New York’s state pension fund said Monday that it will restrict investment in six Canadian oil sands companies “that have not demonstrated that they are prepared for the transition to a low-carbon economy.”
The blacklisted Canadian companies include Imperial Oil (IMO.TO)(IMO), Canadian Natural Resources (CNQ.TO) (CNQ), Husky Energy, MEG Energy (MEG.TO), Athabasca Oil (ATH.TO), and Cenovus Energy (CVE.TO)(CVE). Japan Petroleum Exploration (JP9.F) was also included in Monday’s announcement. The fund said these companies “failed to show they are transitioning out of oil sands production.”
The New York State Common Retirement Fund said it will also sell off more than US$7 million in securities in these companies as it evaluates its oil sands holdings. New York’s is the third-largest public pension fund in the United States, ending last year with approximately US$247.7 billion in assets.
“As nations around the world become increasingly serious about addressing the threat of climate change, and as market forces drive a low-carbon economic transition, we need to make sure our investments line up with this reality,” New York State Comptroller Thomas DiNapoli said in a statement.
He added that the decision comes after careful review of Canada’s oil sands industry, which was determined to be “more costly and carbon-intensive than other forms of crude production.”
The move to exclude some of Canada’s most prominent energy players was part of DiNapoli’s broader review of the transition readiness of energy sector investments facing climate risk. Last year, the fund divested from 22 coal firms. Shale oil and gas companies will be evaluated next.
New York’s state pension fund has committed to curbing climate change by overhauling its investments to net-zero greenhouse gas emissions by 2040.
It’s not the first fund to target Canada’s energy industry for its environmental track record. Last May, Norges Bank Investment Management (NBIM), a branch of Norway’s central bank, said it excluded Canadian Natural Resources, Cenovus Energy, Suncor Energy (SU.TO)(SU), and Imperial Oil due to “unacceptable greenhouse gas emissions.”
Prime Minister Justin Trudeau said at the time that the decision by the US$1 trillion Norwegian fund underscores the growing importance of climate change risk to global investors.
“We’ve seen investors around the world looking at the risks associated with climate change as an integral part of investment decisions they make,” Trudeau said at a press conference in May.
“It is so important for Canada to continue to move forward on fighting climate change and reduce our emissions in all sectors. I can highlight that many companies in the energy sector have understood that the investment climate is shifting, and there is a need for clear leadership and clear targets to reach on fighting climate change to draw on global capital.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.