Norway municipal pension fund divests from Canada’s oil sands

On October 7, the National Observer reported  “Norway public pension fund severs final link with Canada’s oilsands” . The article describes that KLP, which manages the pensions of Norway’s 900,000 nurses, firefighters and other local and state government employees, has sold off US$33 million worth of equity holdings and US$25 million in bonds from Canada’s Cenovus Energy, Suncor Energy, Imperial Oil (majority owned by ExxonMobil) and Husky Energy, as well as Russia’s Tatneft PAO. This follows the June 2019 vote by the Norwegian Parliament to to tighten the coal exclusion criteria of Norway’s Government Pension Fund Global (GPFG), and the October 1 decision by the GPFG to divest from oil exploration companies (although it still maintains investment in downstream and integrated ventures).  The moves are seen as reflective of the instability of oil and gas investments, and it is notable that the KLP fund has had a 22.8 percent return so far this year, 1.5 per cent ahead of its benchmark.

In contrast to the Norweigian pension administrators, the Canada Pension Plan Investment Board (CPPIB) as recently as March 2019  invested $1.34 billion in a joint venture which will expand fracking in the western Marcellus and Utica shale basins of the U.S.. The CPPIB manages $400 billion to support the public pensions of Canadians, and continues to hold hundreds of millions of dollars in oil and gas companies, including Enbridge , Suncor  and Pembina Pipeline.   The Green Party of Canada platform in the 2019 election  commits to “regulate the CPP Investment Board to require divestment of coal, oil and gas shares and ensure that all investments are ethical and promote environmental sustainability.”

Another recent, high-profile divestment:  The University of California announced that by the end of September, the university’s $70 billion pension fund and $13.4 billion endowment  fund will have divested all investments related to fossil fuel extraction.  The reason given:  “The reason we sold some $150 million in fossil fuel assets from our endowment was the reason we sell other assets: They posed a long-term risk to generating strong returns for UC’s diversified portfolios.”  A September 18 article in Vox is one of many reporting on this high-profile decision.

 

What if the financial sector moved away from fossil fuel investments?

On September 17, Bill McKibben, a leader of the divestment movement, wrote Money is the oxygen on which the fire of global warming burns , published in The New Yorker. The essay traces the progress of the divestment movement and asks, What if the banking, asset-management, and insurance industries moved away from fossil fuels?. On the same day came the announcement that “ University of California drops fossil fuels from its $80 billion portfolio”.   An article in Rolling Stone  quotes the UC representatives, stating “it wasn’t moral or political pressures that convinced them to phase UC’s hundreds of millions of dollars in fossil-fuel investments. Instead, they say, it was the growing realization that fossil fuel investments no longer made financial sense and weren’t a worthwhile investment.”

Investment performance of Fossil fuel companies

In what has been seen as an historical turning point, ExxonMobil lost its spot on the S&P Index list of “Top Ten Companies” in August 2019 –  the first time it had not appeared since the Index launched in 1957.  In 1980,  the energy sector as a whole represented 28% of the S&P 500 Index; as of August 2019, it represents  4.4%.  According to a summary by the Institute for Energy Economics and Financial Analysis (IEEFA), the energy sector claimed last place in the S&P rankings of sector performance in August 2019, following similar results in 2018 and 2017.“This is not some temporary aberration. The oil and gas sector is in decline, profits are shrinking and investment options problematic …. This is true even for companies like ExxonMobil that historically have deep pockets.”

The full Briefing Note,  ExxonMobil’s Fall From the S&P 500 Top Ten: A Long Time Coming (August 2019) also includes discussion of the role Canada’s oil sands have played in the decline of the industry.  Carbon Tracker Initiative provides further information in Exxon’s New Clothes – the tale of why Exxon lost its prized position in the S&P 500 .

Are the banking, asset-management, and insurance industries moving  away from fossil fuels?  

New initiatives launched at U.N. Climate Summit in New York in September point in that direction:

  1. 130 banks from 49 countries signed on to the Principles for Responsible Banking (PRBs), committing to align their business operations with the Paris Climate Agreement and the Sustainable Development Goals. Despite the fact that the Bank of Canada issued a report flagging the investment risks of climate change in May, the only signatories from Canada were the National Bank of Canada and the Desjardins Group . Hardly surprising, given the April 2019 Fossil Fuel Report Card from Banktrack , which showed that Canada’s big banks rank 5th, 8th, 9th and 15th in the world for fossil fuel invesment since the Paris Agreement in 2015. In response to the PRI pledge, civil society groups issued a statement, “No More Greenwashing: Principles must have Consequences ”  which highlights the lack of concrete plans and the slow time frame: signatory banks are allowed up to four years to demonstrate their implementation of the principles.  A thorough discussion published by Open Democracy asks “The UN banking principles are welcome – but do they go far enough to stop climate destruction?
  2. A new Net Zero Asset Owner Alliance  was launched, convened by the U.N. Environmental Program’s  Finance Initiative and the Principles for Responsible Investment, and supported by WWF as part of its Mission 2020 campaign. The Net Zero Asset Owner Alliance signatories are insurance and pension fund management companies which hold approximately $2.3 U.S. Trillion. Their commitment document  pledges to re-balance those investment portfolios to make them carbon neutral by 2050, with intermediate targets set for 2025, 2030 and 2040. Founding members include   German insurer Allianz, the California Public Employees’ Retirement System (CalPERS), Swedish pension fund Alecta, PensionDanmark, Swedish pension manager AMF, Nordea Life & Pension, Norwegian insurer Storebrand, and Swiss RE.
  3. European investment bank-logo-enThe European Investment Bank strengthened its climate commitments at the U.N. Climate Summit  pledging to “ position the EIB as an incubator for climate finance and expertise to mobilise others, helping our societies and economies transform to a low carbon future.” Specifically, the bank pledged that 50% of new investments will be for climate action and environmental sustainability by 2025 (previously the target had been 30% by 2020). Also,  “we aim to align all our financing activities with the principles and goals of the Paris agreement by the end of 2020. As an important first step, we will phase out energy projects that depend solely on fossil fuels.”
  4. financing the low carbon futureThe Climate Finance Leadership Initiative (CFLI) , chaired by Michael Bloomberg, released  Financing the Low Carbon Future  , a thorough but readable analysis of how clean energy investment works globally, with practical recommendations . The CFLI is composed of  senior executives of seven major private-sector financial institutions– Allianz Global Investors, AXA, Enel, Goldman Sachs, HSBC, Japan’s Government Pension Investment Fund (GPIF) and Macquarie.
  5. Over 500 environmental and advocacy groups from 76 countires supported the Lofoten Declaration at the U.N. Climate Action Summit. The Lofoten Declaration , (named after the Lofoten Islands of Norway where it was first drafted in 2017) states in part: “It is the urgent responsibility and moral obligation of wealthy fossil fuel producers to lead in putting an end to fossil fuel development and to manage the decline of existing production.”  Canada is one of those countries, and Catherine Abreu of Climate Action Network Canada was one of the supporters, stating: “True leadership in response to the climate emergency means having the courage to commit to ending the expansion of oil and gas production and make a plan to transition communities and workers to better opportunities.”  A summary  appears in “If a House Is on Fire, You Don’t Add Fuel’: 530 Groups Back Call to Rapidly Phase Out Fossil Fuels Worldwide” in Common Dreams (Sept. 23); Background to the Lofoten Declaration here  .

Much remains to be done:  Consider the September 2019 report by Carbon Tracker Initiative.  Breaking the HabitWhy none of the large oil companies are “Paris-aligned”, and what they need to do to get there. The report examines oil company investment activities , and concludes:

  • Last year, all of the major oil companies sanctioned projects that fall outside a “well below 2 degrees” budget on cost grounds. These will not deliver adequate returns in a low-carbon world. Examples include Shell’s $13bn LNG Canada project and BP, Total, ExxonMobil and Equinor’s Zinia 2 project in Angola.
  • No new oil sands projects fit within a Paris-compliant world. Despite this, ExxonMobil sanctioned the $2.6bn Aspen project last year – the first new oil sands project in 5 years.
  • The oil and gas in projects that have already been sanctioned will take the world past 1.5ºC, assuming carbon capture and storage remains sub-scale.

And Global Trends in Renewable Energy Investment 2019 , commissioned by the United Nations, was published in September, reporting the good news that  global investment in new renewable energy capacity, led by solar power, “ is set to have roughly quadrupled renewable energy capacity (excluding large hydro) in the decade ending in 2019. Renewables accounted for 12.9 percent of global electricity in 2018—and if hydropower is also included, the renewable’s share of global electricity production is  measured at 26.3%.  Cost-competitiveness of renewables has “risen spectacularly over the decade, as the levelised cost of electricity has been steadily decreasing, down 81 percent for solar photovoltaics and 46 per cent for onshore wind since 2009.”

Yet despite this good news, the report states: “Overall, we note that these figures represent a small share of the overall economic transition required to address climate change…. global power-sector emissions are likely to have risen by at least 10 percent between the end of 2009 and 2019.”

 

Unions supporting Pension Plan Divestment with practical guides

In Spring 2018,  the Labor Network for Sustainability and DivestInvest Network  jointly released a new guide: Should your union’s pension fund divest from fossil fuels? A guide for trade unionists  .  The guide begins with an introduction to union pension plans in the U.S., including how they are governed, and the legal and administrative safeguards designed to protect members’ money.  It also recounts the role of union pension fund divestment in the South African struggle against Apartheid, describes the current global campaign for divestment from fossil fuels, and how and why unions are participating in that movement. The final section of the guide provides practical guidelines for union divestment campaigns.

Inspiration and a practical example of such a campaign can be found in the article “How New York City Won Divestment from Fossil Fuels”.  The article, originally posted in Portside, is written by by Nancy Romer, a member of the Environmental Justice Working Group of the Professional Staff Congress of the City University of New York and an activist in the divestment campaign which led to the January 2018 decision by New York City to divest $5 billion of its pension funds (and to sue ExxonMobil, Shell, BP, Chevron, ConocoPhillips).

The Guide and Nancy Romer’s article are available at a new Divest/Invest Hub on the LNS website, with plans for more campaign case studies and sample resolutions to be added.   Guides with similar aims have been  produced in the U.K.:  for public sector unions:  Local Government Pension Funds – Divest From Carbon Campaign: A UNISON Guide  (January 2018) ; in  2017, Friends of the Earth-U.K. published  Briefing: Local government pensions: Fossil fuel divestment  and Friends of the Earth- Scotland published  Divest Reinvest: Scottish Council Pensions for a Future worth living in .  The Public and Commercial Services Union published  Divest to Reinvest in 2016.

UPDATED: How universities can confront climate change: new Canadian guide, and a new North American network

confronting climate_changeConfronting Climate Change on Campus  is a newly-released guide by the Canadian Association of University Teachers (CAUT/ACPPU), in response to growing awareness and concern amongst the professors and researchers who are members. It presents a three-step plan of practical action to be followed by academic staff associations and researchers across Canada:  To reduce the carbon footprint of campuses by improving building energy conservation and promoting low-carbon transportation;  to expand course offerings dedicated to climate change, and to encourage climate change research through grants and awards; and to advocate for the creation of association or institutional environment committees, or work with established committees, such as collective bargaining or workplace joint health and safety committees, to push climate change concerns.  The French version of the guide is here .

The University Climate Change Coalition,  to be known also  as UC3, was launched on February 6 at the 2018 Higher Education Climate Leadership Summit in Arizona. The new, North American-wide network pledges  to leverage their research and to accelerate local and regional climate action. To begin, in 2018 each UC3 institution will organize a climate change forum tailored to local and regional objectives, to bring together community and business leaders, elected officials and advocates. The 13 participating research institutions include University of British Columbia and University of Toronto, whose press release about UC3 also provides an update on U of T sustainability policies and initiatives.   The remaining UC3 institutions are: Arizona State University, California Institute of Technology, Tecnológico de Monterrey, La Universidad Nacional Autónoma de México, Ohio State University, State University of New York, University of California, University of Colorado, University of Maryland, University of New Mexico, and University of Washington.

The growing awareness and concern amongst Canadian  academics can be partly credited to the research efforts of the Sustainability and Education Policy Network (SEPN) at the University of Saskatchewan, which CAUT has highlighted, most recently  in  “The Politics of Climate Change” in the CAUT  Bulletin (June 2017).  The article summarizes results of a survey of Canadian colleges and universities by researchers at SEPN, and calls for exactly the kinds of actions addressed in the new CAUT guide.  The scholarly article on which the CAUT Bulletin article is based,”Climate Change and the Canadian Higher Education System: An Institutional Policy Analysis” , appeared in the Canadian Journal of Higher Education in June  2017.  The key findings are: “less than half (44 per cent) have climate change-specific policies in place; those policies focus most often upon the built-campus environment with “underdeveloped secondary responses” to research, curriculum, community outreach and governance policies; and the “overwhelming” response of modifying infrastructure and curbing energy consumption and pollution, while important, risks masking deeper social and cultural dynamics which require addressing.”   A 2-page summary is here ; an infographic is here.

Other relevant SEPN publications include “The State of Fossil Fuel Divestment in Canadian Post-secondary Institutions” (2016) ; “50 Shades of Green: An Examination of Sustainability Policy on Canadian Campuses” (2015) , and the related Research Brief Greenwashing in Education: How Neoliberalism and Policy Mobility May Undermine Environmental Sustainability  (2014),  and “Greening the Ivory Tower: A Review of Educational Research on Sustainability in Post-secondary Education” , which appeared in the journal  Sustainability in 2013.

And elsewhere in the world:  According to The Guardian, on February 5, the University of Edinburgh , which divested from coal and tar sands investments in 2015, announced that it will sell its final £6.3m of fossil fuel holdings.  Edinburgh has a  £1bn endowment fund,  (exceeded in the U.K. only by Cambridge and Oxford). Signalling the change to a more climate-friendly investment strategy, Edinburgh has invested £150m in low carbon technology, climate-related research,  and businesses that directly benefit the environment.

UNISON launches a campaign for pension fund divestment with a Guide for Local Unions

uk MONEYOn January 10, 2018,  the U.K. union UNISON launched a campaign to encourage members of local government pension schemes to push for changes in the investment of their funds – specifically, to “explore alternative investment opportunities, allowing schemes to sell their shares and bonds in fossil fuels and to go carbon-free.”  A key tool in this campaign: Local Government Pension Funds – Divest From Carbon Campaign: A UNISON Guide, which states:  “Across the UK there are nearly 50 divestment campaigns targeting local government pension funds ….. In September this year, it was revealed that a total of £16 billion is invested in the fossil fuel industry by Local Government Pension funds.”  The new Guide explains how the U.K. pension system works for local government employees, and provides case studies of existing divestment campaigns.  In addition, it provides “Campaign Resources”, including a model campaign letter, a glossary of pension and investment terms,  and it reproduces the Pensions and Climate Motion passed at the 2017 UNISON Delegates conference.  The Guide was written by UNISON, in collaboration with ShareAction – a registered U.K. charity that promotes responsible investment practices by pension providers and fund managers.

Greener Jobs AllianceInformation about the divestment campaign, as well as information about the National Auditor’s Report re the U.K. Green Investment Bank,  is included in the January-February issue of the newsletter of the  Greener Jobs Alliance , a U.K.  partnership of “trade unions, student organisations, campaigning groups and a policy think tank.” The Greener Jobs Alliance is part of the Campaign against Climate Change Trade Union Group, which is organizing an event on March 10 in London: Jobs & Climate: Planning for a Future that Doesn’t Cost the Earth