Just as they did with university endowment funds, divestment activists are now pressuring university pension plans to abandon investment in oil and gas companies.  

That’s why InvestNow has called on 20,000 university professors to reject the divestment agenda. 

In Ontario, Shift Action is pressuring the University Pension Plan – which represents the University of Toronto, Queen’s University, the University of Guelph and Trent University – to “remove oil and gas companies from its portfolio,” citing growing financial risk.    

This is a classic example of biting the hand that feeds you. Publicly funded universities are being asked to no longer invest in oil and gas, yet they continue to benefit from the sector. Universities and their pension plans are tax-funded to the tune of billions of public tax dollars. A big portion of those tax dollars comes from the oil and gas sector and its workers.  

Do professors understand the consequences of divestment? Divestment advocates say their efforts strike a blow against climate change, but the world needs oil and gas every day. In 2050, oil and gas are expected to still supply 47 per cent of world energy needs, compared to 52 per cent today, according to the International Energy Agency.  

Canada’s oil and natural gas industry operates under some of the most stringent environmental regulations in the world. If people don’t use ours, their needs will be met by other countries with lower standards. So, divestment hurts the environment. It also hurts Canada.  

The oil and gas sector is our biggest exporting industry, is a top-three contributor to Canada’s GDP, supports 600,000 jobs across the country, and contributes billions annually to government coffers in taxes and royalties—including the salaries of university professors and staff.  

Divesting from Canadian oil and gas does not reduce global emissions, does not reduce demand and does not foster innovation. Divesting from oil and gas threatens to constrain supply and lead to shortages and higher prices. Divesting from oil and gas costs jobs. 

Divestment hurts at all levels.   

For the professor, their pensions are at risk. Oil and gas companies have had some of the strongest returns on the Toronto Stock Exchange (TSX). To eliminate these companies from the investment pool solely for ideological reasons is folly and goes against the duty to maximize returns.  

For everyday Canadians, their livelihoods are at risk.  

For Canada, the economy is at risk. 

The end goal of divestment is the end of Canadian energy. With that comes a hobbled economy: supply shortages, higher prices, shuttered factories, job losses, energy poverty.  

It’s time to invest in Canadian oil and gas for the good of the economy, the environment, pension plan members, and everyday Canadians. 

Gina Pappano is executive director of InvestNow Inc., a non-profit dedicated to demonstrating that investing in Canada’s resource sectors helps Canada and the world. Join the movement and pass the InvestNow resolution at investnow.org. 

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First Canadian universities, now Canadian banks. At a recent event at Queen’s University where David McKay, CEO of RBC was speaking, activists targeted both.

For years activists have been going after institutional investors like the $1-billion-plus Queen’s University Endowment Fund, insisting they divest from oil and gas stocks. They are now also targeting the Canadian Big Five Banks, starting with RBC, demanding that it “divest and stop financing fossil fuels.”

This action, in theory intended by the activists to strike a blow against climate change, could actually increase global greenhouse gas emissions and should be regarded as a strike against the prosperity of Canada and Canadians.

A bit of history on the divestment movement at Queen’s. In 2015, under aggressive pressure from divestment activists, the university undertook an extensive consultation period to decide whether or not to divest the endowment fund of fossil fuels.

They invited both sides to present to the board of trustees and asked for input from students, alumni, faculty and staff. They sought the viewpoints and opinions of many different groups and ultimately decided not to proceed with divestment.

Post-decision, a Queen’s Gazette article quoted some of the university trustees:

“Queen’s is an academic institution whose core activities are teaching and research. The university’s endowment funds exist solely to further these activities and the university has an obligation to seek the best possible return on these investments in order to advance its academic mission,” said Don Raymond, chair of the Investment Committee.

“The Investment Committee agreed that divestment is an ineffective tool to mitigate the risks of climate change and would result in Queen’s losing any moral suasion it has with companies in this sector.”

The article goes on to say that “the committee recognized that fossil fuel industries are lawful, highly regulated and carry social and economic benefits. There are more effective contributions that Queen’s can make to help address climate change through education, research and innovation, and in its operations.”

Fast forward to November 2021, and all of the above statements still hold true. Not surprisingly then, Queen’s has continued to resist the divestment agenda.

Queen’s University and all Canadian universities should focus on education, research and innovation to come up with leading edge technologies that will truly reduce emissions. They should avoid empty political statements like divestment which have no discernible impact on emission reductions.

And why should and would Canada’s largest bank stop investing in and financing the companies that fuel every other sector and company in Canada?

Canadian manufacturing, mining, forestry and agriculture are highly energy intensive: all of them need access to the energy that comes from hydrocarbons. These companies are also a huge part of the economic engine that drives the Canadian economy.

Why should educational and banking institutions continue to invest in hydrocarbons? Investing in hydrocarbons fosters innovation and solutions like carbon capture, utilization and storage, and clean hydrogen.

Investing in Canadian hydrocarbons ensures oil and gas supplies come from countries with high governance standards. Investing in Canadian hydrocarbons means investing in the industry that fuels every other industry on our stock exchanges. Investing in hydrocarbons means investment in the most productive sector in Canada.

Our universities and banks need to reject the activist agenda to divest and instead invest in Canada’s hydrocarbon sector for the good of the economy, the environment, shareholders and everyday Canadians.

Gina Pappano is the former head of market intelligence at the Toronto Stock Exchange and executive director of InvestNow Inc., a non-profit dedicated to demonstrating that investing in Canada’s resource sectors helps Canada and the world. Join the movement and pass the InvestNow resolution at investnow.org.

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd. 

For 22-year-old Justus Otto, the movement at some universities to divest from oil and gas is a symbolic gesture that has little impact other than to give a bad name to Canadian companies that are global leaders in environmental protection.

Otto graduated last year from the University of Alberta with a Bachelor of Commerce and a major in finance and economics. He’s active with the youth-led advocacy group Students for Canada.

Here’s what he had to say about oil and gas divestment, and a better path forward.

Why are you an advocate for Canadian oil and gas?

I became involved with Students for Canada early on, talking about the benefits of Canadian energy and why it’s important for young people especially to gain some knowledge on how Canadian oil and gas resources work and why they’re important.

We’re among the best in the world and we should be proud of it instead of trying to hide it under the carpet. We want to take part in climate action, but do it in a responsible way where Canada is a world leader.

Not a lot of young people really understand what divestment means. We’re trying to create a bit more of a background giving people that knowledge base so that they can make the decision for themselves.

What do you think about the divestment movement?

SFC has done research focused on the economic and social consequences of what happens when universities divest from specifically Canadian energy companies and Canadian fossil fuels.

What we found is that while divestment in principle is a moral goal that has its merit, the practical effects on companies, markets, and people’s jobs, especially in Canada, has more of an adverse effect on climate change than helping.

When you move those investments they move to non-Canadian companies, and they usually have lower standards for emissions, so divestment doesn’t actually help emissions.

What’s wrong with how divestment is addressed on campus?

There’s a disconnect about what the unspoken consequences of it are, especially to the young people who support it.

They support it mostly because it sounds good in theory to get away from oil and gas as soon as possible and get on to low carbon technologies. While obviously we support shifting to low carbon technologies, when you shift away from responsible oil and gas companies like the ones in Canada, you’re definitely doing more environmental and economic damage than good.

Being in university there’s a lot of focus, especially when it comes to climate change, on if we just make a lot of noise in the media and get people to move away from oil and gas, and stigmatize it and make it seem like it’s not a viable way forward, that’s all that needs to be done.

If we make oil and gas pay, we’re the good guys and they’re the bad guys. In reality, it’s not that simple. There are sacrifices that have to be made by everybody.

What impact does divestment have?

In the end all it does is add to the negative stigma around Canada’s resources, and that’s not good for anyone. Canadian oil and gas companies are the ones that are leading the way and we should be supporting them instead of hurting them.

One of the main things is, when those who own the endowment funds for the university divest from oil and gas, are they investing in other companies who have just as big if not a bigger impact on emissions?

Because when you talk about emissions, it’s not just where it starts. Where it ends is where most of the emissions come from, from cars, manufacturing, all that stuff. All emissions are connected. When you just say, oil company bad, everything else good, it’s really not that simple. I think that’s what most younger people think, is that it’s this binary thing.

What do you think is the better pathway for university investments?

I think people are starting to realize that you make more of an impact by working with these companies instead of against them. Many Canadian oil and gas companies support clean energy and clean tech immensely and have done a lot of work leading the world in that area.

Saying we should divest, that we should show these companies that we don’t support what they’re doing, that’s pretty low-resolution thinking because what we should be doing is working with them and supporting their goals.

That’s a lot better for both sides so that in the future it’s less of a binary. It’s less of, we can either have clean tech or oil and gas, because in reality, especially in Canada, you can have both and we should be having both.

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The new CEO of Canada’s pension investment fund says conventional energy (ie. oil and gas) will play a crucial role to lower emissions in the global economy moving into the future. He has no intention of “blanket divesting” from these companies.

“The planet will struggle to transition without the expertise of the more conventional energy players,” John Graham, CEO of CPP Investments, told a Canadian Club of Toronto webinar this week.

“We certainly have a view that organizations and investors that take time to really understand the transition of the real economy will be rewarded, and a view that many of these energy companies will be leaders going forward.”

CPP Investments represents the pensions of 20 million Canadians and has $497 billion of assets under management. Graham, who was appointed CEO in February, has a background in industrial research science.

He says it’s critical that CPP investments continues to play a role in lowering emissions “across the energy spectrum.” The fund has a policy of working with companies to reduce emissions rather than blanket divestment based on involvement in fossil fuels.

For example, Graham noted that CPP Investments founded Calgary-based Wolf Midstream in 2016. The company has expertise in conventional pipelines, which is “knowledge [that] can also be applied to new technologies that will help decarbonize the planet.”

Wolf Midstream built and operates the $900-million Alberta Carbon Trunk Line. The system in central Alberta captures CO2 from an oil refinery and a fertilizer plant and transports it to a mature oil field, where it is used to produce previously unrecoverable resources while being sequestered deep underground.

The Alberta Carbon Trunk Line is the world’s largest CO2 pipeline project. In 2020 – less than one year after starting operations – it achieved the capture and storage of one million tonnes of emissions, the equivalent of taking approximately 350,000 cars off the road.

Graham said CPP Investments’ new sustainable energies group, launched in April, builds on existing strengths in conventional energy, renewables and innovation. With $20 billion of assets already under management, “we’re quite keen to grow this group over the next few years,” he said.

“They’ll continue to have the mandate to invest in conventional energy, invest in renewable energy and invest in innovation and technology…There are incredibly knowledgeable scientists and engineers in the energy sector that are going to play a critical role in this planet’s evolution.”

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