https://www.cbc.ca/news/canada/edmonton/carbon-risk-alberta-public-pension-1.5469552
[A new way for government to use previously independent funds to
subsidize the oil industry. As outside investors, it would be part of
due diligence to decide if one should invest in anything in Alberta now,
given that government has put its thumb heavily on the scale. If they
can interfere with the investment policy of of previously independent
pension funds, what is to prevent them from determining how individuals
and private sector ventures based in Alberta can use their financial
resources in the future? Remember, it is primarily foreign investment
which is financing new wind and solar power initiatives in Alberta,
providing electricity to the grid at lower cost than coal, oil or
natural gas.]
Alberta public pensions being used to prop up struggling carbon
industry, union says
'We're afraid they're going to use our pension savings to fund a
political agenda'
Bob Weber · The Canadian Press · Posted: Feb 20, 2020 6:06 AM MT
[Photo caption: An analyst has concluded that a portion of the Alberta
Investment Management Corp.'s funds set aside to invest in the province
has largely been put into small energy firms — a sector lately fraught
with bankruptcy and bad debts. ]
Alberta's largest labour organization says public-service pensions are
being used to prop up the province's struggling fossil fuels industry at
a time when many large investment funds are moving away from the sector.
"We're afraid they're going to use our pension savings to fund a
political agenda rather than invest those funds in a way that's
responsible," said Gil McGowan, president of the Alberta Federation of
Labour.
The Alberta Investment Management Corp., or AIMCo, says the investment
of nearly $115 billion it manages for 31 pension, endowment and
government funds to carbon-intensive industries that could be affected
by efforts to fight climate change is on par with that of similar funds
around the world.It points to figures suggesting that risk is declining.
Other measures suggest the fund's carbon footprint has increased by
nearly two-thirds since 2015.
One analyst has concluded that a portion of AIMCo's funds set aside to
invest in Alberta has largely been put into small energy firms — a
sector lately fraught with bankruptcy and bad debts.
Earlier this year, one of the world's largest investment groups,
BlackRock, announced it would put climate and sustainability at the
centre of how it decides to invest its $7-trillion fund.
A survey of institutional investors by the University of Texas found
more than half the managers of 439 banks, insurers and fund managers say
climate risks are already a factor in their investment decisions.
'Trending downward'
Documents on AIMCo's website suggest the amount of carbon generated by
companies it invests in has grown significantly to 6.9 million tonnes of
carbon dioxide in 2018 from 4.2 million tonnes in 2015.
For every $1 million AIMCo invests, it now produces 243 tonnes of carbon
dioxide — up from 179 tonnes in 2015.
AIMCo spokesman Denes Nemeth said a third measure — carbon output per
revenue generated — shows its risk is falling. The calculation concludes
AIMCo is generating 194 tonnes of carbon for every $1 million its
investments earn, down from 202 tonnes five years ago.
That measure "demonstrates clearly that AIMCo is trending downward," he
said.
No consensus exists on how to measure investors' carbon exposure, but
Nemeth said an international business group on climate risk disclosure
uses the emissions-per-revenue method.
Nemeth points out those measures only cover equities, not other
investments such as infrastructure or real estate. AIMCo says its
renewable energy infrastructure investments have increased to nearly 20
per cent of its total portfolio in that sector.
Joel Gehman of the University of Alberta's Canadian Centre for Corporate
Social Responsibility said AIMCo's equity investments seem to be in line
with global averages for carbon exposure.
The overall U.S. stock market generates 175 tonnes of carbon dioxide per
$1 million in sales. Global stocks average 188 tonnes.
Still, parts of AIMCo's portfolio are heavily carbon-intensive. In 2015,
Alberta's New Democrat government announced that up to three per cent of
the province's heritage fund, managed by AIMCo, would be invested to
help Alberta's economy grow.
Since then, AIMCo has invested about $46 million in renewable energy,
says an analysis by the non-partisan Alberta Liabilities Disclosure
Project that works to provide accurate data on the province's oil and
gas liabilities.
But about $269 million — about 70 per cent of the money invested under
the Alberta growth mandate — has gone to oil and gas companies.
Some, such as Trident Exploration, have already gone bankrupt despite a
$12.3-million AIMCo infusion, leaving behind millions of dollars in
cleanup liabilities.
The politics of investment
The Alberta Federation of Labour, in a report that was to be released
Wednesday, says that investing trend is no accident.
McGowan points to recent legislation that removes the right of public
pension funds to leave AIMCo's management. Those include the Alberta
Teachers' Retirement Fund, the Local Authorities Pensions Plan and the
Public Services Pension Plan.
Gehman has concerns about AIMCo's exposure to carbon risks. He said
Albertans, just because of the role that carbon-intensive industries
play in the province's economy, are probably already overexposed.
"A true diversification strategy would suggest the AIMCo would want to
be significantly underweight in carbon intensity to counterbalance
this," he wrote.
Leave politics out of investing, says the labour group's report.
"We think it would be unwise and irresponsible to use either public
dollars or the retirement savings of hundreds of thousands of Albertans
to do what the markets and the global investment community are
increasingly reluctant to do themselves."
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