UPP’s Barbara Zvan on the shift to inflation-proof and climate assets
UPP is now fully funded just four years after launch, CEO Barbara Zvan discusses the fund’s shift to inflation-protected assets, its C$1.2bn commitment to climate solutions, and the challenge of decarbonising private markets
UPP is a relative newcomer in the Canadian pension landscape. The C$12.8bn plan, which serves more than 40,000 members across five Ontario universities and 14 sector organisations, was launched in 2021 amid a challenging backdrop for single-sponsor DB plans in a low-interest-rate environment. Employee groups and university administrations, with backing from the provincial government, opted to merge their separate DB plans into one multi-university jointly sponsored pension plan (JSPP), which recently celebrated its fourth anniversary.
Since then, conditions have improved considerably, with rising gilt yields boosting DB funding levels globally. As of 2024, UPP is fully funded and has reported an annual net return of 10.3%. While participation remains optional for universities in the region, interest from other academic institutions is growing.
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Barbara Zvan has led UPP as president and CEO since inception, bringing nearly 25 years of experience from Ontario Teachers’ Pension Plan. She also serves on the board of the Responsible Investment Association, is an advisory board member of the Institute for Sustainable Finance, and was the inaugural chair of Climate Engagement Canada. Tackling global warming is firmly on UPP’s agenda, and the fund ranks comparatively high on Shift's Annual Scorecard, measuring climate commitments of Canadian pension funds.
We spoke with Zvan on the sidelines of the Oxford Sustainable Finance Summit in July to learn more about how the fund’s portfolio is evolving.
Focus on income and inflation protection
“When UPP launched in July 2021, we received the assets from the three founding university pension plans. We didn’t inherit people or technology – just the combined portfolio, which was highly illiquid, with very low inflation-sensitive exposure, and a patchwork of private assets from different managers,” Zvan explains.
The fund is moving towards a more streamlined portfolio, dividing assets into three categories: return-enhancing (equities and private markets), inflation-sensitive (infrastructure and real estate), and interest rate-sensitive (fixed income).
Over the past four years, UPP has reduced the number of managers it works with while increasing its interest rate sensitivity to reflect the higher-rate environment. At the same time, the plan is prioritising assets that offer inflation protection.
“Initially, there was very little inflation protection built into the portfolio, so shifting into infrastructure and inflation-linked assets has been key. We’ve also adjusted our bond allocation to better align the portfolio’s interest rate sensitivity with our pension liabilities and other growth assets. This shift strengthens the plan’s long-term resilience by improving balance and risk management across changing rate environments,” she says.
As UPP’s funding ratio improves, income generation will become more central: “We have to manage risk responsibly, which means ensuring the right asset mix. Bonds help stabilise returns and reduce volatility, which is essential for meeting pension obligations. Infrastructure offers steady, long-term cashflows while also providing inflation protection.”
Embedding climate risk
Climate considerations have been integrated from the start. “As a relatively new plan, every major investment decision is filtered through a climate risk lens. We didn’t want to redesign the portfolio without embedding climate risk considerations from day one,” Zvan says.
UPP has halved its portfolio’s GHG emissions intensity since 2021. Most of this progress has been in listed equities, which are easier to decarbonise, but Zvan acknowledges that private markets, fixed income, and infrastructure present greater challenges. “That’s where real-world emissions reductions and stewardship take centre stage,” she notes.
With UPP investing largely through external managers, careful selection is crucial. “We rely heavily on managers for data, insights, and execution. Climate is a core criterion in our selection process. While hedge funds tend to lag, we’ve seen encouraging progress across other asset classes. Despite public pushback in some quarters, our managers remain largely committed to climate goals.”
In public markets, UPP invests with managers such as Impactive Capital, Whitebox, Acadian Asset Management and Episteme Capital Partners. In private markets, the plan has recently allocated private credit to Arrow Global Group and private equity to Kohlberg & Company. UPP has also made co-investments in infrastructure with Arjun Infrastructure Partners – backing UK rail infrastructure – and with Copenhagen Infrastructure Partners in development-stage renewable energy assets.
Overall, UPP has pledged C$1.2bn for climate solutions by 2030, with more than half already committed. “So far, we’ve invested about C$658m. The market isn’t always easy – ticket sizes can be smaller, and defining what counts as a ‘climate solution’ means looking beyond just renewables. We use a full transition alignment framework,” Zvan says.
Global outlook
It is tempting to invite her to comment on the escalating trade tensions between the US and Canada. With temperatures heating up between Mark Carney and Donald Trump, could it be safer to shift more investments towards the UK and Europe?
Zvan remains diplomatic. “We work with managers who have the expertise to navigate regional dynamics, whether that’s the US, Europe or elsewhere. Our priority is diversification and finding opportunities aligned with our long-term goals and investment horizon.”
Having said that, she appears to enjoy her time in UK, which on a sunny July day in Oxford presents itself from one of its more flattering sides. The opportunity to exchange views with asset owner peers in the UK has been invaluable, she adds.
Looking ahead, Zvan expresses “cautious optimism” about Canada’s climate stance following Mark Carney’s election. “Canada, like the UK, is moving gradually, but seeing so many countries adopt mandatory climate disclosure standards is encouraging. Transitioning is a slow process, but it’s moving in the right direction, albeit with some headwinds.”
