How Ethical Are Canada's Ethical Funds?
By Larry Powell
January 12, 2011
"Conscientious" investments and the tar sands connection
I doubt that any investors with a social conscience would assume that the
"ethical" funds they hold would be helping pay for such projects as the
Alberta oil sands.
I certainly didn't. Though it turns out, I was wrong!
All five of Canada's major banks lend money to tar sands operators. And all
five are actually included in the portfolios of the many ethical investment
funds in this country.
As if that isn't enough, so too is at least one major corporation, Suncor
Energy, which actually extracts the tar from the sands!
Ethical Funds lists
Scotiabank, the Royal Bank of Canada (RBC) and Suncor Energy among its top
ten holdings. The investment company adds, RBC, for one, "provides
significant capital to the oil and gas and other smokestack industries."
Suncor describes itself as a "pioneer"
and one of the biggest players in the development and upgrading of the
Alberta oil sands. So far this year, the company has been producing, on
average, more than a-quarter-of-a-million barrels of oil per day.
Last spring, a US-based environmental group, the Rainforest Action Network,
(RAN) , listed
the five major Canadian banks; RBC, Toronto Dominion (TD), Canadian Imperial
Bank of Commerce (CIBC), Scotiabank and Bank of Montreal (BMO) as investors.
At that time, RAN reported that investment totalled almost $50M.
In a letter to RAN about a year ago, RBC confirmed it was "a financier of
oil sands activity, although (at almost $17M) not currently the largest."
So just what is the concern here?
For years, critics have been pointing out the profound impact which
development of the sands is having on the environment and the health of
people, both regionally and globally. Some even describe it as the "dirtiest
project on earth!"
The Alberta-based Pembina Institute says, of all
the provinces, Alberta was responsible for over half of the increase in all
greenhouse gas emissions between 1990 and 2008 - about 52%! (The tar sands,
of course, were operating, full-bore, during that period.) Pembina predicts
that, given the projected growth of the sands, their already substantial
emissions will nearly triple by 2020! The 25 year-old Institute researches
and advocates for "sustainable energy solutions that will protect the
earth's living systems -- air, land and water."
Meanwhile, millions of hectares of pristine boreal forest are being
bulldozed to make way for more and more tar sands plants. According to
Greenpeace , this
could soon amount to an area twice the size of New Brunswick!
The National Academy of Sciences
in the US reports that oil sands development has been
contaminating the Athabasca River watershed, downstream of the sands, to a
greater degree than earlier thought. It warned that oil sands development
was elevating levels of poisons in the Athabasca River and its tributaries
that were "likely toxic to fish embryos."
Meanwhile, people living downstream of the oil sands, in the community of
Fort Chipewyan, have been reporting high rates of cancer and other illness.
George Poitras, a member of Mikisew Cree
indigenous First Nation says, "My people are dying," and blames oil sands
development.
What does the ethical investment community have to say?
I contacted Robert Walker, Vice President of ESG Services of Vancouver, to
comment on this story. His firm manages several "sustainable" or "social
investment" companies, including Ethical Funds. As he puts it, "Every major
bank in Canada has exposure to oil sands."
Ethical Funds lists "respect for the environment" and a pledge that
"disadvantaged communities should not bear the brunt of adverse
environmental impacts" among its "core values."
So just how does it justify this state of affairs?
In Walker's words, "Note that we do not describe the companies in our Funds
as 'ethical'. This is not our claim." Walker recognizes that the companies
in question have a chequered reputation in managing their social and
environmental responsibilities. But he says his industry is constantly
"engaging" and "pressuring" them to do better. It even hands out and
publishes report cards on their performances. All this, he believes, will
gradually help convince them to change their ways. Walker believes banks
like RBC can play "a pivotal role in encouraging their clients to tackle
climate change." He concludes, "We are at least partially responsible for
progress that banks like RBC are making in this space."
Closing thoughts
Despite these assurances, it's not clear just what "progress" Walker can
point to; whether his industry is, in fact convincing the banks to become
better corporate citizens; or why, as he suggests, it would not be logical
for the average investor to conclude -- if these companies are embraced
within ethical fund portfolios - that they are, or should be, ethical!
In its defense, RBC does sponsor the "Blue Water Project," through which it
promises millions of dollars to help protect watersheds and ensure access to
clean drinking water. It's doubtful, however, any of that money has gone
toward protecting the Athabasca watershed, the deterioration of which the
bank has surely played a part.
So is the Blue Water Project an example of the bank's good intentions? Or
hypocrisy?
If tar sands investment can be considered "ethical," I find it rather hard
to imagine what would not!
If you believe, as I do, that our investment money should be going to less
harmful and less polluting ventures than this, I'd urge you to do something
about it, also. As a result of all of this, I have chosen to shift my modest
investments away from those involving the tar sands and, into less harmful
ventures. My actions, in and of themselves, will obviously mean little.
But, if enough other people can be convinced to take similar action, perhaps
someone somewhere will get the message!
http://www.onearth.org/blog/how-ethical-are-canadas-ethical-funds
