The CEO of the pension fund for 375,000 public sector workers in Alberta was “misrepresenting” his organization’s policies last month when he spoke out against fossil fuel divestment, a watchdog group says.
Last month, Evan Siddall, chief executive of the Alberta Investment Management Corporation (AIMCo), said divesting from fossil fuels is the opposite of what pension funds should be doing if they want to help solve the climate crisis.
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“We don’t believe in (divestment) at all, as a strategy,” Siddall told a September 21 ribbon-cutting ceremony for the new AIMCo office in Calgary. “The energy sector is the sector that’s investing in this area (emissions reduction) the most, and that has the most to lose. So we think that deserves our support and that’s where we will invest. And we think that’s where the returns are, too.”
But that position “contradicts AIMCo’s own policies,” Patrick DeRochie, senior manager at Toronto-based Shift Action for Pension Wealth and Planet Health, said in an email. He said the fund’s January, 2020 Investment Exclusions Guidelines “clearly explain when AIMCo will divest and covers formal exclusions on direct investments in tobacco, nuclear weapons, cluster munitions, anti-personnel mines, weapons systems integration services, or other weapons of mass destruction.”
AIMCo also committed in March to divest all its Russian holdings, DeRochie added.
The exclusions policy [pdf] says AIMCo “reserves the right to exclude the securities of certain companies from its investment portfolios, on a case by case basis, and as required to satisfy individual clients’ statements’ of investment policy and goals.” Of the six “exclusions and exit” criteria in the document, at least four could be seen as pointing to mounting concerns about the multiple risks of fossil fuel investment:
• Disregard for acceptable international business practices;
• Investors’ ability to drive “positive change”;
• Costs of continuing ownership that outweigh potential benefits;
• “Risk of reputational harm” to AIMCo or its clients.
“We are alarmed by the fundamental lack of climate literacy being demonstrated by the investment executives managing C$168 billion in assets for Albertans,” Shift Action said in a statement. “AIMCo has a fiduciary duty to ensure the retirement security of Albertans and invest in their best long-term interests, not to take exceptional risks to prop up the biggest carbon polluters in Canada.”
AIMCo did not respond to a request for comment on how Siddall’s remarks aligned with the exclusions policy.
Maybe it’s just because I can read English but the statement by Siddall about fossil fuels contradicts absolutely nothing quoted from the exclusion policy referenced, which included:
– tobacco
– nuclear weapons
– cluster munitions
– anti-personnel mines
– weapons systems integration services
– other weapons of mass destruction
but NOTHING about fossil fuels. The writer implies that AIMCO *could* extend this to fossil fuels based on the subsequently listed criteria but does not state that they ARE extending it.
So what is the story exactly? And what in this story indicates a “fundamental lack of climate illiteracy”?
Good question, Marvin, thanks. It was a short news update in the midst of a very heavy news day, but that was our problem, not yours.
Had we wanted and had time to write longer, we could have linked to the dozens of stories we’ve published that point to the four of AIMCo’s six exclusion criteria we bulleted in the story — the disregard for acceptable international business practices in a mounting climate emergency, the very real and severe limits on fossil investors’ ability to drive positive change through engagement strategies, costs of continuing ownership that will increasingly outweigh potential benefits, and the mounting risk of reputational harm to AIMCo and anyone else investing in products that fry the planet when used as directed.
I have to say that as I read AIMCo’s criteria, I was deeply impressed and grateful that they screen out cluster munitions and landmines. Possibly too much detail, but I led the project team that produced the onsite summary report of the global Landmine Treaty Conference in 1997 (and it’s more than a little bit sobering to realize that memory is now almost exactly 25 years old). A pension fund accepting that it must not ever finance a device meant to maim and kill civilians, with some models custom-designed to be irresistible and deadly to children, is something I could not have realistically imagined a quarter-century ago. It’s to AIMCo’s credit that, in that instance, they’ve stepped up.
But I trust you see where I’m going with this. At the moment, our society is more broadly dependent on fossil fuels than it ever was on a product known as a “weapon of mass destruction, moving in slow motion”. But the impacts of climate change — with 86% of the carbon dioxide emissions produced by burning fossil fuels — are also far more pervasive and deadly. Last year, the International Energy Agency stated unequivocally that no new oil, gas, or coal infrastructure must be built if we hope to get climate change under control, yet a report last week found that the total length of pipeline capacity under construction world-wide has more than doubled since 2019.
So it’s clear that the fossil industry won’t stop, any more than landmine manufacturers would have stopped, until someone tells them to. While we wait and push for measures like the Fossil Fuel Non-Proliferation Treaty to take hold, phasing down fossil fuel investment is something an institution like AIMCo can start doing right now. If their failure to do so is not about fundamental climate illiteracy, I fear all the other interpretations are rather less polite.
Thank you, Mitchell, for clarifying, and that is an interesting history. I must admit I am not an expert in this space and I’m not sure what drew my attention to this article in my news feed, but it did seem muddled. I think if I paraphrase your response it’s that fossil fuels do bad things to the world even though we need them for the foreseeable future, they won’t stop until “someone tells them to” (with their investment $), AIMCO has a policy in place that would allow them to pull their $, but they’d do better by using those $ to influence the company’s behavior?
Thanks, Marvin. You put it a lot more succinctly than I did!
The only thing I would add is that, yes, we’ll need fossil fuels for the foreseeable future, but the science and the urgency of the climate crisis demand that we draw them down as fast as we can. That begins with no new exploration or development anywhere, ever — not because we say so, but because the IEA has joined a chorus of other voices to make the point. Then we need to “treat it like a damn emergency”, as author Seth Klein says, and speed the decline with measures like mass, deep energy retrofits, heat pumps, transit and light rail, EVs, an honest and diligent approach to nature-based climate solutions, soil carbon sequestration, and more.
The solutions we need are largely practical, affordable, and ready for prime time, and as we’ll be reporting Thursday, the job loss fossil industry advocates are quite rightly worried about is already happening because the industry is cutting costs as fast as it can. If we get this right, and really commit to leaving no one behind, we can prove to ourselves and everyone else that the transition is about opportunity and gain, not loss and pain.