This article was published by The Energy Mix on Feb. 1, 2024.
By Energy Mix staff
One of Canada’s leading private charitable foundations has cleansed 99 per cent of its investment portfolio of oil, gas, and coal assets, less than two years after pledging to do so.
In 2022, the McConnell Foundation “committed to divesting our portfolio of companies that derive at least 10 per cent of their revenues from fossil fuels by the end of 2023,” McConnell reports, in an update issued last week. “At the time of the divestment commitment, 3.8 per cent of our endowment was invested in these types of fossil fuel companies.”
That job is mostly done, except for three private equity funds that own “misaligned fossil fuel assets” with which McConnell continues to “actively engage”, the release says. The foundation now intends to deal with its remaining fossil assets by the end of this year “in a way that balances the cost and practicalities of divestment with the overall impact on emissions.”
• McConnell will consider selling off two of the remaining assets if they don’t make clear progress on their own fossil investments by mid-year.
• The third misaligned holding matures this year, “and no new investments in fossil fuel assets will be made.”
McConnell cites a couple of lessons learned from its decision to apply a negative screen to its investments: that it takes a lot of effort and new skills to assess data on specific fossil fuel assets, and that a commitment to divestment means taking the time to develop a “bespoke” strategy for each investment manager a foundation deals with.
Ultimately, “our first objective is to reduce real-world emissions and not simply to decarbonize our portfolio,” McConnell writes. So “we will only consider selling through secondary markets when reducing real-world emissions through engagement is not possible.”