Trillium Leads Investors Worth $3.6Tr Supporting Joint U.S. and Canadian Limits on Methane Emissions from Oil and Gas Industry
Doubling of support comes as nations gather in New York City to sign the Paris Climate Agreement
APRIL 21, 2016 // BOSTON, MA: As attention turns to the Paris Agreement signing ceremony on Friday, leading global investors representing $3.6 trillion in assets under management released a statement of support today for U.S. and Canadian efforts to limit methane emissions from the oil and gas sector. This represents a doubling of support since July 2015.
“As widely diversified, long-term investors with holdings in the oil and gas industry, we share a vested interest in the industry’s long-term success,” says the statement, which was coordinated by CalSTRS, the Interfaith Center on Corporate Responsibility, NEI Investments, Ceres and Trillium Asset Management. “Curbing methane emissions from all sources in the oil and natural gas value-chain will help limit climate change, promote economic growth and provide regulatory clarity for industry and investors.” For the statement and complete list of signatories, see: www.ceres.org/methanestatement.
The U.S. and Canadian announcement, made on March 10, 2016, commits both nations to reduce oil and gas methane pollution by 40 to 45 percent over the next decade, and to put forth standards to achieve this goal.
“Managing methane emissions is a critical part of the challenge of addressing climate change. In keeping with our fiduciary duty, CalSTRS is supportive of the expected EPA regulation reforms for oil and gas operators as they provide an opportunity to mitigate risk, build trust and create long-term shareholder value,” said CalSTRS Chief Executive Officer, Jack Ehnes.
Methane, the primary component of natural gas, is 86 times more potent as a greenhouse gas than carbon dioxide over a 20-year period. The oil and gas sector is the largest industrial source of methane emissions in the US, and methane emissions occur throughout the entire oil and gas system, from production wells to distribution lines. Data released by the Environmental Protection Agency earlier this month showed that actual methane emissions from the oil and gas industry are 34 percent higher than previous official estimates.
“Without strong action to reduce methane emissions, there is a real risk that natural gas will be seen as part of the problem, rather than as a bridge to a low-carbon future,” said Andrew Logan, Director of the Oil & Gas Program at the sustainability advocacy nonprofit, Ceres. “We believe that the goal announced by the US and Canada is therefore in the long-term interest of the industry, as well as the U.S. economy as a whole.”
“Common sense standards to reduce methane would be good for the climate, the energy sector and the broader economy,” said Jonas D. Kron, Senior Vice President at Trillium Asset Management, LLC. “Evidence indicates that proven technologies that can reduce methane emissions by 40-45 percent at an average annual cost of less than one cent per thousand cubic feet of produced natural gas – a very cost effective price point. These technologies are commonsense ways to cut emissions and should be a central element to policy solutions for all countries looking to reduce their climate impact.”
According to Rhodium Group’s 2015 report on global methane emissions from oil and natural gas systems, wasted natural gas escaping into the atmosphere represents approximately $30 billion of lost revenue. Capturing and reusing the gas represents a significant economic opportunity.
“The Canadian and U.S. commitment to reduce methane emissions represents the kind of government ambition that investors are looking for and creates a template for other jurisdictions to follow,” said Jamie Bonham, Manager, Extractives Research & Engagement, NEI Investments. “There is a clear benefit to companies and investors in harmonizing these goals, and we hope to see other countries follow the lead of Canada and the U.S. It will be good for the climate, good for industry and good for investment.”
Natural gas production has been steadily rising over the past several years and that trend is expected to continue, driven in part by demand in the electric power industry as it shifts toward cleaner burning fuels. Continued growth will in part depend on ensuring that methane emissions are effectively kept in check.
“As a European based asset manager, we would like the EU to set a proactive goal to reduce emissions of oil and gas methane, a climate super-pollutant. Both the US and Canada have done this already by setting a 40-45% reduction goal to be backed by regulations. We also encourage the EU to implement similar policies and standards across Europe to help achieve greater global reductions of this potent GHG. Doing so builds on the global ambition to act on climate change, aligns methane reduction ambitions, creates a more level playing field, and also gives oil & gas companies a clear target to work towards.” Sylvia van Waveren, Senior Engagement Specialist, Robeco.
“Faith-based and values-driven investors are concerned about the long-term health of the companies in which we invest, but also about the wellbeing of communities and the natural systems that are so threatened by climate change,” said Christina Herman, Program Director for Climate and Environment for the Interfaith Center on Corporate Responsibility. “The Paris agreement made clear the global mandate to prevent runaway climate change, and reducing methane leakage is an important aspect of North America’s contribution. Methane emissions represent a real risk to the ability of natural gas to serve as a cleaner fuel source in a global environment looking to reduce climate impacts. As responsible investors, we would welcome robust, effective regulation.”
Founded in 1982, Trillium Asset Management is an investment management firm with over $2 billion in assets under management. Trillium integrates Environmental, Social, and Governance (ESG) factors into the investment process as a way to seek to identify companies better positioned to deliver strong, long-term performance. Trillium has a long history of managing equity and fixed income portfolios for individuals, foundations, endowments, religious organizations, and other non-profits. A leader in shareholder advocacy and public policy work, Trillium leverages the power of stock ownership to promote social and environmental change while providing both impact and performance to our investors.
Ceres is a nonprofit organization mobilizing business and investor leadership on climate change, water scarcity and other sustainability challenges. Ceres directs the Investor Network on Climate Risk (INCR), a network of over 100 institutional investors with collective assets totaling more than $14 trillion. Ceres also directs Business for Innovative Climate & Energy Policy (BICEP), an advocacy coalition of 34 businesses committed to working with policy makers to pass meaningful energy and climate legislation.
The Interfaith Center on Corporate Responsibility (ICCR), in its 45th year, is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for change. Its 300 member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and academic institutions representing combined assets of over $100 billion with a record of corporate engagement that has demonstrated influence on corporate policies that further justice and sustainability. ICCR members engage hundreds of corporations annually in an effort to promote greater corporate accountability on questions such as climate change, corporate water stewardship, sustainable food production, human trafficking and slavery in global supply chains and increased access to both financial and health care services for communities in need.
The California State Teachers’ Retirement System, with a portfolio valued at $178.7 billion as of February 29, 2016, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s 896,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts. Follow us on Twitter @CalSTRS
Founded in 1995, RobecoSAM is an investment specialist focused exclusively on Sustainability Investing. It offers asset management, indices, engagement, voting, impact analysis and investment, sustainability assessments, and benchmarking services. Together with S&P Dow Jones Indices, RobecoSAM publishes the globally recognized Dow Jones Sustainability Indices (DJSI). RobecoSAM is a member of the global pure-play asset manager Robeco, which was established in 1929 and is the center of expertise for asset management within the ORIX Corporation. Approximately 130 professionals work for RobecoSAM, which is headquartered in Zurich.
NEI Investments is a mutual fund company that is committed to making excellent, independent portfolio managers accessible to Canadian retail investors. With approximately C$6.0 billion in assets under management (AUM), NEI Investments’ approach to investing incorporates the thesis that companies integrating best environmental, social and governance (ESG) practices into their strategy and operations will build long-term sustainable value for all stakeholders, and provide higher risk-adjusted returns to shareholders.
Ceres – Andrew Logan, 202-746-0661, firstname.lastname@example.org
ICCR – Christina Herman, 212-870-2316, email@example.com
Trillium – Jonas Kron, 503-894-7551, firstname.lastname@example.org
CalSTRS – Ricardo Duran, 916-414-1440, email@example.com
NEI Investments – Jamie Bonham, 604-742-8328, firstname.lastname@example.org