Shift Action for Pension Wealth and Planet Health is describing the Canada Pension Plan Investment Board’s acquisition of a significant stake in one of California’s largest oil producers as “alarming.”
“These claims are alarming as none of the technologies mentioned offer credible pathways for meaningfully reducing Aera’s carbon emissions quickly enough or aligning Aera with CPPIB’s net-zero commitment,” wrote the watchdog organization in a statement.
Last week, the CPPIB acquired a 49 per cent stake in Aera Energy, a company founded as a joint venture between Shell and ExxonMobil Corp. in 1997. It produces about a quarter of California’s petroleum.
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In a press release following the acquisition, the CPPIB and IKAV Energy Inc., which owns a majority stake in Aera, pledged to ensure the company invested in concentrated solar power and carbon capture technologies. It also announced plans to eliminate the company’s scope 1 and scope 2 carbon emissions within the next decade.
“Our investment in Aera Energy is consistent with a number of investments we’ve made which will help California transition to secure, green energy supplies, while at the same time will deliver long-term risk-adjusted returns for the CPP fund,” said Bruce Hogg, managing director and head of sustainable energies at the CPPIB, in the release. “CPP Investments believes that enabling emissions reduction and business transformation in the energy sector can drive strong returns for long-term investors as part of the whole economy transition and partnering with a like-minded investor like IKAV presents an excellent opportunity to put that decarbonization investment approach into action.”
According to Shift, the release is an example of greenwashing. “The CPPIB attempted to frame this purchase as a transition acquisition, making promises to invest in renewable energy to power the oil company’s production, stating vague intentions to capture some amount of carbon from Aera’s facilities and speculating about using unproven concentrated solar technology to extract oil.”
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The CPPIB made no commitments related to a reduction of the oil company’s scope 3 carbon footprint, said Shift, noting that, as an oil producer, the vast majority of Aera’s carbon footprint would be included in its scope 3 emissions, which cover greenhouse gases emitted by an organization’s supply chain rather than its own activities.
According to the CPPIB’s carbon reduction framework, it’s aiming to eliminate all scope 3 emissions from its portfolio by 2050. “There is no public reporting on a credible plan for how this decarbonization investment approach would be possible,” said Shift.
The watchdog amended its statement after officials from the CPPIB were quoted in two newspapers saying oil production at Aera’s facilities would be reduced over time. In its revised statement, Shift said it was relieved by the additional information.
“This is a significant detail as the only credible pathway for Aera to align with global climate safety and Canadian retirement security is to wind down production. Rather than reaching for greenwash talking points, the CPPIB should have led with this information in its press release on the deal.”