Don’t Use Public Pensions to Prop Up Carbon-Heavy Industries, Alberta Unions Say
Alberta’s public pensions shouldn’t be used to prop up carbon-intensive fossil industries at a time when private investors are abandoning the sector, the Alberta Federation of Labour warned in a statement last week.
The reaction comes after the Alberta Investment Management Corporation (AIMCo) invested a share of the nearly C$115 billion it manages for 31 pension, endowment, and government funds in “carbon-intensive industries that could be affected by efforts to fight climate change,” The Canadian Press reports, in a dispatch republished by CBC.
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“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 AFL President Gil McGowan.
“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,” the federation added in a report.
AIMCo maintains the investment “is on par with that of similar funds around the world,” and “points to figures suggesting that risk is declining,” CP says. “Other measures suggest the fund’s carbon footprint has increased by nearly two-thirds since 2015,” with one analyst concluding “that a portion of AIMCo’s funds set aside to invest in Alberta has largely been put into small [fossil] energy firms—a sector lately fraught with bankruptcy and bad debts.”
The difference comes down to how you do the math, CP explains. Documents on AIMCo’s website show the emissions associated with its portfolio growing from 4.2 to 6.9 million tonnes between 2015 and 2018, or from 179 to 243 tonnes per million dollars it invests. But spokesperson Denes Nemeth said the agency’s emissions per million dollars its investments earns declined from 202 to 194 tonnes over a five-year span.
CP cites Joel Gehman, associate director of the Canadian Centre for Corporate Social Responsibility at the University of Alberta, saying the carbon intensity of AIMCO’s investments is consistent with global averages.
“Still, parts of AIMCo’s portfolio are heavily carbon-intensive,” the news agency writes. Since 2015, when the former provincial government announced that up to 3% of Alberta’s heritage fund would be invested to help build the provincial economy, it’s put $46 million into renewable energy projects—but about $269 million, or 70% of the growth fund mandate, into oil and gas.
“Some, such as Trident Exploration, have already gone bankrupt despite a $12.3-million AIMCo infusion, leaving behind millions of dollars in cleanup liabilities,” CP adds. When Trident folded last year, CBC put the liability at 4,700 abandoned wells and $329 million in clean-up costs.
With McGowan noting that recent legislation prevents public pension funds from leaving AIMCo’s management, CP says Gehman is concerned that Albertans are already over-exposed to carbon risk. “A true diversification strategy would suggest the AIMCo would want to be significantly underweight in carbon intensity to counterbalance this,” he wrote.