Biden presidency accelerating shift toward sustainable investing

TC Energy Corp. is suspending work on the Keystone XL pipeline as a growing movement to divest from fossil fuels gains momentum.

Just hours after his inauguration, U.S. President Joe Biden revoked the pipeline’s presidential permit, issued by his predecessor former President Donald Trump. The energy company had recently announced plans to decarbonize the pipeline and achieve net zero emissions when it’s placed into service. However, sustainable investing experts remained skeptical the plan was enough to save its fortunes.

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Indeed, over the past few years, sentiment toward the fossil-fuel energy sector has shifted. In June, 15 Canadian universities said they would regularly begin measuring the “carbon intensity” of their portfolios and would reduce it over time. In November, eight Canadian institutional investors, including the Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec and Alberta Investment Management Corp., called on corporations to standardize their environmental, social and corporate governance disclosures. Former Bank of Canada and Bank of England governor Mark Carney now works on ESG issues for Brookfield Asset Management Inc.

Leanne Keddie, an assistant professor at Carleton University who studies sustainability accounting, said these types of institutional investors have plenty of sway on companies’ actions. Whether TC Energy’s plan will impress ESG-focused banks and investors is the “magic question,” she added. “I would think it would be difficult for them — not impossible, but difficult — to try to convince investors that this is a good financial risk.”

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“You’re seeing banks, finance institutions shifting away from these types of investments, too. So, I would say [Biden cancelling Keystone] . . . it’s just another endorsement for shifting away from these types of energy sources.”

While TC Energy’s carbon-neutral pledge for the Keystone XL project might reassure investors, it also might be coming too late, said Ryan Riordan, director of research at the Institute for Sustainable Finance at Queen’s Smith School of Business. The average investor has already become much more interested in ESG, he noted. “There are investors that were perhaps, up until now, on the fence, who now throw their hands up and say . . . ‘It’s not going back to the old Exxon, Shell, BP world. It’s a new world, and so I’m going to get out of these types of investments.’ ”

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