Disinvesting From Fossil Fuels

Disinvesting from Fossil Fuels: The Allure of Green Investment

Presenter: Pam Fitzgerald

December, 2020

Disinvestment refers to the use of a concerted economic boycott to pressure a government, industry, or company towards a change in policy, or in the case of governments, even regime change. The term was first used in the 1980s to refer to the use of a concerted economic boycott designed to pressure the government of South Africa into abolishing its policy of apartheid (Wikipedia).

Canadian pension and private investment portfolios as well as institutional holdings contain fossil fuel and bank equities. A recent report documents Canadian bank involvement in fossil fuel financing around the world (Banking on Climate Change).   With a 24% share of the international market, Canadian banks are second only to the US when it comes to fossil fuel financing.

It might appear obvious that a fossil free investment portfolio is green if it does not contain Shell, Cenovus or other fossil fuel equities but it is not this straightforward as their banking investments contain a Trojan horse of fossil fuel stocks.  Three of the better known green Canadian investment funds, Vancity’s Clarington Investments, NEI Environmental Leaders Fund, and Genus Fossil Free, all contain equities with sizable investments in Canadian banks.

Here are a couple of questions to ask investment managers to try and get a handle on the amount of indirect fossil fuel holdings in a green portfolio:

  • What are the details of the equity profiles and what are the fund’s top 10 holdings?   
  • What percentage of the equity holdings are invested with Canadian banks?  

“Banks must similarly commit to align with the goals of the Paris Agreement by ending their financing for fossil fuel expansion, and committing to phase out fossil fuel financing overall.” (Banking on Climate Change).  This is a laudable aim for civil society and principled individuals to pursue through various political means such as disinvestment.

Banking on Climate Change: https://www.ran.org/bankingonclimatechange2020/

RBC announces new restrictions on financing coal, oil developments:  https://globalnews.ca/news/7376077/rbc-coal-oil-financing-restrictions/

The Big Banks Green Bafflegab: https://thetyee.ca/Analysis/2020/11/25/Big-Banks-Bafflegab/

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