The CEO of Alberta Investment Management Corp. (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 $168.3 billion of 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 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.”
No denying importance of sector, says Siddall
Siddall made the comments Wednesday at a ribbon-cutting event in Calgary to mark the opening of AIMCo’s new office in that city. 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 Corporation — is also considering opening offices in Asia and possibly New York as the corporation seeks to become more globally focused over 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 hold the trajectory of climate change below the dangerous tipping point of 1.5 degrees Celsius of warming accelerate.
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. (Matthew Brown/The Associated Press)
“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 Climate 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,” Siddall said.
AIMCo already has $3.2 billion invested in no carbon or low-carbon assets through its infrastructure and renewable resources portfolio. The corporation also completed its inaugural “green bond” issuance last year through its AIMCo Realty division.
But Siddall said in the year ahead, 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 rolled out a flurry of announcements of proposed projects — from hydrogen plants to renewable diesel facilities to carbon capture and storage — aimed at lowering the industry’s emissions profile.
‘You’re funding the bad stuff’
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 it to a storage facility near Cold Lake, Alta, delivering an estimated 10 million tonnes of emissions reductions per year.
On Tuesday, Lindsay Patrick, head of ESG and strategic initiatives for RBC Capital Markets, said in an interview in Calgary that there’s growing recognition within the financial sector that tools such as green bonds could be used not only to support the scale up of green technology but also to help clean up more conventional industries.
“The new idea is to support companies that aren’t 100 per cent green but that have specific projects that are aligned with a 1.5 degree scenario,” Patrick said.
However, Greenpeace senior energy strategist Keith Stewart said Tuesday that financing companies because of specific climate-friendly projects they may have doesn’t make up for the fact that the Canadian oil and gas sector is still planning to increase the overall volume of fossil fuels they produce in the long-term.
“When you’re providing this kind of blanket finance to these companies, you’re funding the bad stuff along with the better stuff,” Stewart said.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
