Canada’s second largest pension fund joins Harvard, the MacArthur Foundation in divestment away from fossil fuels

The Caisse de dépôt et placement du Québec (CDPQ),  the second largest pension fund in Canada, announced on September 28 that it will exit oil production investments at the end of 2022. The new, complete Climate Strategy document is here, and is built on four “vital and complementary pillars, as summarized in a press release

  • Hold $54 billion in green assets by 2025 to actively contribute to a more sustainable economy. 
  • Achieve a 60% reduction in the carbon intensity of the total portfolio by 2030.
  • Create a $10-billion transition envelope to decarbonize the main industrial carbon-emitting sectors. 
  • Complete our exit from oil production by the end of 2022.

Reaction from pension  activist group ShiftAction states that the : “move to exclude investments in oil producers from its portfolio by the end of 2022 is a welcome and significant move that improves the CDPQ’s position as a climate leader among Canada’s major financial institutions. It is amazing that it took until 2021 for a Canadian pension fund to finally recognize that protecting our retirement savings from the worsening climate crisis inevitably requires abandoning market exposure to high-risk fossil fuels…. To achieve climate safety, investment in fossil gas production and infrastructure must also be urgently phased out…… The CDPQ’s progress stands in stark contrast to the Canada Pension Plan, whose CEO said earlier this year that the Canada Pension Plan has no plans to institute a blanket screen on oil and gas during his tenure.”   (Neither does the Ontario Teachers Pension Plan, as quoted in the Toronto Star article,  “Canada’s oil industry dealt a financial blow as pension giant divests itself of investment in fossil fuel”) .

New Canadian campaign demands information from pension fund managers

On September 29, letters were delivered to the boards and executive of Canada’s 10 largest pension fund managers, asking for specific and detailed answers by December, about how the funds are meeting their legal fiduciary obligations in the face of the global climate crisis. According to a Greenpeace press release , the letters were coordinated with ShiftAction and Ecojustice. The letters were signed by members of the respective pensions funds, along with some of their union representatives , and were accompanied by appendices of analysis and a legal brief. The 9-page letter to the Ontario Municipal Employees Retirement System, co-signed by Fred Hahn, President of CUPE-Ontario serves as an example.

Global divestment momentum

All of this is part of the growing momentum of the divestment movement in the lead-up to COP26.  On September 10, after years of resisting activist campaigns, Harvard University announced that its $42 billion endowment will bar any future investments in coal, oil and gas.  Stand.earth states: “this landmark announcement marks a tipping point that will cascade throughout mainstream endowments and financial institutions globally.”   On September 22, Reuters reported “MacArthur Foundation joins investment shift away fossil fuels”, stating that the $8.2 billion fund “is the largest foundation in the world to commit publicly to fossil-fuel divestment to date.” Bill McKibben, one of the architects of the global divestment movement, sums it all up, including the new Caisse de dépôt climate policy, in his article “Starving the Beast” (Crucial Years, Sept. 29).

Canada’s public pensions at risk of stranded assets, as fund managers increase fossil investments

An Insecure Future: Canada’s biggest public pensions are still banking on fossil fuels  was released by the Corporate Mapping Project in mid-August . It examines the investments of the Canada Pension Plan Investment Board (CPPIB) and the Caisse de dépôt et placement du Québec (CDPQ) over a five-year period from 2016 to 2020 – the two together manage $862.7 billion, which fund the pensions of over 26 million Canadians. The report finds that, despite public declarations and climate strategies, CPPIB increased the number of shares in oil and gas companies by 7.7 per cent between  2016 and 2020.  The CDPQ in 2017 pledged to increase its low-carbon investments by 50 per cent by 2020, but the authors calculate there was only a 14% drop in fossil fuel investments between 2016 and 2020, and also note that overall, the CDPQ holds over 52 per cent more fossil fuel shares than the CPPIB. The paper also highlights the funds’ investments in individual fossil fuel companies, including ExxonMobil ; TC Energy ; Enbridge; the world’s highest-producing coal companies, and in companies that are members of the Canadian Association of Petroleum Producers.  The numbers are startling,  and demonstrate a high potential for stranded assets which will threaten Canadians’ pension security.

The authors propose a number of policy changes, including a call for Canadian public pension fund trustees/investment boards to “ Immediately design a plan to phase out fossil fuel investment in alignment with targets set by the Paris Agreement to limit global warming below 1.5 degrees Celsius” and re-invest in renewables.  Recommendations for  the federal government include :  “mandate a clear timeline for public pensions to withdraw from all fossil fuel investments. Define reinvestment criteria that support a just and equitable transition to a renewable-based energy system” .

The report is summarized in “For climate’s sake, Canada Pension Plan needs to take a serious look at its investments”  (National Observer, September 7th),  which also summarizes the “oily” corporate connections of the decision-makers of the CPPIB, and highlights the current election promises related to financial regulation of our pension funds.

Landmark New York State divestment will begin with Canadian oil sands investments

The New York State Comptroller’s office announced on December 9 that it will begin a systematic review of the holdings of the New York State Common Retirement Fund in early 2021, with the ultimate goal to achieve decarbonization of all investments by 2040. The New York State Common Retirement Fund is the third largest pension fund in the U.S., valued at $226 billion, and provides retirement benefits for 1.1 million state and municipal workers.

The review will examine all investment holdings over a period of four years, beginning with what are judged the riskiest – oil sands investments such as Imperial Oil, Canadian Natural Resources, Husky Energy, Suncor Energy, and Cenovus Energy –  followed by companies in oil and gas, fracking, oil services and pipelines.   Details of the companies to be reviewed are in a Backgrounder by Divest NY; details are also provided in the press release from the Comptroller’s Office.  As described in  “New York State Just Set a New Standard for Fossil Fuel Divestment”  in Gizmodo:  “With the state of New York and New York City now ready to divest, it puts enormous pressure on polluting companies. As the beating heart of capital, the city and state’s pension funds—which together total around $500 billion—no longer going to fossil fuels sends a huge signal to Wall Street and the fossil fuel industry. But it also turns up the heat on other institutional investors, notably California’s pension funds, which are the largest in the nation, to catch up.”

Bill McKibben, founder of 350.org and divestment leader, wrote an Opinion piece in the New York TimesYou should have listened, New York Tells Big Oil” . McKibben characterizes this divestment decision as a victory in an 8-year battle, and the latest development in the declining economic and political power of Big Oil.

Canada Pension Plan continues to risk Canadians’ retirement savings – this time, fracking investments in Colorado

The Canadian Pension Plan Investment Board continues to display a hypocritical disregard for its own sustainability principles, as reported in  “CPPIB’s fracking operation in U.S. raises questions” in the Toronto Globe and Mail on September 27. The Globe and Mail describes the fracking activities and political donations of Crestone Peak Resources, a company 95% owned by the Canada Pension Plan Investment Board, and formed out of the ashes of Encana. The article reports that Crestone spent more than US$600,000 to support pro-business candidates who opposed tougher regulation of fracking in the 2018 Colorado state elections. Friends of the Earth Canada were involved in the Globe and Mail investigation and has posted unique information here .

The Energy Mix also published “’Canadians Don’t Want This: Fracking Company Owned By Canada Pension Plan Spent $600,000 To Influence Colorado State Elections” (September 30).The article quotes  Professor Cynthia Williams, Osler Chair in Business Law at Osgoode Hall Law School in Toronto, who states:  “It’s a “perfectly correct statement of corporate law” to say that CPP and Crestone are separate companies”, …. But it’s “an imperfectly correct answer to the ethical questions about CPPIB using its heft, based on the involuntary monetary contributions of millions of citizens and other people working in Canada, to try to shape politics to support its oil and gas investments, in Colorado, even as the Government of Canada has committed to working to transition to a low-carbon economy.”

Professor Williams  is the author of  Troubling Incrementalism: Canadian Pension Plan Fund and the Transition to a Low-carbon Economy , published in September by the Canada Climate Law Initiative.  The report discusses CPPIB investments in fossil fuels in the last six years in detail, including fracking companies in Ohio and the Crestone company in Colorado, as well as oil sands expansion in Alberta and Saskatchewan. The report concludes by calling on CPP Investments to fundamentally re-evaluate its role, stating:

“Our view is that CPP Investments should be, and could be, making a substantial contribution to Canada’s future economy by supporting new technologies, new companies, and the just transition to a low-carbon economy. We argue that doing so would be more consistent with its statutory mandate to manage the assets of the CPP Fund in the best interests of the twenty million Canadian contributors and beneficiaries than is its current approach. It would also be more consistent with its common-law fiduciary duties, which require intergenerational equity.”

What can Canadians do to move their pension funds away from fossil fuels?

Friends of the Earth Canada offers an online letter to Heather Munroe-Blum (Chair, Canada Pension Plan Investment Board) and Mark Machin (CEO), with five recommendations arising from the Crestone investigation. FOE is also conducting open informational meetings about the CPP investments throughout Canada in October.

Shift Action  is a project of Tides Canada which advocates for environmentally-responsible pension management.  Their press release (Sept. 29) cites the Crestone investment, highlights the nearly $12 billion invested in Chinese coal mines and other fossil fuel companies (double its clean energy investments),  and warns: “The CPP is betting Canadian retirement savings against the unstoppable transition to a clean energy economy, and fueling the global climate crisis in the process.”  In an interview published in The Energy Mix , Shift Action’s Executive Director, Adam Scott urges Canadians:  “One of the best ways to have an impact in this crisis is to make sure the funds that are invested on your behalf are invested in solutions to climate change, not in the problem. There’s a tool on our website that makes it easy for all Canadians to send a note to their pension funds asking what they’re doing on climate risk and how they’re investing.”   Shift Action published a detailed guide to engagement in June 2019, Canada’s Pension Funds and Climate Risk: A Baseline For Engagement . It concludes with tips which include:  “Each of Canada’s major pension plans has a different structure for governance and accountability. Beneficiaries should understand this structure and have a clear sense of their pension plan’s sponsors and governance model. Beneficiaries should engage with all relevant points of contact, for example a union pension representative or a government appointed pension trustee.”

And finally, for pension fund trustees, the Canada Climate Law Initiative  flagship initiative is the Canadian Climate Governance Experts program, which offers “pro bono sessions on effective corporate governance to address climate-related financial risks and opportunities to corporate boards of directors and Canadian pension fund boards.”

 

 

Climate change and health: U.K. National Health Service launches new campaign for greener health care; more medical associations divest from fossil fuels

England’s National Health Service (NHS) is the country’s largest employer with 1.3 million staff, and its operations are responsible for approximately 4-5% of England’s carbon footprint. On January 25, the Chief executive officer of the NHS announced a new campaign to tackle the global climate change health emergency through a greener health care system.  A website for the new campaign, “For a Greener NHS”, focuses on a goal of a net zero national health service, with an Expert Panel to compile experiences and make recommendations in an interim report due in summer 2020, and a final report scheduled for Fall 2020.  In the meantime, the Greener NHS campaign will encourage such initiatives as switching from coal or oil-fired boilers to renewable heat sources for buildings; switching to less polluting anaesthetic gases and better asthma inhalers in treatment; and introducing technological solutions to reduce the number of patient visits and travel miles.

Another part of the initiative is a grassroots campaign for front-line workers, supported by the UK Health Alliance on Climate Change – which includes representative bodies covering over 650,000 NHS staff, including the union UNISON . The NHS press release quotes UNISON:  “Involving staff is crucial if the NHS is to help the UK meet its emissions targets in good time. They know more than anyone how the health service ticks and so are best placed to make practical green suggestions to get the NHS to where it needs to be.”  Examples of existing staff-oriented programs are described in case studies :  reducing the use of disposable plastic gloves;  an electric bike courier system for delivery of medical and laboratory samples; and a sustainable travel initiative  to encourage staff use of transit, shuttle buses, bicycles and walking for journeys to work.

British medical associations and organizations are also acting at the societal level. In January, the prestigious British Medical Journal (BMJ) published an editorial: “Investing in humanity: The BMJ’s divestment campaign” , which calls on individuals and organizations to act immediately, stating: “Divestment offers health professionals and medical organisations, for the duty is both individual and collective, an opportunity to influence politicians and industry towards behaviours that are better for the planet and people’s health.”  While urging divestment, the BMJ states: ” we will not accept advertising or research funded by companies that produce fossil fuels. We will also explore how else our business might be dependent on fossil fuel companies and take steps to end any such reliance. The BMA has no direct holdings in tobacco or fossil fuel companies.”  (Note that The Guardian newspaper in the U.K. also announced in February 2020 that  it will ban any fossil fuel advertising. ) According to a press release from the UK Health Alliance on Climate Change, six constituent groups of the Alliance have announced an intention, or are already divesting, from fossil fuels:  the British Medical Association, the Royal College of General Practitioners, the Faculty of Public Health, the Royal College of Emergency Medicine and the Royal College of Paediatrics and Child Health,  and in January 2020, the Royal College of Physicians .   The Canadian Medical Association has also divested from fossil fuels.

Financial giants targeted by new U.S. divestment campaign; Youth challenge the Davos elites to stop investing in the fossil fuel economy immediately

stop the money pipeline targetsLaunched at Jane Fonda’s final #FireDrillFriday event in Washington D.C. on January 10, the Stop the Money Pipeline , according to a Sierra Club press release , will consolidate a number of existing divestment campaigns and target the worst climate offenders in each part of the financial sector. The first campaign round consists of three major targets: amongst banks:  JP Morgan Chase;  amongst  insurance companies: Liberty Mutual;  and amongst asset managers, BlackRock. Groups involved in Stop the Money Pipeline are: 350.org,  Rainforest Action Network (RAN), Sierra Club, Greenpeace USA, Sunrise Project, Future Coalition, Divest Ed, Divest-Invest, Native Movement, Giniw Collective, Transition U.S., Oil Change International, 350 Seattle, EarthRights International, Union of Concerned Scientists, Majority Action, The YEARS Project, and Amazon Watch.

The Stop the Money Pipeline website  has archived some of the arguments for their campaign – including Bill McKibben’s September Commentary in the New YorkerMoney Is the Oxygen on Which the Fire of Global Warming Burns”, and “Why Big Banks Are Accused Of Funding The Climate Crisis” in  HuffPost  in October 2019.  The campaign launch has been described in “Climate Movement Takes Aim at Wall Street, Because ‘Money Is Only Language Fossil Fuel Industry Speaks‘” in Common Dreams (Jan. 9);   , and  in  “Want to do something about climate change? Follow the money” in the New York Times  on Jan. 11. In that Opinion piece, Bill McKibben and Lennox Yearwood Jr.  describe their arrest at a sit- in at the Chase Bank which was part of the campaign launch. Democracy Now also covered the events in  “Stop the Money Pipeline”: 150 Arrested at Protests Exposing Wall Street’s Link to Climate Crisis  on January 13 .

Are campaigns having any effect?

Perhaps it is just coincidence, but on January 9,  BlackRock announced it is signing on to  Climate Action 100+, a global investor network formed in 2015 and which includes California Public Employees’ Retirement System (CalPERS), HSBC Global Asset Management, and Manulife Asset Management.   BlackRock also announced a new investment strategy, summarized in  “BlackRock Will Put Climate Change at Center of Investment Strategy”   in the New York Times (Jan. 14) . The NYT article emphasizes the company’s influence as the world’s largest investment fund with over $7 trillion under management, and states that “this move … could reshape how corporate America does business and put pressure on other large money managers to follow suit.”  The new strategy is outlined in two Annual Letters from BlackRock’s CEO Larry Fink:  Sustainability as BlackRock’s New Standard for Investing , the letter to corporate clients states, “Our investment conviction is that sustainability-integrated portfolios can provide better risk-adjusted returns to investors”.  The second letter, titled A Fundamental Reshaping of Finance, acknowledges that  protests have had an impact on their position: Climate change has become a defining factor in companies’ long-term prospects. Last September, when millions of people took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect.”   He continues: “…. awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.… climate change is almost invariably the top issue that clients around the world raise with BlackRock. ….   In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”  However, this urgency seems somewhat at odds with another statement in the Letter to CEO’s: “…. While the low-carbon transition is well underway, the technological and economic realities mean that the transition will take decades. Global economic development, particularly in emerging markets, will continue to rely on hydrocarbons for a number of years. As a result, the portfolios we manage will continue to hold exposures to the hydrocarbon economy as the transition advances.”

Other divestment developments:

Urgency is a key theme in a new public call by Greta Thunberg and other youth leaders.  “At Davos we will tell world leaders to abandon the fossil fuel economy” – an Opinion piece carried by The Guardian on January 10,  directed to the world’s economic elite scheduled to gather at the World Economic Forum in Davos at the end of January. The core message is urgent:  “We call upon the world’s leaders to stop investing in the fossil fuel economy that is at the very heart of this planetary crisis. Instead, they should invest their money in existing sustainable technologies, research and in restoring nature.. …Anything less than immediately ceasing these investments in the fossil fuel industry would be a betrayal of life itself. Today’s business as usual is turning into a crime against humanity. We demand that leaders play their part in putting an end to this madness. Our future is at stake, let that be their investment. An article in Common Dreams on January 10 highlights the youth campaign and notes that it aligns with Stop the Money Pipeline .

C40 Cities released a new toolkit on January 7:  Divesting from Fossil Fuels, Investing in Our Future: A Toolkit for Cities.   The toolkit is directed at city officials, outlining steps required to divest their pension funds from fossil fuels. It includes eight successful case studies –  from Auckland, Berlin, Copenhagen, London, MelbourneNew York City, Oslo, and Stockholm – all of whom have divestment experience and none of whose city pension funds were negatively impacted by divestment.  C40 Cities is a network of 94 municipalities with a population of over 700 million people, active in promoting climate change action at the municipal level.

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

U.K. Rolls out Green Policies, including Fighting Plastics, Phasing Out Coal, and Encouraging Divestment

Theresa May 2018 Facing criticism for recent  policy reversals which have resulted, for example, in falling investment in clean energy in the U.K. in 2016 and 2017 , the government has recently attempted a re-set with its policy document:  A Green Future: Our 25 Year Plan to Improve the Environment , released on January 11.    “Conservatives’ 25-year green plan: main points at a glance” (Jan. 11) in The Guardian summarizes the initiatives, which focused on reducing use of plastics (in line with a recent EU decision), encouraging wildlife habitat, and establishment of an environmental oversight body.  Specifics are promised soon; the Green Alliance provides some proposals in “Here’s what Theresa May should now do to end plastic pollution” (Jan. 11). George Monbiot is one of many critics of the government policy, in his Opinion Piece.

In the lead-up to the long-term Green Future policy statement, other recent developments have  included: 1.  Changes to investment regulations to encourage divestment.    “Boost for fossil fuel divestment as UK eases pension rules”  appeared in The Guardian on December 18 , stating:  “in what has been hailed as a major victory for campaigners against fossil fuels, the government is to introduce new investment regulations that will allow pension schemes to ‘mirror members’ ethical concerns’ and ‘address environmental problems.’    The rules are expected to come into force next year after a consultation period and will bring into effect recommendations made in 2014 and earlier this year by the Law Commission. ”

2. Coal Phase-out:  Also, on January 4, the British government responded to a consultation report by announcing CO2 limits to coal-fired power generation.  By imposing emissions limits, the government seeks to phase out coal-fired power by 2025, but still to allow flexibility for possible carbon capture operations, and for emergency back-up energy supply. The consultation report, Implementing the end of unabated coal: The government’s response to unabated coal closure consultation  , capped a consultation period which began in 2015.    The government’s policy response is  summarized in the UNEP Climate Action newsletter here  (Jan. 5).

 

New York City and State announce plans to divest pension funds; Canadian Public Pension fund holds on to coal

I love new yorkNew York City Mayor Bill diBlasio captured headlines on January 10 2018 for his announcement that New York City will divest from fossil fuels and will sue Exxon and other oil companies for the damages of Superstorm Sandy.   Yet  it was actually on December 19 that New York City Comptroller Scott Stringer and New York State Governor Andrew Cuomo  first announced separate proposals to freeze current fossil fuel investments, divest New York’s public pension funds from fossil fuels, and reinvest in renewable energy.    Common Dreams summarized the announcements in ” ‘Undeniable Victory’: Cheers Follow Proposals to Divest Massive New York Pensions From Fossil Fuels”Reaction from 350.org (Dec. 19)  emphasized the importance of five years of citizen activism , and quoted Bill McKibben, who emphasized the symbolic importance of New York’s announcement:  “Coming from the capital of world finance, this will resonate loud and clear all over the planet. It’s a crucial sign of how fast the financial pendulum is swinging away from fossil fuels.”   (As further proof, in November, administrators of Norway’s $1 trillion sovereign wealth fund recommended no further investment in fossil fuels and  divestment from existing oil and gas shares , and in the U.K., legal changes are in the works to ease divestment for pension funds.)

At the state level,   Governor Cuomo’s press release  states:  “Governor Cuomo and Comptroller DiNapoli will work together to create an advisory committee of financial, economic, scientific, business and workforce representatives as a resource for the Common Retirement Fund to develop a de-carbonization roadmap to invest in opportunities to combat climate change and support the clean tech economy while assessing financial risks and protecting the Fund.” The New York Common Fund of the state manages approximately $200 billion in retirement assets for more than one million New Yorkers and is  heavily invested in fossil fuels, with nearly $1 billion invested in ExxonMobil alone.

At the city level, officials have set a goal of divesting the city’s  funds from fossil fuel companies within five years , according to the press release from the Office of the Comptroller,  which also highlights the complex process involved.  In February 2017,  the Office of the Comptroller had issued a  press release  stating,  “the Trustees of the New York City Pension Funds … will conduct the first-ever carbon footprint analysis of their portfolios and determine how to best manage their investments with an eye toward climate change. In the 21st century, companies must transition to a low-carbon economy, and a failure to adapt to the realities of global warming could present potential investment risks.”  The New York City pension fund includes municipal employees, teachers, firefighters and police.

Related reading re New York activism : The Divest NY website;  “How New Yorkers won fossil fuel divestment”  from the Indypendent (Jan. 12); and Noami Klein’s article in The Intercept (Jan. 11).

Contrast the New York divestment announcements with the continued fossil fuel investment of the Canadian Pension Plan Investment Board (CPPIB), revealed in two new reports.  In early December, Friends of the Earth Canada, as part of its ongoing campaign,  released  Canadian Coal Investment: Powering Past the Coal Alliance, and Urgewald, a German organization, released Investors vs. the Paris Agreement.  The two reports “present a compelling picture of entrenched investors holding onto the old dirty economy and its growing risks at a time when politicians are committing to the phase out of coal.” – specifically, the Powering Past Coal Alliance launched by Canada and Great Britain at COP23 in Bonn in 2017.  The Powering Past Coal Declaration commits governments to phasing out existing traditional coal power and placing a moratorium on any new traditional coal power stations without operational carbon capture and storage, and commits all partners to supporting clean power through their policies and investments, as well as restricting financing for traditional coal power stations without operational carbon capture and storage. In an October 2017  press release,  Friends of the Earth representatives asked, “Why is the CPPIB ignoring government policy and undermining Canada’s diplomatic efforts to lead a global phase-out of coal?” . To date, there has been no public statement adjusting  the Sustainable Investing position of the CPPIB to bring it in line with the Powering Past Coal Alliance Declaration.

Canadian Coal Investment: Powering Past the Coal Alliance calculates the CPPIB’s total investment in coal at $12.2 billion Cdn., with $267 million of that in new coal projects . In a global ranking in Investors vs. the Paris Agreement, Urgewald found that Canada is the 8th largest investor in new coal development, and names several Canadian institutions in its Top 100 Investors list, including SunLife  (ranked #31 with $895 million invested); Power Financial Corporation (#53 with $631 million invested); Caisse de dépôt et placement du Québec ( #71 with $433 million invested); Royal Bank (#86 with $356 million invested); and Manulife Financial ( #98 with $282 million invested).

Also of interest:  “Failure to Launch” in Corporate Knights  magazine (Jan. 15 2018), which provides a serious discussion of the problems of pension plan regulation as the answer to its tagline question: “Why are Canadian pension funds dragging their feet when it comes to climate change?”

 

 

Trade unions in the U.K. actively engaged in climate change policy, advocating for environmental representatives

Trade Unions in the UK: Engagement with climate change is a new report, based on research conducted between September 2016 and January 2017 by the Campaign Against Climate Change Trade Union Group . The report asks:  what are the driving forces behind trade union engagement in climate change issues, and what are some of the barriers and difficulties for trade unions?  It summarizes the results of interviews with policy officers and environmental activists from the largest 15 unions in the Trades Union Congress (TUC), as well as two smaller but active unions: Transport and Salaried Staff Association (TSSA) and the Bakers, Food and Allied Workers Union (BFAWU). The report is also based on the results of systematic searches of the unions’ websites and relevant policy documents (with links to key documents).  It reveals an overview of the diversity and context of trade union climate policy, focusing on issues such as environmental representatives, energy supply, airport expansion, fracking and divestment from fossil fuels. The report summarizes the positions on these issues, union by union, but for those who want even more detail, there is a supplementary inventory .

This first-ever report was released in August 2017, and since then, Unison has voted to campaign for pension fund divestment and the TUC adopted an historic motion for public ownership of energy at its September Congress.  Also at the Fringe Meeting of the September Congress, the Campaign Against Climate Change Trade Union Group presented its discussion paper  ‘Another world is possible: jobs and a safe climate‘. And most recently, the U.K. government at long last released its Clean Growth Strategy, to limited union approval.

 

Ontario Teachers Pension Plan invests in clean technology

The  Ontario Teachers’ Pension Plan acknowledges that “ Climate change risks have global impacts that affect multiple sectors and companies. On the other hand, climate change will also present new investment opportunities, such as innovative technologies.”  The embodiment of that approach came with the  OTPP announcement  on March 9 that it has partnered with Anbaric, a developer of clean energy transmission and microgrid projects from Wakefield Massachusetts.  According to the Boston Globe newspaper  , Ontario Teachers  will invest $75 million  initially to gain a 40 percent stake in Anbaric, creating a new management company, called Anbaric Development Partners  . Potential exists to invest a further $2 billion in clean energy projects.   The OTPP press release  states,  “Ontario Teachers’ investment in Anbaric creates an attractive launching pad for generating innovative energy jobs and boosting local economies while replacing our deteriorating and outdated fossil fuel-oriented grid with new and sustainable energy alternatives. This includes sophisticated high-voltage direct current (HVDC) transmission technology and microgrid projects that will bring renewables online with greater efficiency.” The Ontario Teachers Pension Plan controlled $171.4 billion in net assets at December 31, 2015 on behalf of  the province’s 316,000 current and retired teachers.

As a sophisticated, global investor, it has examined the risks of climate change, and in Fall of 2016, published  Climate Change: Separating the real risks for investors from the noise   , which, like the Canadian Pension Plan Investment Board ,   seems to acknowledge the reality and complexity of climate risk, while rejecting divestment of fossil fuel assets.  The report states that “Investors need a toolbox of solutions to help manage physical and regulatory risks across their portfolios, both in the short and longer term. Portfolio carbon footprints are only one tool, and they have limitations. Divestment should be the outcome of a well informed and thoughtful investment process, rather than a wholesale approach to a single sector. “   And further  –  “ Engagement with policy makers and companies provides investors with key pieces of information and could be the impetus for governments and companies to be more proactive in climate change mitigation or adaptation. “

Canada Pension Plan: improved benefits, but still exposed to fossil fuel risk

Welcome as it is that the federal government announced improvements in the Canada Pension Plan on October 4, it would be even more welcome to know that the CPP Invesment Board (CPPIB)  was not risking our future pensions by remaining invested in the  fossil fuel industry.  Friends of the Earth  Canada has launched a new campaign, Time to Climate Risk-proof the CPP,  which reveals that approximately 22% of the Canadian portfolio is invested in  fossil fuel producers or pipeline companies, including coal.  The Friends of the Earth campaign includes an online site called Pension Power , enabling ordinary Canadians to query their pension fund managers.  It also calls on the CPPIB to sign onto the Montreal Pledge, and  the Portfolio Decarbonization Coalition (PDC), two United Nations Environmental Program initiatives that encourage institutional investors to decarbonize their portfolios and disclose risky assets.  Anything less ignores the now-apparent decline of the fossil fuel industry and the shift to a low carbon world,  and thus fails the fiduciary responsibility of institutional investors – to protect assets against risk.

Canada’s Shareholder Association for Research and Education (SHARE) has published studies on the need for responsible investment;  Royal Bank of Canada (RBC), Suncor Energy and NEI Investments published Unburnable Carbon and Stranded Assets : What investors need to know   in January 2015, and  Canada’s Marc Carney,  in his high profile role as Governor of the Bank of England and Chair of the international Financial Stability Board,  has been a world leader in warning about the dangers of stranded assets since 2015 .  How can the Canada Pension Plan Investment Board have missed the message that other Canadians are so well aware of?

Further reading:   For an overview of the international literature, see Divestment and Stranded Assets in the Low-carbon Transition from the OECD (Oct. 2015)  or more recently: Unconventional Risks: The Growing Uncertainty of Oil Investments in July 2016;  Shorting the Climate ( from the Rainforest Alliance Network, BankTrack, Sierra Club and Oil Change International);  “New York City Pension Funds begin to craft a Fossil Fuel Divestment Path others can Follow”  (July 2016),  and  “Fiduciary responsibility and climate change”    in Corporate Knights (Aug. 30).

Divestment decision at University of Toronto amid further financial warnings

At the end of March, the President of the University of Toronto issued an official response  to the Advisory Committee on Divestment from Fossil Fuels, which had reported in December 2015. The University rejected a blanket divestment strategy and opted to pursue a targeted approach which will incorporate environmental, social, and governance-based factors (ESG) in investment decisions. It states that the core mission of the university, research and teaching, will be used as its main contribution to the fight against climate change. The statement  is summarized in a  Globe and Mail article (March 30) .  On April 12, the New York Times reported  that Yale University had also found a compromise position regarding investment strategies for its endowment fund, rather  than outright divestment.  Arguing against such approaches: from researchers at the London School of Economics,  “Climate value at risk’ of global financial assets” in Nature Climate Change online (April 4)  which uses models to estimate the impact of twenty-first-century climate change on the present market value of global financial assets, and concludes that “losses could soar to $24tn, or 17% of the world’s assets, and wreck the global economy”.  An article in The Guardian   (April 4) summarizes this and other studies.  Even the Harvard Business Review (April 14)  is sounding the alarm, based on the latest research.   An article in Corporate Knights magazine, “Defending Divestment”   (April 6) considers the financial and moral arguments about divestment.

Fossil Fuel Investment Risk: Losses, and Pressure to disclose Risks to Investors

A March 2 article in The Tyee, “How a B.C. union dumped fossil fuels and cashed in”   highlights the profitable  decision of the B.C. Government Employees Union to move $20 million in its strike fund and general reserves from equities (and fossil fuels)  into cash in 2014. The article then discusses the more complex issues of climate risk in pension fund investing (B.C.GEU did not divest its pension fund). A March 1 article  in Grist, “New York lost Billions with Fossil Fuel Investments”  estimates  that the New York State Common Retirement Fund,  the third largest pension fund in the U.S., lost $5 billion over three years through its investments in fossil fuel companies.  The estimate is based on the analysis of Toronto-based Corporate Knights, using its Decarbonizer  calculator.  Another Corporate Knights analysis of the performance of 14 major funds  , including Harvard’s endowment, the Bill and Melinda Gates Foundation, and the pension plans of Canada and the Netherlands, estimated that the combined losses of the 14 funds since  2012 was $23 billion.

In early March, the investment committee for the largest pension fund in the U.S., California Public Employees’ Retirement System (CalPERS) voted  to require that the corporations it invests in must include people on their boards who have expertise in climate change risk management strategies.  On March 24, CBC reported  that the U.S. Securities Exchange Commission (SEC) has ordered Exxon to put to a vote at its shareholders’ meeting in May a resolution which would require Exxon to make annual disclosure of risks to company’s operations from climate change or legislation designed to control carbon pollution.

These are all evidence that the investment community is paying attention to the investment risks of fossil fuels, particularly stranded assets.  At COP21, a global Task Force on Climate-related Financial Disclosures (TCFD) was established, with Michael Bloomberg at the head, to“consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries”… and to “ develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders”.  In January, at the World Economic Forum in Davos, Switzerland,  proposals for risk reporting by fossil fuel companies were set out in  Considerations for Reporting Disclosure in a Carbon-constrained world   from Carbon Tracker Initiative and the Climate Disclosure Standards Board .  Too Late, Too Sudden: Transition to a Low-Carbon Economy and Systemic Risk (Feb. 2016)     from the  European Systemic Risk Board in February recommends that policymakers increase disclosure of the carbon intensity of non-financial firms (that would include the fossil fuel industry), noting that “Fossil-fuel firms and electricity utilities are substantially debt financed, exacerbating the potential financial stability impact of a sudden revaluation of stranded assets.”  For a Canadian context, see an October 2015 working paper from SHARE, Integrating the Economy and the Environment: An Overview of Canadian Capital Markets  .

A New tool for Responsible Investing and Divesting in Canada

As it does every year to coincide with the World Economic Fund Meetings, Canadian magazine Corporate Knights released its rankings of the 100 Most Sustainable Corporations in the World in January 2016 . Perhaps surprisingly given the current VW emissions scandal, a German automaker, BMW, is ranked #1 in sustainability, based on its energy, waste and water reduction performance and for linking the salary of its senior executives to their sustainability performance. Corporate Knights also introduces its Eco Fund ratings , along with a discussion of responsible investing , “to make it easy for Canadian investors to see which funds provide the best combination of economic and environmental performance.” Canadian mutual funds are ranked, with calculations of their 3-year annualized returns, weighted carbon intensity, and exposure to green companies.  Such ranking may prove useful to the financial managers at the University of Toronto, who are currently considering the recommendations of a Presidential Advisory committee on divestment from fossil fuels . The committee has recommended that the university determine a method to evaluate whether a given fossil fuels company’s actions blatantly disregard the 1.5-degree threshold, and then proceed with “targeted and principled divestment from specific companies in the fossil fuels industry”.   Alternatives Journal puts this in context of the wider university divestment movement in “U of T could make Divestment History” (Dec. 2015)  . Disappointingly, the Globe and Mail reported on December 23 “Ontario Teachers, CPPIB opt to maintain fossil-fuel assets” . The Ontario Teachers’ Pension Plan and Canada Pension Plan Investment Board say they are committed to their roles as “engaged investors”, seeking transparency from companies regarding risk.     On January 1, 2016, Marc Lee summarized the issues in The Tyee and asked, “Is your Pension Fund in Climate Denial?

Pension funds and Divestment: What Canadian Trustees and Workers should know

Pension Funds and Fossil Fuels: The Economic Case for Divestment , released by the Canadian Centre for Policy Alternatives in November, examines the top 20 public pension funds in Canada and estimates that their fossil fuel holdings put them at risk of losses of approximately $5.8 billion, because of the potential for new regulations, carbon pricing, emission caps, and stranded assets. The report, aimed at   pension fund trustees and concerned workers , argues for divestment of fossil fuel holdings and briefly reviews some of the alternative financial instruments and clean energy projects that could benefit from the divested capital. The analysis is supported by an October report by the Carbon Tracker Initiative, Lost in Transition , which warns that “ Coal, oil and gas companies are misleading shareholders with overly optimistic future demand projections” and “these scenarios are potentially underestimating the pace and scale of the transformation of the energy sector”. And Unhedgeable Risk: How Climate Change Sentiment Impacts Investment  concludes that that investors should concern themselves not only with the long-term fundamentals of climate change, but also with the immediate risks of “ sentiment shifts” (such as oil price panic and sell-off).

IF NORWAY CAN DIVEST FROM COAL ASSETS, WHEN WILL THE CANADA PENSION PLAN RECOGNIZE THE RISKS?

According to the New York Times   (June 5) “ Norway’s $890 billion government pension fund, considered the largest sovereign wealth fund in the world, will sell off many of its investments related to coal, making it the biggest institution yet to join a growing international movement to abandon at least some fossil fuel stocks.”   Yet a June 15th Special Report in The Guardian, “ Coal Crash: How Pension Funds Face Huge Risk from Climate Change ”  highlights the coal assets held by the public pension funds of South Africa, Netherlands, U.S. teachers, and Canada, and estimates that Canada’s Pension Plan Investment Fund holds $590m in coal-related investments. The report includes private asset management companies as well, with BlackRock as the clear leader with $24.5billion in coal. The June 14th article in the Globe and Mail, “Campaigns to Divest from Fossil-Fuel Holdings Gain Steam”  describes divestment by Canadian universities and the United Church of Canada, but makes no mention of pension funds. Helpful reading on the growing trend away from coal: Chapter 3, “Closing the Coal Plants”   in The Great Transition: Shifting from Fossil Fuels to Solar and Wind Energy  from the Earth Policy Institute ; a series by Inside Climate News “Coal’s Long Goodbye: Dispatches from the War on Carbon”, and “Big Oil takes on King Coal: The Climate Fight Shifts Gears” , a May 28 article from the National Observer in Vancouver, which argues that the petroleum industry will abandon its partner, coal, in the fight for its share of the world’s carbon budget.

Update on the “Keep it in the Ground” Divestment Campaign at The Guardian newspaper

The Keep it in the Ground campaign, urging the Gates Foundation and the Wellcome Trust to divest from fossil fuels, is keeping up the pressure with an investigative series on the practices of Big Oil. For an update on the campaign and links to the latest major stories, go to Leading Health Charities should divest from Fossil Fuels say Climate Scientists      at The Guardian  news site (May 23).  Information about the Divestment campaign is consolidated here;  Sign the Divestment petition here.

And watch for:  another interactive feature of the Keep it in The Ground campaign at  The Guardian, asking readers “How has your job been affected by climate change”…  From the website:  “We’d like you to complete the sentence “What I wish others knew about climate change … ” using the form below and we will create an article with contributions from individuals around the world. “

Pension Funds ill-prepared for the risks of Stranded Assets

A survey by Asset Owners Disclosure Project (AODP) found that only 76 of the 500 largest asset owners in the world (pension funds, insurance funds, foundations and endowments) have taken meaningful action to manage climate risk. 21 of the 32 large Canadian institutional investors in the survey scored badly, including the Alberta Heritage Savings Trust Fund and the Ontario Public Service Pension Plan. “ Risky Management ”  at Corporate Knights magazine (April 29) provides a summary of the survey results. The full report is at the AODP website .

The Asset Owners Disclosure Project (AODP) is an independent not-for-profit global organisation whose objective is to protect retirement savings and other long term investments from the risks posed by climate change. AODP and a London-based environmental law firm, ClientEarth, have announced they will work with pension fund members to challenge trustees and managers to fulfill their legal duty to protect investments from climate risk. The campaign could result in a test case to clarify the legal duties of pension fund fiduciaries.

The Dangers of Stranded Assets and Carbon Bubbles

The HSBC Bank released advice to investors in April, titled Stranded Assets, What Next?  The letter admits that coal and fossil fuel investments are highly likely to become stranded, and advises that there are “reputational as well as economic risks to staying invested”. A blog by the Pembina Institute  summarizes the HSBC report and considers the dangers of stranded assets for Alberta.

At the international level, G-20 leaders have asked the Financial Stability Board in Basel to convene a public-private inquiry into the dangers to the financial sector as climate rules become much stricter, and fossil fuel assets become stranded. All member countries have agreed to co-operate or carry out internal probes, including the United States, China, India, Russia, Australia, and Saudi Arabia. The investigation will be modeled on that commissioned by Mark Carney at the Bank of England, which is set to report in July 2015. See “G20: fossil fuel fears could hammer global financial system”   in The Telegraph (April 29).

Fossil Fuel Divestment and the New Campaign by the Guardian Newspaper and 350.org

The divestment movement has been busy since global Fossil Fuel Divestment Day in February, with news that hundreds of thousands of academics, engineers and lawyers in Denmark will vote on divesting their €32bn pension funds from fossil fuel investments in April, and that Oxford University is facing protest demonstrations because it has deferred a vote on divestment till May. In March, The Guardian newspaper in the U.K. and 350.org launched the Keep it in the Ground campaign, asking the Wellcome Trust and Gates Foundation to divest their endowments from fossil fuels. The Guardian has been relentlessly posting information and arguments for the cause of divestment: “Bank of England warns of huge financial risk with fossil fuel investments”(March 3); “Mark Carney defends Bank of England over Climate Change Study” (March 10); “UN Backs Fossil Fuel Divestment Campaign” (March 16); “Wellcome Trust sold off 94 million pound ExxonMobil oil investment” (March 18) and, “Revealed: Gates Foundation’s $1.4bn in fossil fuel investments” (March 19). The retiring editor of The Guardian newspaper, Alan Rusbridger,  announced the paper’s new editorial stance in “Climate change: Why the Guardian is Putting Threat to Earth Front and Centre” (March 6). He states: “The coming debate is about two things: what governments can do to attempt to regulate, or otherwise stave off, the now predictably terrifying consequences of global warming beyond 2C by the end of the century. And how we can prevent the states and corporations which own the planet’s remaining reserves of coal, gas and oil from ever being allowed to dig most of it up. We need to keep them in the ground”.

Fossil Fuel Divestment Campaigns in Canada

Global Divestment Days took place worldwide on February 13 and 14th, organized by 350.org through their Go Fossil Free campaign. In Canada, a divestment campaign led by the UBCC350, (a group of students, faculty, staff, and alumni) climaxed on February 10 with a a largely symbolic vote by UBC Faculty : see “UBC profs vote 62 per cent in Favour of Fossil Fuel Divestment” in the Vancouver Observer (Feb 10  ) and see the press release from UBC350. On February 12, the Financial Post reported that “University of Calgary will not Divest from Fossil Fuels”.

Also in February, the Sustainability and Education Policy Network housed at the University of Saskatchewan released The State of Fossil Fuel Divestment in Canadian Post-Secondary Institutions, which lists all 27 Canadian post-secondary institutions where divestment campaigns were underway as of October 2014, as well as the amount of money currently invested in fossil fuels. The report notes a “disconnect”: “While some campuses have positioned themselves as sustainability leaders, they are still heavily invested in fossil fuel companies”. Other related documents from the ongoing research are at the SEPN website.

A White Paper, Fossil Fuel Divestment: Reviewing Arguments, Policy Implications, and Opportunities was published by the Pacific Institute for Climate Solutions (PICS) in January. It  concludes that fossil fuel divestment campaigns can be socially effective but are unable to have any real impact on reducing emissions or financing transition to sustainability without alternative investments that change the structure of the economy. PICS is maintaining a website for ongoing commentary on the issue, and indeed, the paper has been criticized in The Tyee and in the DeSmog Canada Blog for “missing the point” of the importance of divestment to revoke social license.

Divestment Still a Necessary Strategy as ExxonMobil Reports on Stranded Assets

The largest oil and gas company in the world, ExxonMobil, agreed under pressure from activist shareholders to publish a “Carbon Asset Risk” report on their website, to provide information to shareholders on the risks that stranded assets pose to the company’s business model, and how the company is planning for a low-carbon world. Stranded assets for Exxon are the carbon reserves which would need to remain in the ground if the world were to follow a carbon budget to keep below 2 degrees of global warming.

Some environmentalists are claiming this transparency as a victory – GreenBiz described it as “a pivotal milestone on the road to a low-carbon economy”. Bill McKibben, noting that the Exxon report was released on the same day as the IPCC Report, said it is “probably at least as important in the ongoing battle over the future of the atmosphere”. But McKibben sees “consummate arrogance” in Exxon’s statement that “we are confident that none of our hydrocarbon reserves are now or will become stranded”. For McKibben, the solution remains a divestment campaign – a strategy that Archbishop Desmond Tutu also urged in an April essay in The Guardian.

See “Exxon, Stranded Assets and the New Math” at GreenBiz: http://www.greenbiz.com/blog/2014/03/24/exxon-stranded-assets-and-new-math, and an article in the Wall Street Journal Market Watch at: http://www.marketwatch.com/story/landmark-agreement-with-shareholders-exxonmobil-agrees-to-report-on-climate-change-carbon-asset-risk-2014-03-20. But see also Bill McKibben’s article in The Guardian on April 3rd, “Exxon Mobil’s Response to Climate Change is Consummate Arrogance” at: http://www.theguardian.com/environment/2014/apr/03/exxon-mobil-climate-change-oil-gas-fossil-fuels?CMP=twt_fd&utm_content=bufferfc5c8&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer, and Desmond Tutu, “We Need an Apartheid-style Boycott to Save the Planet” at: http://www.theguardian.com/commentisfree/2014/apr/10/divest-fossil-fuels-climate-change-keystone-xl.

For an overview of Stranded Assets, see Unburnable Carbon: Wasted Capital and Stranded Assets at:
http://www.lse.ac.uk/GranthamInstitute/publications/Policy/docs/PB-unburnable-carbon-2013-wasted-capital-stranded-assets.pdf.

UN Climate Chief Urges Institutional Investors to Move to Low-Carbon Assets

According to CERES, a non-profit advocacy coalition, “Since 2003, the biennial Investor Summit on Climate Risk at the United Nations has been the pre-eminent forum for leading institutional investors in North America, Europe and the rest of the world to discuss the implications of climate change for capital markets and their portfolios.” At this year’s summit on January 15, Christine Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), told the audience of 500 global leaders: “The pensions, life insurances and nest eggs of billions of ordinary people depend on the long-term security and stability of institutional investment funds. Climate change increasingly poses one of the biggest long-term threats to those investments and the wealth of the global economy.” She urged investors to move out of high-carbon assets and into assets built on renewable energy, energy efficiency and more sustainable ways of business that green global supply chains.

A related report by CERES, Investing in the Clean Trillion: Closing the Clean Energy Investment Gap, was released at the Summit. It provides recommendations for investors, companies and policymakers to increase annual global investment in clean energy to at least $1 trillion by 2030- up from a current investment level of approximately $300 billion. A related report by Cleantech Group pegs the level of worldwide global investment in cleantech venture companies at $6.8 billion in 2013.

LINKS:

2014 Investor Summit on Climate Risk website is at http://www.ceres.org/investor-network/investor-summit

UNFCC press release regarding Christine Figueres’ statement is at: http://unfccc.int/files/press/press_releases_advisories/application/pdf/pr20140115_ceres_final1.pdf. Watch a 2-minute video of an interview with Ms. Figueres’ at: http://climatedesk.org/2014/01/un-climate-chief-calls-for-tripling-of-clean-energy-investment/

To download the CERES Report: Investing in the Clean Trillion: Closing the Clean Energy Investment Gap, or the Executive Summary go to: http://www.ceres.org/resources/reports/investing-in-the-clean-trillion-closing-the-clean-energy-investment-gap/view – registration required.

Summary of the Cleantech Groups Investment report is at http://www.cleantech.com/2014/01/08/i3-quarterly-investment-monitor-reports-6-8-billion-cleantech-venture-investment-2013/

Davos World Economic Forum has Leaders Talking Climate Investment

Climate change and the green economy represented major issues at the 2014 World Economic Forum at Davos, from January 22nd to 25th. UNFCC Executive Secretary Christiana Figueres and World Bank president Jim Yong Kim called for strong climate action, and Figueres warned that failure to establish a binding international agreement on climate change by 2015 would place the global economy at risk. Talks that addressed global finance and the green economy noted the potential of green bonds to fund adaptive and mitigative efforts while stimulating the economy. Kim suggested doubling the size of the green bond market to $20 billion before the next Climate Summit, and doubling it again before the following summit in December 2015.

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In early January, WEF released Climate Adaptation: Seizing the Challenge that similarly emphasized the role of investment and the private sector in addressing climate change. According to the report, investing in adaptation measures could help avert up to 65% of the projected increase in losses due to climate change. The report presents a framework developed by Economics of Climate Adaptation (ECA) to assist the public and private sector to quantify possible losses and the cost of adaptation projects, as well as attract private investors to fund those projects. The final day of Davos focussed on discussion of the circular economy – the use of circular supply chains, and increased re-use, recycling, and remanufacture. (See the feature item above for more).

For highlights of speeches, blogs and press releases related to climate change and sustainability at the WEF, see: http://forumblog.org/topic/sustainability/

 

Climate Adaptation: Seizing the Challenge is available at: http://www.weforum.org/reports/climate-adaptation-seizing-challenge

For coverage by the Globe and Mail, see “Davos summit Aims to Press Reset Button” (Jan 20) at: http://www.theglobeandmail.com/report-on-business/economy/davos-summit-aims-to-press-reset-button/article16419504/; “Davos summit calls for cleaner energy, focus on climate change” (Jan. 22) at: http://www.theglobeandmail.com/news/world/davos-summit-calls-for-cleaner-energy-focus-on-climate-change/article16457713/; “Sovereignty is Canada’s top priority in the North, Baird tells Davos forum” (Jan. 23) at: http://www.theglobeandmail.com/news/politics/sovereignty-is-canadas-top-priority-in-the-north-baird-tells-davis-forum/article16470142/.

Live Coverage by The Guardian (U.K.) is at:

http://www.theguardian.com/sustainable-business/2014/jan/24/davos-2014-climate-change-resource-security-sustainability-day-three-live?INTCMP=ILCNETTXT3487 and http://www.theguardian.com/sustainable-business/2014/jan/25/davos-2014-climate-change-resource-scarcity-sustainability-day-four-live.

Naomi Klein Calls on Green Groups to Join the Fossil Fuel Divestment Movement

Citing the growing campaign for divestment from fossil fuel companies, Naomi Klein asks the question:Shouldn’t environmental organizations be more concerned about the human and ecological risks posed by fossil fuel companies than they are by some imagined risks to their stock portfolios?” In an article in The Nation, she names the names of the green organizations which are “part owners of the industry causing the crisis they are purportedly trying to solve”. She also names the organizations which are not, including “Greenpeace, 350.org, Friends of the Earth, Rainforest Action Network, and a host of smaller organizations like Oil Change International and the Climate Reality Project.”  Read http://www.thenation.com/article/174143/time-big-green-go-fossil-free# ,  reprinted as “It’s time for environmental groups to divest from fossil fuels” (May 2) at Rabble.ca at http://rabble.ca/columnists/2013/05/its-time-environmental-groups-to-divest-fossil-fuels

Investment in Fossil Fuel Companies is on Shaky Ground – and that Includes Pension Funds

In a report released on March 26, authors Marc Lee and Brock Ellis warn of a possible “carbon bubble”, akin to the high tech or housing bubbles that have rocked financial markets in the past. The study finds that at least 78% of Canada’s proven oil, bitumen, gas, and coal reserves must remain in the ground in order to keep global temperature rise under 2 degrees C. This stranded, unburnable fossil fuel is part of the carbon liability of oil and gas companies, and has not been adequately recognized and accounted for by financial analysts. Because the Toronto Stock Exchange is highly weighted towards the fossil fuel sector (with 405 oil and gas companies and a total market capitalization of over $379 billion on the TSX in 2011), the authors argue that this failure to account for these climate risks means that large amounts of invested capital are vulnerable – including the pension assets of working Canadians. They also point out the intergenerational inequity implied in ignoring the interests of younger workers in pension fund management. They propose a series of measures to deflate the carbon bubble and green Canada’s investment markets as part of an orderly transition to a clean energy economy.  

Unburnable Carbon, a report by the Carbon Tracker Initiative, discusses the implications of these stranded carbon assets for world and U.K. financial markets. A 2013 update will be available in late April.

Meanwhile, the U.S. campaign for divestment of fossil fuel investments, spearheaded by Bill McKibben and 350.org, is gathering momentum in Canada. See the website ofhttp://gofossilfree.ca/ to follow the campaign to lobby universities to divest themselves of any investments related to fossil fuel companies.

LINKS

Canada’s Carbon Liabilities: The Implications of Stranded Fossil Fuel Assets for Financial Markets and Pension Funds is available at:  http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2013/03/Canadas%20Carbon%20Liabilities.pdf

Unburnable Carbon
 (2012, and forthcoming 2013 update) is available at the Carbon Tracker website at :http://www.carbontracker.org/carbonbubble

“Global warming’s terrifying new math” by Bill McKibben in Rolling Stone, July 2012 at: http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719