Financial actors with significant stakes in Canadasa国际传媒檚 fossil fuel industry have been unlikely to use their influence to push for transitioning to a lower-carbon economy, according to a new study.
The recently published work, authored by former and current University of Victoria researchers, states financial markets will play a key role in enabling or constraining the low-carbon transition thatsa国际传媒檚 needed in order to stave off the worst impacts of climate change.
The researchers looked at financial backers of the sa国际传媒渂ig fivesa国际传媒� fossil fuel companies that together account for 80 per cent of Canadasa国际传媒檚 bitumen operations.
They concluded that just 14 shareholders hold significant leverage on Canadasa国际传媒檚 fossil fuel industry, and in the last decade that equity ownership has been increasingly consolidated by foreign entities. Seventy per cent of those influential shareholders are based outside of Canada.
sa国际传媒淲hat this means is Canada in some ways has lost that domestic oversight,sa国际传媒� said Truzaar Dordi, the studysa国际传媒檚 lead author.
The largely foreign investors also may be less engaged in achieving the countrysa国际传媒檚 climate commitments, the study said. That could have global implications as Canadasa国际传媒檚 fossil fuel operations are expected to emit 36 billion tonnes of emissions under current policies sa国际传媒� an amount that would eat up 16 per cent of the worldsa国际传媒檚 remaining carbon budget by 2050.
sa国际传媒淚f a key stakeholder puts up barriers that certainly plays a significant challenge for, nationally as well as globally, us meeting our climate targets,sa国际传媒� Dordi said. sa国际传媒淭hey can be a voice for change and they should be a voice for change.sa国际传媒�
Capital markets can enable unsustainable fossil fuel production and consumption at levels that will contribute to climate instability, the study said. Canada is especially vulnerable as the authors point to how the costs associated with oil and gas extraction are much higher compared to operations in other parts of the world.
The study found the five firms are highly sensitive to the influence of their external financiers as they all have debt-to-capital ratios of around 60 per cent, which is about twice as much as the global average.
The authors argue shareholders are unlikely to advance the low-carbon transition as they have to put a lot of money into the largely fixed assets making up the Canadian oil and gas sector, so theysa国际传媒檒l want to maximize their returns.
sa国际传媒淧art of the problem with that is investors donsa国际传媒檛 really want to see investments stranded, they donsa国际传媒檛 want to see stranded assets,sa国际传媒� Dordi said.
But that also opens shareholders to risk if low-carbon policies are accelerated in response to the worsening impacts of climate change being seen. The study found interventions that direct capital in a more sustainable direction could restrict the activities contributing to the climate crisis, while also mitigating financial risks.
The authors call on Canada to strengthen its climate change fight and send clear signals to the market by using supply-side policies to align the financial system with the low-carbon transition. The study said that could include limiting fossil fuel exploration or extraction sa国际传媒� through production taxes or revoking subsidies sa国际传媒� to reduce the risk of carbon lock-in and stranded assets.
READ:
READ:
