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Opinion: AIMCo's stake in GasLink project a bad investment – Edmonton Journal

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Jasper Avenue at 104 Street was closed to traffic for about an hour when a round dance was held by about 100 people on Friday January 10, 2020. The round dance was held to oppose the use of legal injunctions, police forces, and criminalizing state tactics against the Wet’suwet’en Nation asserting their own laws on their own lands. Wet’suwet’en Nation has been opposing the construction of Coastal GasLink, an LNG pipeline, on its unceded traditional territories since it was first proposed in 2012.


LARRY WONG Larry Wong / POSTMEDIA NETWORK

Albertans woke up on Boxing Day to discover their public pension plan had bought a gas pipeline. Unfortunately, this late Christmas gift is likely to be a liability, due to the financial, regulatory, reputational and legal risks involved with the purchase.

On Dec. 26, 2019, the Alberta Investment Management Corporation, which manages public-sector pension plans and other provincial government funds, announced a partnership to purchase a 65-per-cent stake in TC Energy’s Coastal GasLink (CGL) pipeline.

Part of the heavily-subsidized LNG Canada project, CGL is a $6.6-billion pipeline that would ship gas from fracking fields in northeastern B.C. to an export terminal in Kitimat, B.C., locking in an additional 8.6 million tonnes of carbon pollution per year by 2030 and undermining B.C’s and Canada’s insufficient emissions reduction efforts. B.C.’s gas sector is already under fire for causing earthquakes, contaminating water, and leaking methane, a potent greenhouse gas.

Many pension funds, including AIMCo, publicly recognize the financial risks of climate change and claim to screen their investments for environmental, social and governance (ESG) factors. If ever there was a project that fails a credible ESG screen, it’s CGL. The project’s environmental risks and failure to respect Indigenous rights should disqualify it for investment for any firm claiming to invest responsibly.

CGL will massively increase carbon pollution over the 30-year lifespan of the project, on top of even more emissions when the gas is burned downstream. This comes at a time when scientists have repeatedly warned that emissions must drop rapidly within this decade in order to avoid the catastrophic global impacts of a warming world.

With investors and central bankers sounding the alarm about climate risk, financing new long-lived fossil-fuel infrastructure should be seen as a foolhardy venture. Investors can reasonably assume that new measures to curb both the consumption and extraction of fossil fuels will negatively impact returns over time. Recent research reveals that technological disruption and new climate policies could strand as much as $4-trillion in fossil-fuel investment by 2035 alone, a particular risk for export-dependent countries like Canada.

CGL is also under fire for its failure to respect Indigenous rights and title. While TC Energy has signed agreements with band councils along the pipeline route, the Wet’suwet’en hereditary chiefs, who hold authority over their unceded traditional territories, have long opposed the pipeline.

Last January, TC Energy used a court injunction to enable the RCMP to violently remove Wet’suwet’en members from their lands and begin construction. Uncovered documents reveal that RCMP officers were instructed to “use as much violence … as you want” and considered using lethal force. The RCMP continues to surveil and harass Wet’suwet’en members, while CGL construction has destroyed Wet’suwet’en archaeological sites. British Columbia’s human rights commissioner called for the suspension of CGL absent the free, prior and informed consent of impacted First Nations. Wet’suwet’en hereditary chiefs issued an eviction notice to CGL on Jan. 5.

It doesn’t have to be this way. In 2020, there are numerous profitable, low-risk opportunities to invest that can help to address the climate crisis without raising red flags over human rights. A recent World Bank study estimates the opportunity for climate-smart investments in emerging markets alone in the next decade at US$23-trillion. Just last fall, the Canada Pension Plan purchased the renewable energy producer Pattern Energy, valued at US$6.1 billion, demonstrating the ability for Canadian asset managers to profit from investing in climate solutions at scale.

AIMCo has a fiduciary responsibility to invest in the best long-term interest of its beneficiaries to ensure Albertan retirees and workers can collect their pensions in a warming world undergoing a rapid energy transition. In buying a yet-to-be-built “carbon bomb” that undermines Indigenous rights, AIMCo risks rendering the term “responsible investing” meaningless.

Adam Scott is director and Patrick DeRochie is pension engagement manager for Shift: Action for Pension Wealth and Planet Health, a charitable organization that helps Canadians engage their pension funds on climate change.

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Ouch. Investment banking revenue hasn't been this weak since 2008 – CNN

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HSBC announced plans last week to slash about 35,000 jobs to combat crumbling profits. Deutsche Bank (DB) cut 18,000 jobs last summer as Germany’s biggest bank tries to rebuild itself. And Morgan Stanley (MS) trimmed its workforce by 1,500 late last year.
Even big bank bosses are on the chopping block. The CEOs of Credit Suisse, UBS (UBS) and HSBC (HBCYF) have all stepped down for various reasons within the past six months. And Barclays CEO Jes Staley is being investigated by regulators over his ties to disgraced financier Jeffrey Epstein.
Meanwhile, Morgan Stanley is spending $13 billion to acquire online broker E-Trade (ETFC) in a bid to make its business model less volatile.
The turmoil reflects the severe financial pressure on investment banks broadly as they cope with muted volatility, IPO busts and technological disruptions to the way markets work.
Revenue at the top 12 global investment banks fell 3% in 2019 to the weakest level since the chaos of the 2008 financial crisis, according to Coalition, a business intelligence provider. Revenue is down for the fourth year out of the past five.
“Investment banks are being forced to rethink their entire business,” said Ian Winer, a Wall Street veteran who currently serves as an advisory board member at hedge fund Bellator Asset Management. “There just aren’t many ways for them to make money in the traditional way.”
That’s why they are doing some serious belt-tightening. Headcount at leading investment banks dropped by 6% last year, the fifth-straight year of declines, according to Coalition.
“The quickest way to cut costs are personnel. It’s like shoot first and ask questions later,” said Winer.
US government fines Wells Fargo $3 billion for its 'staggering' fake-accounts scandal
Last year was supposed to be a blockbuster one for the IPO market, one of the industry’s bread-and-butter moneymakers. However, that didn’t pan out. IPO activity slowed down after the disappointing first-half debuts of Uber (UBER) and Lyft (LYFT) and then the implosion of WeWork and its mega IPO.
Companies raised about $194 billion through IPOs around the world in 2019, according to Dealogic. That’s not too shabby, but still down nearly 8% from the year before. And it’s well below the recent peak of $264 billion in 2014.
“The IPO market collapsed after WeWork,” said Gerard Cassidy, a banking analyst at RBC Capital.
Some companies like Slack (WORK), Spotify (SPOT) and iHeartMedia (IHRT) have decided to go public through direct listings, bypassing the expensive fees they would owe investment banks altogether. Others like Richard Branson’s Virgin Galactic (SPCE) went public through a merger with a special purpose acquisition corporation.

Muted volatility — until now at least

Another problem for investment banks is that up until very recently, financial markets have behaved very calmly. Extremely low interest rates from central banks around the world has suppressed market volatility. That, in turn, limits the fees that big banks haul in when large hedge fund clients trade with a frenzy. And it lowers demand for the complex equity-trading instruments that sophisticated clients buy from investment banks during times of market turmoil.
Even Monday’s 1,000-point plunge on the Dow only lifted the VIX (VIX) volatility index to 24. That’s still relatively calm by market freakout standards.
“People just aren’t trading as much. It’s harder for banks to make money,” said Winer.
Of course, some investment banks are doing just fine, particularly outside of the largest firms. For instance, Stifel (SF), which caters to middle market firms, reported a 16% jump in investment banking revenue last year.
Bigger picture, finance is clearly under pressure from structural changes to the industry that is hurting market revenue at investment banks.
Although fixed income revenue rose last year at leading investment banks, the firms suffered a 10% decline in equities revenue, according to the Coalition report. And headcount in the equities business also fell by 10%.

The rise of the robots

RBC’s Cassidy partially blames the “electronification” of the business. As robots replace humans in trading, large institutional investors are demanding lower fees for executing trades.
“The days of thousands of traders on the New York Stock Exchange are gone. It’s all been replaced by robots,” said Cassidy.
Robots are also replacing stock pickers. Investors have ditched expensive active managers in favor of dirt-cheap ETFs and other passive investment vehicles. That long-running trend is forcing active investment firms to find ways to cut costs, including by demanding cheaper transaction costs from the major investment banks executing their trades.
The ETF boom is also spurring consolidation. Last week, Franklin Templeton parent Franklin Resources reached a $4.5 billion deal to acquire rival Legg Mason (INFR).
Morgan Stanley is buying E-Trade for $13 billionMorgan Stanley is buying E-Trade for $13 billion
At the same time, the online brokerage industry has been turned on its head by the rise of Robinhood and free trading. Discount brokers slashed their trading fees to zero and Charles Schwab (SCHW) and TD Ameritrade (AMTD) are joining forces. This free trading phenomenon is putting additional pressure on investment banks to cut their transaction costs.
“I don’t know how you compete against that,” said Winer.
All of these headaches help explain Goldman Sachs’s decision to build a consumer banking giant called Marcus and Morgan Stanley’s takeover of E-Trade. After the E-Trade deal is finalized, Morgan Stanley will generate 57% of its pre-tax profits from wealth and investment management. That’s up from just 26% a decade ago.
Wall Street firms are diversifying away from the volatile markets business in favor of more stable Main Street ones.
“The whole game has changed,” said Winer.

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Europe's top firms must double low-carbon investment – study – Financial Post

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LONDON — Europe’s top companies need to more than double their current level of spending on low-carbon projects to meet the European Commission’s flagship goal of ‘climate neutrality’ by 2050, according to a report released on Tuesday.

The major study of 882 publicly-traded companies across multiple sectors by climate research provider CDP and consultancy Oliver Wyman showed they spent 124 billion euros ($134.1 billion) on capital investment and research and development in 2019.

That amounted to around 12% of total investment. To be on track to meet the goal of net-zero emissions by 2050 however, that figure needs to jump to 25%, said CDP Europe’s Managing Director Steven Tebbe.

The biggest areas for new investment were electric vehicle technologies, with spend of some 43 billion euros, renewable energy, at 16 billion euros, and energy grid infrastructure, at 15 billion euros, the report said.

“Some European companies are making bold new low-carbon investments to roll out renewables, build greener infrastructure, buy electric vehicles and make manufacturing more energy-efficient,” Tebbe said.

“But there is a huge opportunity to do more, and we need to see more action across the board.”

While doubling capex spend was “a big ask,” Tebbe said the costs of inaction were higher still. The companies assessed account for around three-quarters of the EU’s total emissions and the same amount of its stock market capitalisation.

“To help fill this investment gap, there’s a serious need for policymakers and investors to help companies finance the breakthrough technologies of the future,” he added.

CDP, which works with companies and investors to help them manage their climate risk, is largely backed by funding from philanthropic and government grants.

European policymakers are aiming to reduce emissions targets to 50%-55% below 1990 levels by 2030 and to achieve climate neutrality by 2050 as part of a 1 trillion euro ($1.1 trillion) European Green Deal.

In a bid to achieve its goal, the EU last week opened a public consultation on how companies report the social and environmental impact of their activities, amid concern the current rules on corporate sustainability disclosures are not tough enough.

($1 = 0.9246 euros) (Reporting by Simon Jessop; Editing by Jan Harvey)

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Money Hunter: A Smart Investment – Montreal Alouettes

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He was born Monshadrik Hunter, but in the football world, everyone calls him Money. And he may be one of the smartest investments our Alouettes have made since the free-agent market opened earlier this month. On February 12, Money officially joined the Montreal crew after spending two years with the Edmonton Eskimos. The defensive back recorded 59 tackles, two interceptions and one sack in 2019 – his first season as a starter in the CFL – and, being only 24-years old, he surely still has much more to bring to the table.

Following Into a Hall of Famer’s Footsteps

As he hit Free Agency, Money knew one thing: he’d be good wherever Barron Miles was. As a matter of fact, Barron played an important role in persuading Money to come to Montreal, just like he largely contributed to his protege’s evolution as a pro.

Last year, I started watching more film and working on game plans. Having Barron there really helped me understand the game better and dissect it,” says the DB. “He taught me how to study the game and I knew I’d be comfortable playing for him again.

Adding Some Bite to the Defence

According to GM Danny Maciocia, our recruit has what it takes to be a serious candidate at the strongside linebacker position. So far in his professional career, Money has seen playing time at safety and halfback. Fulfilling the role of SAM would take him back to his high school years, but he’s ready and willing to do whatever it takes to help his team. Plus, everyone agrees: Money’s versatility is one of his best assets. He has the ability to stop the run game, to get to the quarterback if needed or to drop back into coverage.

He can perform at multiple positions,” Barron Miles explains. “He’s going to add a little bite to the secondary. He’s long, fast and rangy. Now that he’s in his third season, the game will be slower for him and he can only get better.

It takes a special kind of relentlessness to be able to hit literally everybody on the field. Think of Patrick Levels in 2019. Those who appreciated his fire will certainly learn to love Money’s bite. Standing at 6’1, he has the potential to become a serious threat if he continues to focus on his technique.

I love playing this game more than anything. So much so, that I’ve been working on controlling my passion,” he admits. “Some people will say I can be a hothead. I know I don’t play calm, but I just have to constantly put that energy into my technique.

While he may be known for his intensity on the field, Money spends most of his off-time relaxing at home with his four (soon to be five) year-old daughter, Miya. As a matter of fact, the little cutie, who was born on April Fool’s Day, will be moving with him to Montreal this summer. Her presence, he says, helps him stay levelled. Something he will want to be coming into the 2020 season.

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