Following is the text of a presentation made by Lenore Fahrig of 350 Ottawa to the Finance and Economic Development Committee (FEDCO) of the City of Ottawa on 6 December 2016.
Why the City of Ottawa Should Divest the Endowment Fund
Thank you for allowing me to make this statement.
I would like to request that the City seriously consider the risk inherent in the City’s endowment fund investments in large oil, gas and coal companies.
An analysis of these investments by the group 350 Ottawa indicates that over the 9 years since inception of the endowment fund in 2007, returns on the fund have been between $6 million and $13 million less than they would have been without the holdings in large oil, gas and coal companies. While these companies have performed well in some years, over the 9 year period they have performed less well than the average for the fund.
Looking forward, the medium-term viability of these investments in large oil, gas, and coal companies is particularly uncertain. Recent political decisions, both globally and in Canada, indicate that these industries are on a deterministic downward slide. The Paris accord on greenhouse gas emissions in 2015 committed Canada and most other countries to very significant greenhouse gas emissions reductions over the next 14 years. Significantly, in Canada 25% of our emissions come from extraction of oil, gas and coal. This means that large reductions in production by these industries are needed for Canada to meet its targets. In addition, Canada has already announced a carbon pricing scheme, which will reduce demand for oil, gas and coal.
To summarize, although returns over the past 50 years from investments in large oil, gas and coal companies have been strong, their performance over the past 10 years is poor, and will worsen as countries like Canada become serious about reducing carbon emissions.
Therefore I request that the City of Ottawa should consider discontinuing these endowment fund investments in large oil, gas and coal companies.
Thank you for considering this request.