Page 4 - NorthAmOil Week 12 2022

NorthAmOil COMMENTARY NorthAmOil

Report finds ESG funds preferring

Russian to Canadian oil

A new CIBC Capital Markets report has highlighted ESG-focused funds showing a

preference for Russian oil and gas investments over Canadian ones

CANADA-RUSSIA A new report has highlighted a trend whereby a oil and gas as Canadian, the report found. CIBC
desire by investors to demonstrate their environ- described this as a “shocking” example of inves-
WHAT: mental credentials has led to Canadian oil and tors prioritising the environmental aspect of
ESG-focused funds have gas being shunned while they continue to invest ESG at the expense of the social and governance
been found to have more in energy from countries such as Russia. The aspects.
Russian oil and gas report, by CIBC Capital Markets, has led to calls CIBC said that the largest four Russian energy
holdings than Canadian for the asset management industry to rethink its companies – Gazprom, Rosneft, Lukoil and
ones. approach to environmental, social and govern- Novatek – represented around 0.2% of global
ance (ESG) investments. ESG holdings. This was double the size of invest-
WHY: The report has been published as Russia’s war ments in Canada’s TC Energy, Suncor Energy,
The asset management on Ukraine shows no sign of ending any time Enbridge and Canadian Natural Resources Ltd
industry has been among soon. The conflict has prompted an unprece- (CNRL), according to the bank.
those pivoting away from dented wave of sanctions against Russia and has “Perhaps most shockingly, the ratio of dollars
Canadian oil on concerns led to multiple oil and gas companies, including held in Gazprom (a Russian state-owned energy
over its environmental majors with significant investments, leaving the firm) was six times that of Suncor,” the CIBC
impact. country. However, CIBC’s findings illustrate analysts wrote.
that other types of investors still have significant “Russia and Saudi Arabia may well emit less
WHAT NEXT: holdings in Russian oil and gas, which may not CO2 per produced barrel of oil equivalent [boe]
The push by various types be as apparent as stakes in giant upstream and than some North American firms, but they also
of investors to withdraw downstream projects. invariably have less robust social and govern-
from Russia could lead ance oversight,” the analysts continued. “This
to some realignment “Shocking” findings says nothing of the reality many of their energy
taking place but The CIBC report showed that while many entities are de-facto state-controlled and often
pressure to demonstrate of the 10 largest energy holdings across ESG aligned (read: weaponised) with foreign policy
environmental funds had scaled back or exited their Canadian objectives – many of which will be an affront
credentials remains high. investments, particularly in the oil sands, half to mainstream ESG investors. To be blunt, the
had continued to invest in Russia. At the end of importance of Social and Governance within
2021, ESG funds owned twice as much Russian energy should not be looked over.”

Investors have
increasingly shunned
Canada’s oil sands
citing environmental
concerns.

P4 www. NEWSBASE .com Week 12 24•March•2022