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Canadian Energy: Invest in the best, Divest from the rest


from the Canadian Energy News Network

The divestment movement has begun to take hold in post-secondary institutions across the country. The main goal of the divestment movement is to try and lockout funding for oil and gas projects. While it has not been as large as what is being seen in the United States, many divestment-based student groups have been able to pressure University Boards of Governors to vote in favour. The most recent case of divestment-based activism comes out of McMaster University in Ontario.

Now the process for divesting technically began in 2018 when they agreed to go fossil fuel-free by 2050. However, there is now more internal pressure to speed up their shift. Activist student groups and staff have been calling for a faster divestment to address climate change.

The largest issue with the divestment movement is that it does not change the demand for reliable energy. What it does do, is shift investment from environmentally conscious suppliers of energy to countries that are more polluting, less transparent, less sensitive to societal pressures, and less committed to emissions reductions.
 

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Providing this reliable energy while being able to reduce emissions is one of the biggest challenges of the modern world. The world population will be increasing to around 10 billion in 2050 by some estimates. Alongside this, demand for oil and gas will be increasing in those regions that are expected to see major population growth. These are going to primarily be in non-OECD developing countries in Asia and abroad.

Why would Canadian universities divest from best in the world Canadian energy? Canada can take a leadership role in supplying our energy sources to these developing countries and help the environment at the same time.

There is also evidence that divestment is just pointless posturing by activist investors. Studies have shown that even if the maximum amount of capital was divested from these companies, share prices are unlikely to suffer. It is also the market, so other investors will eventually come along and snap up the very shares that were just dumped.

Some fund managers are also telling investors to be wary of the cleantech boom since many companies still rely heavily on government subsidies to turn a profit. They are also noting that oil and gas stocks right now are a good investment to pad portfolios.

Even world-leading climate economists like Mark Carney, U.N. Special Envoy on Climate Action and Finance, oppose the divestment movement and favors financing all companies who are improving carbon efficiency whether they are in the oil sands or renewable energy.

Canada’s oil and gas industry is the leader in environmental spending in the country and companies are doubling down on reducing their impact on emissions by deploying technology like carbon capture.

Actively investing in companies that are already reducing emissions seems like a better bet for portfolios and climate change.

Moreover, our lives greatly benefit from the everyday products that are produced from oil and gas. Even now, a year into the pandemic, the PPE made from oil and gas products is helping save lives. The Divestment Movement does not recognize these economic, social, and environmental benefits of oil and gas products for which there are currently no better substitutes.

Investing in Canadian oil and gas companies is not anti-climate, but it is pro-Canada and pro-responsible resource production. We know that oil and gas will not be gone by 2050, and only responsible producers like Canada will be at the top.

It’s time to invest in the best and divest from the rest.



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