Alberta Premier Jason Kenney says his government’s move to launch a co-ordinated, cross-department secretariat to promote the environmental, social and governance measures increasingly emphasized by global investors, will help attract much-needed dollars to the province.
The creation of a new ESG secretariat, included in Thursday’s budget, is in part an attempt to stem the tide of divestment from the oil sands and the Canadian energy sector. But it will also promote the ESG strides being made in other industries, by co-ordinating policy action and advocacy efforts at the very heart of government.
The Alberta government has promoted industry in different ways and via different departments “for 15 or 20 years,” Mr. Kenney told The Globe and Mail, “but we are upping our game.”
“We really think we don’t get a fair shake when it comes to many – especially European – investors, who hear only the negative side of the oil sands,” he said.
“Part of our message is: To focus only on emissions in the broader ESG spectrum is not the right path.”
It’s a message Mr. Kenney took with him to London in late 2019, when he had meetings with various banks and investment houses in an effort to convince them that oil sands producers were reducing emissions intensity and making strides on other environmental issues.
While that same year he also called investor concerns about climate risks in the oil sector the “flavour of the month,” he told The Globe those London meetings proved successful in changing some investment policies to focus on emissions intensity, and place more emphasis on oil companies’ social and governance successes.
Alberta Energy Minister Sonya Savage worked in the oil sector for 15 years before she was elected in 2019 and witnessed firsthand a growing emphasis on ESG and sustainability issues.
Now it has become a “fundamental and central thing for the entire industry,” she told The Globe.
That’s why her government is ramping up its focus on ESGs – a move welcomed by the Canadian Association of Petroleum Producers (CAPP).
Ben Brunnen, CAPP’s vice-president of oil sands, said the new secretariat could potentially fill an information void by consistently defining ESG metrics and tracking how the industry is meeting those goals.
“If we can get some objective, consistent, complete and comparable data on ESG performance, it can then start to set the right tone and the right basis for either identifying areas to improve performance, or demonstrating the performance of our industry to international markets in order to attract capital,” he said.
Alberta enlisted the help of the Eurasia Group, a New York-based political risk consultancy outfit, for advice on promoting investments in the energy sector and navigating investors’ ESG frameworks.
Ms. Savage said the $125,000 contract signed with the company in early 2020 proved invaluable when the oil market collapsed in the face of a pandemic-driven fall in demand for crude and a Saudi-Russian price war that pummelled oil prices.
In particular, Eurasia Group’s global geopolitics and energy sector analyses helped as Alberta found itself “staring down negative price oil and not sure exactly where it was heading,” she said.
It also helped the province get a handle on how major institutional investors factor ESG measures into their decisions.
In a report earlier this month, Eurasia said ESG considerations in financial sector regulation present “one of the most substantive opportunities for President Joe Biden’s administration to advance climate policy.”
“The administration’s agenda will include efforts to further standardize ESG-related reporting, increase the scope and frequency of mandatory ESG-related disclosures, and examine more rigorously the contribution of climate change to systemic financial risk,” it wrote.
Understanding and promoting strides made on various ESG issues are essential if Alberta’s various industries are to remain competitive, Ms. Savage said.
The exact details of the role of Alberta’s new secretariat are still being hashed out. However, Mr. Kenney said it will play a convening role for executive council, which falls under his direct supervision.
He said Invest Alberta, a Crown corporation, will lead capital market advocacy efforts about ESG performance, while the Canadian Energy Centre – better known as the energy war room – will continue to communicate Alberta’s environmental performance to a more general public audience.
Ms. Savage said the secretariat should be up and running in a couple of months.
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