Shareholder engagement versus divestment
Canadian fund providers, such as NEI, have been engaging with oil and gas companies for over 15 years, yet those companies have yet to develop transition plans for a renewable energy future, as shown in this report by Environmental Defence. We are at a critical point in the climate emergency and incrementalism is no longer acceptable. If a fossil fuel company decides to build a renewable energy project, they can still use a green bond from the funds on this list if the money is segmented. Additionally, research has shown that divestment harms the fossil fuel industry's social capital, as shown here.
By factoring the risk of each asset, funds using environmental, social and governance criteria typically show higher long-term returns. Analysis shows that funds without fossil-fuel companies perform better than their conventional counterparts. Furthermore, to stop warming beyond 1.5°C, oil and gas companies will be left with stranded assets that haven't been fully factored into their stock prices. Investing in fossil fuel companies is betting against a livable future.