Vigeo Eiris publishes a new Opinion Column: “Oil sands: what does the future hold?”
The oil sands industry receives much criticism worldwide because of its heavy social and environmental impacts, which can in turn generate complex legal, regulatory and social risks to shareholder value.
– 23 out of 161 oil & gas companies included in Vigeo Eiris’ research universe were identified as having involvement in oil sands operations, the majority of which are North American.
– Companies involved in oil sands production display weak to limited commitments to environmental issues, with the majority demonstrating increased GHG emissions.
– Oil sands represent Canada’s fastest growing source of greenhouse gases, with production accounting for 14% of Canada’s total GHG emissions in 2014. Canada’s oil sand reserves are alleged to be in the process of becoming stranded assets (i.e. assets that have become obsolete or non-performing ahead of their useful life, and must be recorded on a company’s balance sheet as a loss of profit), with up to $220 bn worth of Canada’s oil sands reserves at risk of becoming unrecoverable.
– As the released emissions contribute to global climate change incrementally, further expansion of oil sands appears to jeopardise emission reduction targets set by the 2016 Paris Climate Agreement to limit global warming to below 2 degrees Celsius.
– Banks are increasingly becoming the focus of protests and campaigns for their role in financing fossil fuel projects: 28 banks were identified as financing oil sands between 2014 and 2016. Whilst most of the financial institutions under review are not responsive on this issue, some banks (including Credit Agricole, Société Générale, Groupe BPCE/Natixis) have already taken important steps towards tackling climate change by announcing their commitment to stop funding oil sands projects at the One Planet Summit held in Paris in December 2017.
The key findings from this Sustainability Focus are based on Vigeo Eiris’ rating of 161 companies from the Oil and Gas sector worldwide.
Vigeo Eiris is an independent international provider of environmental, social and governance (ESG) research and services for investors and public & private organisations, and covers a research universe of 4000 listed companies worldwide.
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Environment, ESG, Methodology