Scott and DeRochie: Coastal GasLink Buy Undercuts Pension Fund’s Duty to Alberta Retirees

Buying a 65% stake in the C$6.6-billion Coastal GasLink pipeline in northeastern British Columbia was the wrong way to invest Alberta’s public pension fund, Adam Scott and Patrick DeRochie of Shift: Action for Pension Wealth and Planet Health argue in an op ed last week for the Edmonton Journal.

The “late Christmas gift”, announced December 26 by the Alberta Investment Management Corporation (AIMCo), “is likely to be a liability due to the financial, regulatory, reputational, and legal risks involved with the purchase,” Scott and DeRochie write.

As one component of the lavishly-subsidized LNG Canada liquefied natural gas megaproject, Coastal GasLink (CGL) would undercut British Columbia’s and Canada’s climate plans by helping to lock in 8.6 megatonnes of additional carbon pollution per year by 2030, they add. “CGL will massively increase carbon pollution over the 30-year lifespan of the project, on top of even more emissions when the gas is burned downstream,” despite scientists’ persistent call for a 50% reduction in greenhouse gas emissions this decade to avert the worst effects of climate change.

And pension funds are aware of the threat.

“Many pension funds, including AIMCo, publicly recognize the financial risks of climate change and claim to screen their investments for environmental, social, and governance (ESG) factors,” Scott and DeRochie state. And “if ever there was a project that failed a credible ESG screen, it’s CGL,” based on its environmental risks as well as its failure to respect Indigenous rights.

“With investors and central bankers sounding the alarm about climate risk, financing new long-lived fossil fuel infrastructure should be seen as a foolhardy venture,” they say—and it isn’t as though AIMCo had no other options. “In 2020, there are numerous profitable, low-risk opportunities to invest that can help to address the climate crisis without raising red flags over human rights. A recent World Bank study estimates the opportunity for climate-smart investments in emerging markets alone in the next decade at US$23-trillion. Just last fall, the Canada Pension Plan purchased the renewable energy producer Pattern Energy, valued at US$6.1 billion, demonstrating the ability for Canadian asset managers to profit from investing in climate solutions at scale.”

Against that backdrop, “AIMCo has a fiduciary responsibility to invest in the best long-term interest of its beneficiaries, to ensure Albertan retirees and workers can collect their pensions in a warming world undergoing a rapid energy transition,” Scott and DeRochie conclude. “In buying a yet-to-be-built ‘carbon bomb’ that undermines Indigenous rights, AIMCo risks rendering the term ‘responsible investing’ meaningless.