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Canada’s public pensions at risk of stranded assets, as fund managers increase fossil investments

By Elizabeth Perry - Work and Climate Change Report, September 7, 2021

An Insecure Future: Canada’s biggest public pensions are still banking on fossil fuels  was released by the Corporate Mapping Project in mid-August . It examines the investments of the Canada Pension Plan Investment Board (CPPIB) and the Caisse de dépôt et placement du Québec (CDPQ) over a five-year period from 2016 to 2020 – the two together manage $862.7 billion, which fund the pensions of over 26 million Canadians. The report finds that, despite public declarations and climate strategies, CPPIB increased the number of shares in oil and gas companies by 7.7 per cent between 2016 and 2020. The CDPQ in 2017 pledged to increase its low-carbon investments by 50 per cent by 2020, but the authors calculate there was only a 14% drop in fossil fuel investments between 2016 and 2020, and also note that overall, the CDPQ holds over 52 per cent more fossil fuel shares than the CPPIB. The paper also highlights the funds’ investments in individual fossil fuel companies, including ExxonMobil ; TC Energy ; Enbridge; the world’s highest-producing coal companies, and in companies that are members of the Canadian Association of Petroleum Producers. The numbers are startling, and demonstrate a high potential for stranded assets which will threaten Canadians’ pension security.

The authors propose a number of policy changes, including a call for Canadian public pension fund trustees/investment boards to “ Immediately design a plan to phase out fossil fuel investment in alignment with targets set by the Paris Agreement to limit global warming below 1.5 degrees Celsius” and re-invest in renewables. Recommendations for the federal government include : “mandate a clear timeline for public pensions to withdraw from all fossil fuel investments. Define reinvestment criteria that support a just and equitable transition to a renewable-based energy system” .

The report is summarized in “For climate’s sake, Canada Pension Plan needs to take a serious look at its investments” (National Observer, September 7th), which also summarizes the “oily” corporate connections of the decision-makers of the CPPIB, and highlights the current election promises related to financial regulation of our pension funds.

California Kids to Teachers' Pension Fund: Divest from Oil

By Marcy Winograd - Common Dreams, August 26, 2021

The kids are mad as hell—and so are teachers who want their California teacher pension fund, CalSTRS, to join 1,000 other institutions collectively divesting $14.5 trillion from the fossil fuel industry that threatens climate catastrophe. The retirement fund divestment fight, led by retired teachers in Fossil Free CA and students from Youth vs Apocalypse and Earth Guardians, estimates CalSTRS' portfolio investments in fossil fuels at $16 billion, mostly in oil and gas delivery systems, but $6 billion in direct investments in oil behemoths, with $400 million in Exxon-Mobil, $350 million in Chevron, $250 million in BP and $108 million in Enbridge Inc. This is the same corporation sending attack dogs to maul water protectors protesting drilling at river crossings on indigenous land, where Enbridge's Line 3 pipeline will send sludgy tar sands through Minnesota. The estimated pollution from the pipeline is equivalent to 50 coal powered plants running for 50 years.

Fossil Free CA and other divestment advocates, including this author, warn that CalSTRS, the nation's second largest pension fund with a $310 billion dollar portfolio, just behind CalPERS' $444 billion in holdings, risks sticking its members, over 700-thousand active and retired California teachers, with stranded assets—unless the pension fund moves the money before it's too late, too late for the portfolio, too late for the planet.

CalSTRS's resistance to divestment from Big Oil comes at a financial cost to rank and file public school teachers. In 2019, the Corporate Knights, a Toronto-based research firm, published a study showing that had CalSTRS divested during the last decade the teacher retirement fund would have generated an additional $5.5 billion. Forbes reports that during that same decade, the energy sector of big fossil fuel companies, such as Exxon (ejected from the Dow in 2020), Chevron and BP, shrunk to the smallest investment sector in Standard and Poor's (S & P) index of the 500 largest US publicly traded companies. This year oil companies underperforming the index saw their credit ratings cut in half.

Agreement reached to save Terra Nova offshore oil and gas field in Newfoundland

By Elizabeth Perry - Work and Climate Change Report, June 16, 2021

UPDATE: As reported by CBC News on June 16 in “New hope for Terra Nova as Suncor announces tentative deal to save N.L. oilfield” , and by a Unifor press release, an agreement in principle has been reached to restructure ownership of the Terra Nova oil fields, offering a path forward which may save the jobs of the workers. Details are not yet available, but Suncor will increase its equity stake and previous owners may participate in the new structure, contingent on the province honouring its commitment to provide $205 million from the oil industry recovery fund, and some $300 million in royalty relief .

Workers demonstrated outside the Newfoundland legislature on June 14 and 15 , as politicians debated inside about the fate of the Terra Nova oil field and an ultimatum from Suncor Energy, asking for the government to buy the assets of the Terra Nova FPSO, an offshore production and storage platform which employed nearly 1,000 workers in 2019, which is the last time oil was produced. Suncor is the last company remaining in the consortium which owned the oil field. The complexity of the situation is described in several CBC articles, including: “Talks to save Terra Nova oilfield collapse after N.L. government rules out equity stake” (June 10), and “As deadline for Terra Nova approaches, pressure mounts to save troubled oilfield” (June 11). To date, the government has refused to buy the asset, saying that the risks are too great because the oilfield is estimated to be 85% depleted. Instead, it has agreed to provide about $500 million in cash and incentives to the company. As of June 16, Suncor Energy has still not announced a decision, as reported by CBC in “Terra Nova deadline comes — and goes — without word of its fate” .

Unifor Local 2121 represents the workers at Terra Nova, and organized the demonstrations at the legislature. Unifor describes the rally here, and in this press release asserts that the Terra Nova decision is a harbinger of the future of the Newfoundland oil and gas industry.

It’s time to nationalize Shell. Private oil companies are no longer fit for purpose

By Johanna Bozuwa and Olúfẹ́mi O. Táíwò - The Guardian, June 7, 2021

It has been a bad month for big oil. A Dutch court just ruled that Shell must cut its carbon pollution by 45% by 2030. The court’s decision has rightly been celebrated: it is a much more stringent requirement than the ineffective regulations imposed to date. Meanwhile, shareholders are waging rebellions at various oil giants – ExxonMobil shareholders won two seats on the board to pressure the oil company towards a greener strategy, and shareholders at Chevron and ConocoPhillips passed nonbinding resolutions pressuring the companies to disclose their lobbying efforts and emissions amounts.

Private oil and gas companies are finally up against the wall. Shell has promised to appeal the Dutch court decision, but oil prices went negative last year and put companies on bankruptcy notice, and last week the International Energy Agency said to stop digging. Politicians have floated the idea of oil and gas magnates becoming “carbon management companies” as a way for those companies to have a “future in a low-carbon world” while retaining control over oil, gas, and profit in a planet increasingly aware of and hostile to their emissions-generating activity.

But as far as the Dutch court’s ruling or the new bout of shareholder activism goes, neither go far enough. Nor should Shell be turned into a “carbon management company”. Like all private oil companies, Shell should not exist.

Oil and gas companies are a political structure: they possess private, authoritarian dominion over the pace and volume of oil and gas production, and thus of important determinants of global emissions. These emissions and their consequences do not respect any sort of public/private distinction, nor borders, nor the rights to clean air or clean water. For decades, private oil companies have intentionally and recklessly obscured their role in the destruction of countless local environments as well as their role in the global climate crisis.

Private oil companies have propped up an ever-failing business on a complex system of national and international government subsidies, all of which function to privatize the benefits of oil and gas production while socializing its financial, environmental, and social costs – making the public pay in tax dollars, human rights abuses, and an unlivable climate. Now that these companies fear being left behind by a changing political context, their public relations strategy is to insist to a public increasingly aware of the dire need to stop carbon emissions that there is still a place for private oil companies in a “green” world.

There is a role for the workers, their skills and knowledge, and the equipment and infrastructure of oil and gas companies. But there is no longer a role for companies or profit-seeking as an organizing principle of this aspect of human society – not if we want to continue to have human society...

Read the rest here.

Fossil Fuel Companies Took Billions in U.S. Coronavirus Relief Funds but Still Cut Nearly 60,000 Jobs

By Nicholas Kusnetz - Inside Climate News, April 2, 2021

When Congress looked to prop up a tanking economy and stanch its hemorrhaging of employment as the pandemic spread last year, the oil industry was among those that sought relief. Now, a new analysis shows that dozens of fossil fuel companies received billions of dollars in tax benefits in the coronavirus relief package, but slashed tens of thousands of jobs anyway.

While Congress ended up sending billions in direct loans to small and large businesses, a significant portion of CARES Act benefits came in the form of changes to the tax code. At least 77 fossil fuel companies took advantage of those to claim a total of $8.2 billion in benefits last year, even as they cut nearly 60,000 jobs, according to an analysis published Friday by BailoutWatch, a nonprofit supported by Rockefeller Philanthropy Advisors.

Chris Kuveke, a BailoutWatch analyst, said the data shows that the aid to the industry failed to deliver the benefits that Congress had intended.

“These companies did not use that money they received through the CARES Act to maintain payroll,” he said.

As oil prices collapsed last year, some energy companies began lobbying Congress and the federal government for various forms of relief. Occidental Petroleum, for example, enlisted its employees to send letters to members of Congress to ask that they “provide liquidity” to the energy industry, according to Bloomberg News.

Among the various forms of stimulus included in the final relief package were changes to the tax code that proved beneficial to the oil industry.

For example, companies for years were allowed to “carry back” their losses in one year to offset profits from previous years to get a retroactive tax refund. That allowance helped companies with volatile earnings, but it was eliminated by the 2017 tax cuts signed into law by President Donald Trump. The change was one of the few provisions of the tax overhaul that modestly increased the tax burden for corporations, even as the bill overall drastically reduced corporate taxes, said Thornton Matheson, a senior fellow at Urban-Brookings Tax Policy Center.

The CARES Act eliminated that change, and even expanded on the original provision, allowing companies to carry any losses incurred from 2018-2020 back five years, instead of the two years allowed before the 2017 tax bill. Matheson said the oil and gas industry was among a few likely to benefit most from that part of the CARES Act, because its earnings can swing wildly with commodity prices.

Thus the change allowed companies to stretch losses from 2018 back to 2013, when oil prices were above $100 a barrel and profits for some of them were sky high (prices fell sharply in late 2014, and have not fully recovered).

Marathon Petroleum, a major refiner, benefited the most, the analysis found, claiming $2.1 billion in tax benefits, according to the BailoutWatch analysis. The company cut nearly 2,000 jobs last year, not counting those in its retail business.

Marathon disputed the figure, saying that less than 30 percent of its $2.1 billion tax benefit was due to the CARES Act provisions. However, its annual securities filing said that based on the carryback “as provided by the CARES Act, we recorded an income tax receivable of $2.1 billion” to reflect the company’s estimate of the refund it expected to receive in its 2020 tax return.

Marathon spokesman Jamal T. Kheiry said some of the layoffs were associated with the idling of refineries, and added that the company was generous with employees who lost their jobs. “To help affected employees transition, we provided severance, bonus payments, extended healthcare benefits at employee rates, job placement assistance, counseling and other provisions,” he said.

NOV, a drilling company, cut nearly 8,000 workers, more than 20 percent of its employees, despite receiving a $591 million tax benefit. The company did not respond to a request for comment.

Occidental collected $195 million and cut 2,600 jobs.

Eric P. Moses, a spokesman for Occidental, said the job cuts were associated with its 2019 acquisition of Anadarko Petroleum “and completed prior to the COVID pandemic and Congress’ passage of the CARES Act.”

Steady Path: How a Transition to a Fossil-Free Canada is in Reach for Workers and Their Communities

By staff - Environmental Defense, January 2021

This brief investigates the actual state of employment in Canada’s fossil fuel industry. It explains why the clean economy transition is manageable for workers in fossil fuel industries and should start now. And it provides ten principles that we should be following to make this transition fair and effective.

This brief summarizes the findings of Employment Transitions and the Phase-Out of Fossil Fuels, a report authored by economist Jim Stanford at the Centre for Future Work.

Read the text (PDF).

The Biden Climate Plan: Part 2: An Arena of Struggle

By Jeremey Brecher - Labor Network for Sustinability, December 8, 2020

The climate plan released by Joe Biden in August presents a wide-ranging program for reducing greenhouse gas (GHG) emissions. The previous commentary, “The Biden Climate Plan: What it Proposes–Part 1” summarizes that plan. This commentary identifies the points of conflict on climate policy and related social policies that are likely to emerge within a Biden administration. It concludes by assessing how advocates of a Green New Deal can take advantage of the Biden program to fight for a climate-safe, worker-friendly, socially-just outcome. To read this commentary, please visit: this page.

Labour and Environmental Sustainability

By Juan Escribano Gutiérrez, in collaboration with Paolo Tomassetti - Adapt, December 2020

There is consensus that the separation between labour and the environment, as well as that between the legal disciplines that regulate both domains, is meaningless and outdated. Since business activities affect the health and the environment of workers and human beings, synergies between the two spheres have to be created. Yet there is still a long way to go in order to bring together labour and environmental regulation.

In all the selected countries (France, the Great Britain, Hungary, Italy, the Netherlands and Spain) the legal systems regulating salaried work, on the one hand, and the environment, on the other hand, remain disconnected, although no formal obstacles exist to their integration. With regard to the scope for collective bargaining to become a means to integrate both spheres, no legal restrictions apply in any of the framework considered, although explicit references to workers and employers (or their representatives) to bargain over environmental aspects are far less evident.

It is up to the social partners to promote environmental sustainability as a goal for collective bargaining or to continue with the traditional inertia that divides labour and environmental regulation. Despite research shows how the social partners, especially trade unions, are more and more willing to negotiate environmental aspects, the narrative on the trade-off between labour and the environment is still evident, especially in the Hungarian context. Collective agreements could take a leading role in driving the just transition towards a low-carbon economy, but in practice they do not regard this mission as a priority. Environmental clauses in collective agreements are still exceptional and lack momentum.

One explanation is that the legal mechanisms in place to limit the impact of business activity on the environment (i.e. environmental law) legitimize firms to consider environmental aspects as their own prerogative. For this reason, in some legal systems, employers tend to discuss environmental commitments outside collective bargaining, including them into corporate social responsibility (CSR) mechanisms. By doing so, the company avoids enforceability, limiting the effectiveness of the tools to regulate environmental issues.

Read the text (Link).

The Biden Climate Plan: Part 1: What It Proposes

By Jeremey Brecher - Labor Network for Sustinability, December 1, 2020

This commentary by Jeremy Brecher analyzes Joe Biden’s “Plan for Climate Change and Environmental Justice” released in August. The following commentary, “The Biden Climate Plan: Part 2: An Arena of Struggle,” will consider the struggles that are likely to emerge over what parts of the plan can and should be implemented. To read this commentary, please visit: this page.

Letter to Contra Costa County, California on Just Transition from Fossil Fuels

By staff - Sunflower Alliance, November 20, 2020

Just weeks after Contra Costa County’s Board of Supervisors declared a climate emergency, a diverse group of environmental, labor, and public health advocates sent a letter to the Board calling for a planned and equitable transition away from fossil fuels to a clean energy economy, in what many are calling a “just transition” that supports refinery workers and frontline communities.

“We applaud your recent Declaration of a Climate Emergency in Contra Costa County, which underlines the need to ‘plan for a ‘just transition’ away from a fossil-fuel dependent economy.’  In furtherance of this goal, we seek your immediate action to ensure just transitions for workers and communities threatened with sudden abandonment by refineries located in the County.  We believe climate protection must go hand in hand with environmental and economic justice,”  reads the letter’s opening paragraph.  See the full letter here.

The letter highlights concerns over recent news regarding changes to traditional refinery operations in Contra Costa County—including Marathon’s announcement of a permanent end to crude oil processing at its Martinez refinery, and Phillips 66’s notice of an impending partial closure of its San Francisco Refinery facilities in Rodeo, Franklin Canyon, and Arroyo Grande.

Both companies have proposed changes that would significantly decrease the production of non-petroleum fuels, which will involve shuttering large portions of the refinery.  Neither company has identified plans for full cleanups of their industrial sites, nor have they made adequate commitments to support the wages, health care, or pensions of workers whose jobs are threatened by these changes.

“The large oil companies who have for so long made their profits in Contra Costa County’s local communities ought to be the ones to pay the steep cost associated with their departure,”  the letter states.

The letter also identifies how the communities facing shuttered refinery operations are ultimately at risk for future prospects for environmentally healthy and economically sustainable development.

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