The CEO of Alberta Investment Management Corporation (AIMCo) says divesting from fossil fuels is the opposite of what pension funds should be doing if they want to help solve the climate crisis.
Evan Siddall—head of what is one of Canada’s largest institutional investors, with C$168.3 billion of assets under management as of the end of last year— told The Canadian Press that AIMCo wants to be a leader in financing the transition to a low-carbon economy, but it won’t do that by divesting from fossil fuels as some global pension funds have done.
Instead, Siddall said AIMCo will be exploring opportunities to invest in oil and gas companies and other heavy industrial emitters.
“We don’t believe in (divestment) at all, as a strategy,” Siddall said. “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.”
Siddall’s remarks appeared to sidestep some of the epic failures in his organization’s recent ventures into fossil fuel projects on behalf of retirees whose pensions depend on investment income.
He was speaking last Wednesday at a ribbon-cutting event in Calgary to mark the opening of AIMCo’s new office in that city, CP writes. Up until now, AIMCo, which is responsible for the investments of pension, endowment, and government funds in Alberta and is headquartered in Edmonton, has had secondary offices in Toronto, London, U.K., and Luxembourg.
Siddall, who has been AIMCo’s chief executive for just over a year and was formerly CEO of the Canada Mortgage and Housing Commission, said there is no denying the importance of the Canadian fossil energy sector currently and moving forward as global efforts to decarbonize economies and hold the trajectory of climate change below the dangerous tipping point of 1.5°C of warming accelerate.
“We (AIMCo) have been absent from the Calgary oil and gas and energy hub, which has probably left us less informed than we could be,” Siddall said.
While environmental groups have argued that one of the best ways to make progress on climate change is to urge banks, pension funds, and investors to cut funding to the fossil fuel industry, Siddall said that’s misguided.
He said if Canada is to meet its Paris agreement pledges it will need not only to invest in renewable, zero-emission energy, but also to help heavy emitters lower their greenhouse gas footprints, or go from “grey to green.”
“And that means investment in oil and gas companies. It actually means supporting them,” he told CP.
AIMCo already has $3.2 billion invested in no- or low-carbon assets through its infrastructure and renewable resources portfolio, the news agency adds. The corporation also completed its inaugural green bond issuance last year through its AIMCo Realty division.
In the year ahead, Siddall said AIMCo will explore opportunities for its clients to profit from the transition to a low-carbon economy by providing capital to heavy emitters working on their own net-zero plans.
“The initial sectors we’re looking at are the energy sector, the power and utilities sector, industrial emitters in general,” he said. “We see the potential for strong financial returns. We’re a long-term investor, so unlike public markets that tend to operate quarter to quarter with much shorter-term horizons, we can look to a transition into 2030 and see the path to earning a return on decarbonization.”
In recent months, the Canadian oil and gas sector has issued a flurry of announcements of proposed projects—from hydrogen plants to renewable diesel facilities to carbon capture and storage—all said to be aimed at lowering the industry’s emissions profile.
The largest of these is the massive project proposed by oilsands consortium Pathways Alliance that aims to capture CO2 emissions from oilsands facilities and transport them to a storage facility near Cold Lake, Alberta. The project’s boosters say it’s aiming for an estimated 10 million tonnes of emissions reductions per year, although CCS projects in Canada and elsewhere frequently fall short of their published targets.
This report by The Canadian Press was first published September 21, 2022.
