Story of the Week: March 2022

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March 26, 2022 - Why ESG funds 'shockingly' buy Russian oil instead of Canadian crude
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March 26, 2022 - Why ESG funds 'shockingly' buy Russian oil instead of Canadian crude

Why ESG funds 'shockingly' buy Russian oil instead of Canadian crude by Jeff Lagerquist Appeared in Yahoo Finance Canada on March 22, 2022 Gina's Thoughts This article references a recent study put out by CIBC Capital Markets which performed a global analysis of almost US$2 trillion in ESG fund AUM and found Russian energy holdings within the ESG (Environmental, Social, Governance) universe were held twice as much as Canadian energy. The authors of the study posit that "if ESG investors conclude that a state-controlled Russian company is more attractive from a corporate social responsibility perspective than Canada's largest energy producers, something is lost in translation." Canadian oil and gas companies have some of the highest environmental and governance standards in the world, yet are being passed over as investment opportunities. The "E" in ESG has taken a disproportionate role in investment decisions and it is time to rethink the balance of the three initials in ESG.
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March 19, 2022 - The drawbacks and dangers of oil and gas divestment
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March 19, 2022 - The drawbacks and dangers of oil and gas divestment

The drawbacks and dangers of oil and gas divestment by William McNally Appeared in The Financial Post on March 9, 2022 Gina's Thoughts InvestNow featured the longer version of this article in our first Story of the Week of 2022. A lot has changed in the world in two months, and as a result, the author has inserted some new thoughts about divestment. "As the west divests, however, Vladimir Putin and others have been more than happy to pick up the slack. Worldwide production has not fallen. Instead, western divestment has helped enrich and embolden non-western actors." InvestNow has always maintained that if the oil and gas that society wants and needs is not provided by Canadian companies, it will come from state-owned suppliers from such countries as Saudi Arabia, The Gulf States, Russia and Iran. This is playing out in real time. "Divestment won't stop fossil fuel production because it does nothing to reduce actual energy demand." Every leader, director, or member of corporations, university governing councils, public pension plans, or any other institution contemplating divestment - and indeed every Canadian - should realize that a vote for divestment is a vote against Canada and Canadians.
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March 12, 2022 - Putin's war on Ukraine exposes the folly of ESG
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March 12, 2022 - Putin's war on Ukraine exposes the folly of ESG

Putin's war on Ukraine exposes the folly of ESG by Oliver Shah Appeared in The Times on March 6, 2022 Gina's Thoughts "For some time, the monomaniacal focus of certain investors on compliance with environmental, social and governance (ESG) metrics has been proving counterproductive. In some cases it has even begun to undermine the tenets of democracy, as decisions that should be made by governments are instead taken by fund managers based on external pressure from campaigners." The author cites defence and energy as the two sectors most affected by ESG as both sectors have been blacklisted by ESG investors. With current threats to national security and energy security of many European countries, most notably Germany, the author calls for current assumptions about ESG to change. Deutsche Bank, for example, has been busy "ticking the boxes on climate and governance" and has "promised to stop lending to the coal industry by 2025". The author wonders if they "will reconsider now that Berlin, panicking over the fact 60 per cent of its gas comes from Russia, is thinking about extending the lifespans of its coal-fired and nuclear power plants?" "In the tradeoff between security and virtue, Angela Merkel's government chose the latter, with terrible consequences." Canada is following along the same path although further behind in the timeline. Will Canada soon face the consequences of abandoning its oil and gas sector in the name of ESG? The author suggests switching out "ESG for CDP - common sense, decency and pragmatism. In the world of CDP, there are no highly paid advisers lecturing from the pulpit of giant fund managers. There will just be investors who engage with boards thoughtfully."
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March 5, 2022 - What Canadian policymakers can learn from Europe's energy woes
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March 5, 2022 - What Canadian policymakers can learn from Europe's energy woes

What Canadian policymakers can learn from Europe's energy woes by Eric Nuttall Appeared in The Financial Post on March 1, 2022 Gina's Thoughts "It should be obvious: the world needs more, not less, of Canada’s abundant and ethically produced energy". So reads the by-line of Eric Nuttall's piece in The Financial Post. He poses two questions. "Is what we are witnessing in Europe a teachable moment for North American energy policy? Can we learn from the mistakes of others and improve North American energy reliability and affordability?" InvestNow posits the answer to these two questions is a resounding yes! Canada is following in Europe's footsteps, with projects being sidelined or regulated into oblivion and divestment and demonization of the industry, "all in the name of decarbonization and environmental protectionism". The author cites the UK as a chain of events example of what could go wrong. In the UK last winter, the wind stopped blowing by 90 per cent which nullified much of its offshore wind energy capacity. "Coal plants were fired up and liquefied natural gas demand surged resulting in all-time or near all-time price highs for both. Power prices surged. At least 19 energy suppliers went bankrupt. The rise in energy costs trickled through the economy and made the production of necessities such as fertilizer uneconomic, which impacted CO2 production and indirectly threatened beer and meat production." Energy fuels our world. With the world's third-largest oil reserves, Canada is blessed with an abundance of natural resources. Canada can and should be providing the oil and gas that fuels the world to the world.
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