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.