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© Reuters. FILE PHOTO: Common view of the Imperial Oil refinery, positioned close to Enbridge’s Line 5 pipeline in Sarnia, Ontario, Canada March 20, 2021. REUTERS/Carlos Osorio/File Picture
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By Maiya Keidan and Nia Williams (NYSE:)
TORONTO (Reuters) -Canada’s largest pension managers boosted their investments within the nation’s main oil sands firms within the first quarter of 2021, elevating questions in regards to the funds’ latest commitments to greening their portfolios.
The cumulative funding by the nation’s prime 5 pension funds into the U.S.-listed shares of Canada’s prime 4 oil sands producers jumped to $2.4 billion within the first quarter of 2021, up 147% from a 12 months in the past, a Reuters evaluation of U.S. 13-F filings present. A lot of that improve, which bucked a declining development since 2018, got here from rising costs of shares already owned, however the funds additionally bought extra shares.
The 5 funds, so as of measurement, are Canada Pension Plan Funding Board (CPPIB), Caisse de dépôt et placement du Québec (CDPQ), Ontario Lecturers’ Pension Plan (OTPP), British Columbia Funding Administration Corp (BCI) and the Public Sector Pension Funding Board (PSP), which collectively handle greater than C$1.4 trillion ($1.2 trillion) in belongings.
Governments, firms and buyers all over the world have stepped up pledges to drastically scale back climate-warming greenhouse gasoline emissions. Some giant pension managers, together with the New York State Pension Fund and Norway’s largest pension fund KLP, have exited oil sands firms.
Canadian pensions face stress to steadiness a mandate to be environmentally accountable with their fiduciary obligation to maximise returns. Canada’s oil sands are a high-carbon business, but their rising shares costs are tempting for buyers.
Some Canadian pension funds say they favour persevering with to put money into fossil gas producers to assist these corporations transition towards producing cleaner power.
“We’ve an enormous downside with pension funds saying we imagine in engagement, not divestment, however there is not any signal of this engagement,” mentioned Adam Scott, director of pension activist group Shift. “The very act of proudly owning them (oil sands firms) implies the funds don’t assist transition.”
Whereas first-quarter exposures to grease sands corporations have risen, annual studies present three of the 5 pension funds decreased their general power publicity in 2020 from 2019. However the 13-F filings current a extra up-to-date image.
For particulars on Canadian pensions publicity to prime oil sands producers:
In contrast with similar interval in 2018, the funds’ investments within the 4 oil sands corporations had been down 0.9%.
Whereas the Reuters evaluation is restricted to 4 firms – Canadian Pure (NYSE:) Sources Ltd, Suncor Power (NYSE:), Cenovus Power (NYSE:) and Imperial Oil (NYSE:) – it offers a glimpse into the funds’ investments in northern Alberta’s oil sands, the supply of the best emissions-per-barrel oil on the planet, in accordance with a 2020 report from consultancy Rystad Power.
CDPQ, OTPP and PSP decreased their cumulative publicity to power to C$22.2 billion in 2020, from C$28.2 billion in 2019, in accordance with annual studies.
However CPPIB, which manages C$497.2 billion in belongings, noticed publicity to fossil gas producers rise 51.5% to C$17.6 billion on the finish of March 2021, after falling for a minimum of 5 years. The fund’s investments in renewable power producers rose 16% to C$7.7 billion during the last 12 months by comparability.
CPPIB declined to touch upon the 13-F holdings knowledge.
BCI’s annual studies don’t escape power investments as a share of general holdings. Spokesman Ben O’Hara-Byrne mentioned quite a few components have an effect on adjustments in holdings, so percentages shouldn’t be used to derive assumptions about BCI’s response to environmental, social and governance (ESG) “integration efforts.”
A spokeswoman for PSP Investments mentioned lots of the investments had been held in so-called “passive” portfolios containing a mixture of belongings primarily based on a inventory index designed to match general market strikes.
CDPQ didn’t remark particularly on its oil sands holdings, however a spokesman mentioned fossil fuels symbolize a really small share of whole belongings owned by fund, which is focusing on a carbon impartial portfolio by 2050.
OTPP has additionally dedicated to a net-zero portfolio by 2050 and can concentrate on climate-friendly investments that assist shift away from fossil fuels, a spokesman mentioned.
Randy Bauslaugh, co-Chair of McCarthy Tétrault’s Pension Funds Group, on Wednesday mentioned in a brand new paper that pensions have a obligation to take into consideration the dangers of local weather change.
“Pension fund fiduciaries who fail to contemplate or handle climate-related monetary dangers and alternatives, might discover themselves personally chargeable for financial, reputational or organizational loss ensuing from that failure,” he wrote.
($1 = 1.2049 Canadian {dollars})
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