The truth about the oil sands

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Dear Mr. DiNapoli and Ms. Titarchuk,

I want to express my concern upon hearing the New York State Pension Fund has chosen to sell off its securities in some (but not all) Canadian oil sands companies and decline further investment. 

Arguing that the companies identified “do not have viable plans to adapt to the low-carbon future,” Mr. DiNapoli suggested they do not meet your Fund’s goals of achieving a net-zero portfolio.

However, that rationale is flawed, arbitrary and hypocritical when measured against some of the companies that remain within the Fund’s portfolio.

Four of the Canadian oil sands companies singled out by Fund (Cenovus Energy, Canadian Natural Resources Ltd., Husky Energy, and MEG Energy) have all stated their aspirational goals to achieving net zero emissions by 2050 to align with the Paris Climate Agreement. In all, the stocks held in the seven companies identified by the Fund are valued at about $7 million. 

Meanwhile, two energy companies (Exxon Mobil Corp. and Chevron Corp.), which remain among the fund’s largest investments with nearly $700 million between them, have so far declined to make similar environmental commitments. As well, Exxon owns 70% of Imperial Oil, one of the Canadian companies the Fund has opted to distance itself from.

Here are some facts you should know about Canada’s oil sands sector:
•	Overall oil sands emissions intensity has declined by over 23% between 2012 and 2019, and the Province of Alberta forecasts a further 16-23% reduction over the coming decade;
•	In some cases, depending on the production process, emissions per barrel in the oil sands is actually below the average crude consumed in the U.S.;
•	Canada is the global leader in ESG (environment, social and governance) rankings among the world’s top 20 oil producers;
•	Canada’s oil and gas industry spends more on cleantech than all other sectors combined, committing $1.45 billon of the $2 billion Canadian industries spent in all of 2016;
•	Oil sands producers spent more than $15 billion with Indigenous-owned businesses between 2012 and 2019, including a record $2.4 billion in 2019.

According to the U.S. Energy Information Administration, the global demand for oil will continue to rise in the decades ahead, up to 104.1 million barrels per day in 2040 from 97.9 million barrels per day in 2019. This is despite an increased role for renewable energy sources.

As the majority of the world’s top oil exporters are from nations with poor track records on both human rights and environmental stewardship, Canada should be considered a producer and supplier of choice as we move towards an energy transition.
I ask that your reconsider your decision to divest from these Canadian companies that have shown the exact same commitment your Fund has to tackling carbon emissions globally.

Respectfully submitted,
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