned with the International Energy Agency’s Net-Zero by 2050 outlook, which shows that meeting global climate goals requires oil and gas expansion to halt immediately and production to decrease rapidly?

11. In what ways has Heritage Royalty “worked closely with regulators and its partners to ensure that it has a positive influence on the direction of the oil and gas industry”, as the company claims on its website? Which “environmental requirements” are incorporated into Heritage Royalty’s contracts and leases?

12. Who is responsible for decommissioning the wells and reclaiming the land after oil and gas has been extracted under Heritage Royalty leases? Who is responsible for funding this work?

13. It appears that rights owned by Heritage Royalty may overlap with Indigenous lands. Are affected Indigenous communities being compensated for Heritage Royalty's use and leasing of First Nations and traditional Indigenous lands? Have Heritage Royalty and OTPP developed policies to ensure the Free, Prior and Informed Consent of affected Indigenous communities, in line with modern recognition of Indigenous rights?    

OTPP says its climate strategy is rooted in driving real-world impact, decarbonizing high emitters and investing in companies that help build a sustainable economy. It is unclear how Heritage Royalty’s business model could credibly align with this strategy. It appears that, to achieve Canadian and global climate targets, a significant amount of the fossil fuel resources covered by Heritage Royalty leases must stay in the ground, creating potential financial risks for OTPP’s ownership position.  

I am disappointed that OTPP has risked my retirement savings on a company whose business model is fundamentally based on making the climate crisis worse, while providing virtually no disclosure to plan members like me. The climate crisis is here, and it gets worse with every barrel of oil or cubic foot of gas that is extracted, refined and burned.

Without disclosure of how OTPP will manage the phase-out of its fossil fuel assets, including Heritage Royalty, OTPP’s net-zero commitment and climate strategy is incomplete. I expect my pension managers to be able to answer reasonable questions about how my retirement savings are prudently invested. 

To ensure Heritage Royalty aligns with Canadian and global climate targets, honours OTPP’s climate strategy and respects Indigenous rights, OTPP should:
-Calculate and disclose the scope 1, 2 and 3 emissions associated with the developed and undeveloped oil and gas underneath Heritage Royalty’s lands;
-Calculate and disclose how much of the oil and gas underneath Heritage Royalty’s lands can be extracted and burned while remaining aligned with Canadian and global climate commitments;
-Publicly commit to stop making new investments in companies and assets whose business model is dependent on fossil fuel production;
-Develop and disclose a plan to wind down the production of oil and gas underneath Heritage Royalty’s lands in line with Canadian and global climate commitments, while protecting the pensions of working and retired Ontario teachers;
-Ensure Heritage Royalty has the free, prior and informed consent of affected Indigenous communities and First Nations whose land was stolen by the company’s predecessors.

I look forward to OTPP answering my questions and responding to my concerns about Heritage Royalty.

Sincerely,
[your name will go here]
[your email address will go here]

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