Canadian Life Insurers Face Investment-Health Alignment Challenges

Canada's leading life insurance companies—Manulife, Sun Life, and Great-West Lifeco—face scrutiny over a mismatch between their health-focused business models and investment strategies that remain heavily weighted toward fossil fuels. Despite public net-zero commitments, these insurers continue to invest insufficiently in renewable energy and climate solutions, which creates financial and reputational risks amid escalating climate-related health impacts. Fossil fuel combustion significantly contributes to global health issues, including respiratory and cardiovascular diseases, worsened by climate-induced events like wildfires—a growing concern in Canada. The health consequences of such pollution translate directly into increased insurance claims and volatility, challenging traditional actuarial assumptions. Analyses reveal none of these insurers meet recommended investment ratios aligned with limiting global warming to 1.5°C. Manulife leads with a 2:1 low-carbon to fossil fuel investment ratio, while Sun Life and Great-West Lifeco lag behind. Moreover, they have yet to establish transparent, quantifiable targets for increasing renewable energy allocations in their general accounts, which finance policyholder liabilities. By contrast, other insurers such as European firms AXA and Allianz and Canadian entities like RBC and the Co-operators have adopted clearer renewable and low-carbon investment targets, boosting accountability and reducing greenwashing risks. Given the long-term nature of life insurance liabilities, investing in climate-resilient infrastructure aligns with the sector's risk management and sustainability objectives. Recommendations for Canadian life insurers include enhancing transparency regarding fossil fuel exposure, setting explicit and measurable climate investment goals, updating actuarial models to incorporate rising health risks from pollution and climate change, and advocating for policy reforms that incentivize green investments. Such steps would better align their investment portfolios with both their health-centric mission and emerging environmental realities, reducing financial exposure to climate-related risks.