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Max Fawcett is a freelance writer and a former editor of Alberta Oil magazine and Vancouver magazine.

When newly elected Alberta Premier Jason Kenney met with The Globe and Mail’s editorial board in May 2019, he described investor concerns about climate risk as “a flavour of the month.” As it turns out, though, that flavour is now a permanent fixture on the menu.

Witness the New York Times op-ed published this week from Allison Lee, a Donald Trump appointee to the U.S. Securities and Exchange Committee, who wrote that dismissing investors' concerns about environmental, social and governance (ESG) as a mere moral whim is a “prominent outdated notion.”

Unfortunately, that thinking seems to remain pervasive within Alberta’s oil and gas industry. At a recent conference, Cenovus CEO Alex Pourbaix essentially blamed investors for not caring enough about Alberta’s Indigenous or environmental policies, and for not knowing that his company’s emissions were lower than 50 per cent of the rest of the oil produced globally. “No one knows that,” he said, according to Globe and Mail reporter Emma Graney. “It’s way, way easier for people to virtue signal [by being anti-oil sands] than taking the time to understand the real issues.”

But this criticism does nothing to actually help the industry. As much as they might like to complain about virtue signalling and hypocrisy on the part of investors, too often they trade in both – and in so doing, miss the direction that the prevailing winds are blowing.

After all, many of those leaders and their industry associations have actively campaigned against the carbon tax, environmental assessments and other so-called “red tape” – only to conveniently champion those same policies to investors when it suits them. Yes, many Canadian oil and gas companies have made progress in recent years on reducing their per-barrel GHG emissions, and Canada remains one of the few oil-producing regions in the world with a carbon tax. But that doesn’t change the fact that, according to the Alberta government’s own Canadian Energy Centre, those per-barrel emissions are still, at best, equivalent to the average refined barrel in the United States.

Rather than complaining about the fact that investors are more concerned about greenhouse-gas emissions than other environmental, social, or governance risks, Alberta’s oil and gas companies would be better off focusing their efforts on actually addressing those concerns. And now, more than ever, that means having a clear plan for the future.

The hard fact is that large Canadian institutions are demanding more on climate change from companies in their portfolios. “We are really looking at what the company is going to do about this issue,” Bertrand Millot, the vice-president of risk management at the Caisse de dépôt et placement du Québec, told The Globe and Mail in a recent story. “What it’s done in the past is important, but for climate change, it’s really the future we’re looking at.” All six major banks, three major life insurers and every major pension plan have endorsed the Task Force on Climate-related Financial Disclosures, an effort to create a uniform and universal standard for climate-risk reporting. That’s a standard that many oil and gas companies will have to work harder to meet. As a recent report from the Canada West Foundation argued, “part of the problem is that the sector lacks comprehensive, objective and credible data to be able to back up its performance claims.”

The good news is that the industry can still change tack here. As the Canada West Foundation points out, other sectors of the resource economy, from mining to forestry, have faced similar reputational challenges and found ways to move past them. But to do that, its report’s authors argue, the oil and gas industry will have to rise to the challenge presented by the ESG movement, and go above and beyond the level of reporting on the climate risks associated with their businesses that they’ve done to date. That means they’ll have to stop leaning on Canada’s reputation rather than their own, and stop associating with organizations that seem more interested in filibustering on climate risks than reducing them.

Most importantly, they’ll have to engage with what Mr. Pourbaix described as “the real issues” – and accept that they might not be the ones they would prefer to talk about. Yes, Canadian society has a whole host of features that makes it objectively better than places such as Russia and Saudi Arabia. But that’s not where the conversation is going right now, and it’s not what institutional investors care about. What matters to them is minimizing the financial risks associated with climate change, and at the end of the day that comes down to one thing: reducing greenhouse-gas emissions. No amount of virtue signalling, from anyone, is going to change that.

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