Signs of an investor backlash against companies involved in tar sands have emerged with the news that a major Norwegian pension fund advisor and a large Dutch bank have decided to disassociate themselves from businesses with tar sands portfolios.
Norway’s Storebrand, which manages Nordic life insurance and pension funds, announced that it has withdrawn all its financial interests in six companies that are heavily involved in tar sands extraction, while Utrecht-based Rabobank said it would from now on refuse to offer any loans to companies involved in tar sands and shale gas.
While both Storebrand and Rabobank have relatively strong socially responsible investment policies, both are mainstream investment institutions and both said there were sound financial as well as ethical reasons for their positions.
Storebrand’s head of sustainable investment, Christine Torklep Meisingset, said tar sands would be responsible for such large amounts of carbon emissions over the next few years that they were effectively ‘worthless financially’ as a resource to society in the long term, producing greater costs than the returns they deliver. Rabobank said it would not get involved in loans to tar sands businesses because the long-term financial and environmental risks were just too great.
Both said they had been influenced by a new report from the UK-based Carbon Tracker think tank, which has concluded that 80 per cent of fossil fuel reserves need to be left in the ground if the worst effects of climate change are to be avoided. Carbon Tracker also says tar sands and other carbon intensive energy sources could become ‘stranded assets’ that are likely to be worthless in the long term as the world shifts to renewable sources of energy.
The lead author of the report, Sir Nicholas Stern, said: ‘Smart investors can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision.’ He added that the financial community ‘is beginning to wake up to the idea of stranded assets’.
Jeremy Leggett, chairman of Carbon Tracker, said the moves by Storebrand and Rabobank could be the first signs of a new investment trend. ‘There are grounds to be more than cautiously optimistic that something exciting is happening,’ he said. ‘We think there will be more investors looking at this argument and coming to the same conclusion.’