Worldwide Divestment Update

by William MacCallum, ECA member

Today gofossilfree.org lists 503 organizations worldwide that have divested from fossil fuels. This means there are now over 3.4 trillion American dollars pledged not to be invested in the industry. Studies have suggested the fossil fuel divestment campaign, which began in the US, has been faster than any previous divestment movement such as tobacco and apartheid.

Some of the highest profile international organizations that have fully divested are the Rockefeller Brothers Fund, the World Council of Churches and the British Medical Association. The former is particularly notable as the Rockefeller family amassed their fortune from oil starting in the late 19th century.

Bill McKibben of 350.org says “The World Council of Churches reminds us that morality demands thinking as much about the future as about ourselves – and that there’s no threat to the future greater than the unchecked burning of fossil fuels. This is a remarkable moment for the 590 million Christians in its member denominations: a huge percentage of humanity says today ‘this far and no further’.”

In Australia literally dozens of pension funds have fully divested now. Here in Canada the Canadian Medical Association, the United Church of Canada and many other groups and philanthropic organizations such as catherinedonnellyfoundation.org announced in 2015 they would be fully divesting. At the annual general meeting of the Ontario Secondary School Teachers’ Federation (AMPA) in March there will be a motions put to the floor asking that OSSTF divest its own Internal Investment Fund from fossil fuels and that the OSSTF pressure the Ontario Teachers’ Pension Plan to divest from fossil fuels by creating a policy that it divest.

Pension plans are by definition long-term money management and the fossil fuel industry is no longer a good long-term investment. It’s time to divest.

Has the OTPP divested from fossil fuels?!

By William MacCallum

In November 2015 Corporate Knights reported that the Ontario Teachers’ Pension Plan had “quietly decarbonized”. While they acknowledged other pension plans still had investments in the fossil fuel industry, it was claimed that OTPP no longer did. This was immediately followed by a report from the Canadian Centre for Policy Alternatives also in November 2015 painting a different story. The CCPA estimates that the fossil fuel content in the equities portion of OTPP’s assets is 5.6%, while among “all other asset classes” the fossil fuel content amounts to an estimated 12%.

The discrepancy (along with why the CCPA has used estimates) is perhaps partially explained by the manner in which the OTPP discloses its assets publicly. Only assets in excess of 150 million dollars are publicly disclosed by the OTPP. Upon inspecting the most recently disclosed list of OTPP’s holdings, there appear to be virtually no assets that are primarily in the fossil fuel industry other than a couple of foreign natural gas companies such as Scotia Gas, based in the UK. This would appear to be why Corporate Knights claimed that the OTPP had “quietly decarbonized”, even though it was in fact not exactly accurate.

The CCPA report uses estimates since a large fraction of OTPP’s assets is made up of “minor investments” with values of less than 150 million dollars. The names of these minor investments are not normally publicly disclosed by the OTPP. How the CCPA calculated their estimates is not divulged, but it is based on the latest available data, the OTPP’s 2014 annual report.

As well, OTPP announced on June 30, 2015 that they had purchased Heritage Royalty Limited Partnership (HRP), which holds a broad portfolio of oil and gas royalties in Western Canada, from Cenovus for 3.3 billion dollars. It is difficult to reconcile that purchase with the claim that OTPP has “quietly decarbonized”.

Not until April is the next annual report expected from the OTPP so we do not know the current situation. If they have in fact “decarbonized” you would think that they would be making a point of making it known publicly, unless they intend on re-investing in dirty energy. Instead the OTPP has claimed in the past they choose not to do any “screening” by industry, favouring an investment by investment approach. This claim of not screening though is questionable as the OTPP appears not to invest in certain industries such as tobacco and weapons. Is it time to treat the fossil fuel industry similarly? The Educators Climate Alliance believes it is.