Investing in climate change?

 

The tar sands developments in Alberta, Canada are among the planet’s most controversial oil projects. Tar sands (or oil sands as they are sometimes known), are naturally occurring deposits of clay, sand and water combined with bitumen, a heavy form of crude oil. In its natural state, tar sand is a grainy, viscous substance with few uses. However, with treatment, it can be turned into fuels such as petrol and diesel. In a world where energy prices have increased sharply in recent years, and where production from traditional oil reserves like the North Sea are declining, it is easy to see why, at first glance, the tar sands look attractive.

 

However, tar sands developments are associated with a host of environmental and social problems. There are also an increasing number of questions about their financial viability. The shareholder resolutions, co-ordinated by a group of socially responsible investors and organisations including FairPensions and QPSW partner the Ecumenical Council for Corporate Responsibility (ECCR), challenge BP and Shell’s decision to invest in tar sands. If passed, they would require both companies to commission a detailed report justifying their involvement.

 

Critics claim that tar sands are amongst the world’s dirtiest fuels, producing on average three times the greenhouse gasses of conventional oil – largely as a result of the huge amount of energy required to transform them into a useable fuel. It is often said that the greenhouse gasses associated with the tar sands developments mean that it will be impossible for Canada to meet its greenhouse gas targets under the Kyoto protocol. Indeed, in 2006 the Government of Canada officially announced that it was abandoning efforts to meet these.

 

The Alberta developments have also been associated with deforestation, air and water pollution as well as the creation of huge ’tailings lakes’ to store toxic waste. All of this has, according to some indigenous communities, had a significant effect on wildlife, fragmenting or tainting habitats. Some communities also believe that pollution and toxins entering the food chain have been responsible for an abnormally high rate of the local population suffering from cancers. One indigenous community has taken the provincial government to court, complaining that the developments constitute a threat to their traditional way of life.

 

BP and Shell are not the only companies involved in tar sands; however they are certainly the largest and potentially the most significant. Both companies are advising shareholders to vote against the resolutions and given that most investors tend to vote in line with company recommendations, it is extremely unlikely that the resolutions will attract the 75% of the shareholder vote required to become binding. Nevertheless, in previous shareholder resolutions, fewer than 10% of shareholders voting against a company’s advice has been enough to send a powerful message to the company’s management. It is hoped that this resolution will have a much greater impact.

 

Reflecting Friends’ concerns about sustainability and climate change, Britain Yearly Meeting and the Joseph Rowntree Charitable Trust are amongst the 120 BP and 150 Shell investors who have already indicated their intention to vote for the motion. Others include faith groups, charities, trade unions, local authorities and a number of individuals. This coalition accounts for over 150 million pounds worth of both BP and Shell shares, however it is hoped that even more shareholders will join them. If you or your meeting holds shares in Shell or BP, please consider voting for the resolutions. However you don’t have to be a BP or Shell shareholder to take action – look at the ‘What can i do?’ box to find out other ways you can support it.  

If you or your Meeting has investments in BP or Shell, consider supporting the resolutions. You can download an investor briefing at www.fairpensions.org.uk/tarsands/resolutions. 

You might also find the Ecumenical Council for Corporate Responsibility guide to ‘investing and engaging with companies’ helpful. See: www.eccr.org.uk/publications

Your pension fund may be invested in companies which invest in tar sands. As a pension scheme member, you have a right to express your concerns to your fund provider and to ask them to support the resolutions.

You can do this easily and quickly through the FairPensions website: www.fairpensions.org.uk/tarsands/action

Even if you don’t have shares or a pension you can still make your voice heard by e-mailing one of Shell or BP’s largest shareholders. The FairPensions website can help you do this. See: www.fairpensions.org.uk/tarsands/action2