AIMCo CEO rejects divestment from fossil fuels as an investment strategy

Alberta Investment Management Corp. CEO says. (AIMCo) Divestment from fossil fuels is the opposite of what pension funds must do if they are to help solve the climate crisis.

Evan Sydal – head of what is one of Canada’s largest institutional investors, with $168.3 billion in assets under management as of the end of last year – said in an interview that AIMCo wants to be a leader in financing the transition to a low-carbon economy, but it won’t do so by ditching the fuel. Fossil also did some global pension funds.

Instead, Sydal said AIMCo will explore opportunities to invest in oil and gas companies and other sources of heavy industrial emissions.

“We don’t believe [divestment] Absolutely, as a strategy,” Sydal said.

The energy sector is the sector that invests in this field [emissions reduction] More than others, this has a lot to lose. So we think this deserves our support and that’s where we’re going to invest. And we think that’s where the returns are, too.”

He does not deny the importance of the sector, says Sydal

Sydal made the remarks Wednesday at a ribbon-cutting event in Calgary marking the opening of the new AIMCo office in that city. So far, AIMCo – which is responsible for pension, endowment and government fund investments in Alberta and is headquartered in Edmonton – has secondary offices in Toronto, London, the UK and Luxembourg.

Sydal – who was CEO of AIMCo a little more than a year ago and was the former CEO of Canada Mortgage and Housing Corporation – is also considering opening offices in Asia and possibly New York as the company seeks to become more globally focused on the next couple of years.

But he said there is no denying the importance of the Canadian energy sector currently and moving forward as global efforts to decarbonize economies and keep climate change on track below the dangerous 1.5°C tipping point are accelerating.

AIMCo says that divestment from fossil fuels is the opposite of what pension funds must do if they are to help solve the climate crisis. (Matthew Brown/The Associated Press)

“we [AIMCo] We were absent from the Calgary Oil, Gas and Energy Center, which probably made us less familiar than we could have been.”

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 for the fossil fuel industry, Sydal said this is misleading.

He said that if Canada is to live up to its commitments in the Paris climate agreement, it will need not only to invest in zero-emission renewable energy, but also to help heavy emitters of greenhouse gases, or go from “gray to green”.

“This means investing in oil and gas companies. It actually means supporting them,” Sydal said.

AIMCo already has $3.2 billion invested in zero- or low-carbon assets through its infrastructure and renewables portfolio. The company also completed its inaugural “green bond” issuance last year through its real estate division AIMCo.

But next year, Sydal said, AIMCo will explore opportunities for its customers to take advantage of the transition to a low-carbon economy by providing capital for heavy emissions working on its net-zero plans.

“The primary sectors we’re looking at are the energy sector, the power and utilities sector, and industrial emissions in general,” he said.

“We see the potential for strong financial returns. We are a long-term investor, so unlike general markets that tend to operate quarter to quarter with short-term prospects, we can look to move into 2030 and see the path to earning a return on decarbonization.”

In recent months, Canada’s oil and gas sector has launched a flurry of announcements of proposed projects – from hydrogen plants to renewable diesel facilities to carbon capture and storage – with the goal of cutting industry emissions.

You fund bad things

The largest of these is the massive project proposed by the oilands Consortium Pathways Alliance that aims to capture carbon dioxide emissions from oil sands facilities and transport them to a storage facility near Cold Lake, Alta, providing an estimated 10 million tons of emissions reductions annually.

On Tuesday, Lindsey Patrick, head of ESG and strategic initiatives for RBC Capital Markets, said in an interview in Calgary that there is growing recognition within the financial sector that tools like green bonds can be used not only to support the scaling of green technology. But also to help clean up more traditional industries.

“The new idea is to support companies that are not 100 percent environmentally friendly but have specific projects aligned with the 1.5 degree scenario,” said Patrick.

However, Keith Stewart, chief energy strategist at Greenpeace, said corporate funding due to climate-friendly projects it may have does not offset the fact that the Canadian oil and gas sector is still planning to increase the overall volume of fossil fuels. Produce long term.

“When you provide this kind of blanket financing to these companies, you fund the bad things along with the better things,” Stewart said.

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