Two of Canada’s largest life and health insurance companies have made net-zero promises, but continue to invest billions of dollars in fossil fuels.
As of June, Sun Life and Manulife’s fossil fuel investments stand at $15.9 billion and $9.9 billion, respectively, according to new data from the upcoming global coal, oil and gas output lists, obtained by Canadian National Observer, reveals.
Launched in 2017, the Global coal output list is a comprehensive database managed by the German NGO Urgewald. It is used by financial institutions, civil society organizations, regulators and others to track thermal coal investments. the Global oil and gas output list it is a sister database launched last year.
Both sunshine life Y manulife have promised to transition to net zero by 2050. But the companies, two of the country’s largest investors, which exceed the size of Canada’s largest banks with a combined C$3 trillion in assets under management, invested more in coal this year than last. The data shows Sun Life has $13.5 billion worth of investments in coal companies as of June, up 14% from the $11.8 billion recorded last year. Similarly, Manulife has $5.5 billion worth of investments, just under six percent of the $5.2 billion it had in 2021. Last year, Sun Life and Manulife were the No. 1 and No. 1 coal investors. 3 from Canada. RBC ranked second.
what people are reading
Matt Price, director of corporate engagement at shareholder advocacy group Investors for Paris Compliance, said Canadian National Observer the “headline numbers are shocking” and show how exposed both companies are to coal, which is being phased out in many regions of the world in favor of lower-emitting energy sources.
For example, Sun Life and Manulife have invested $2.5 billion and $676 million, respectively, in North Carolina-based Duke Energy, which reports using 27 percent coal of its power generation.
When it comes to oil and gas, Manulife invests more than Sun Life. Manulife has investments of just under $4.4 billion in oil and gas companies, while Sun Life has just over $2.4 billion. Both companies have invested hundreds of millions in oil and gas powerhouses like TC Energy, which is building the Coastal GasLink pipeline, ExxonMobil, Royal Dutch Shell, Woodside Petroleum and others.
Sun Life and Manulife have made net-zero promises but continue to invest billions of dollars in fossil fuels, new data obtained by Canada’s National Observer reveals. #DisasterFinancing
‘Clear tension’ between companies’ mission and financial goals
Knowing which companies Sun Life and Manulife invest in can be used to estimate how much planet-warming greenhouse gas emissions the insurance giants are responsible for through their financing. A report published in September by Amsterdam-based research firm Profundo, commissioned by Investors for Paris Compliance, did just that.
Based on corporate documents through June of this year, it found that Sun Life is responsible for at least 121 million tons of greenhouse gas emissions, while Manulife financed at least 77 million tons, the same volume of emissions as 42 .5 million gasoline cars driven per year. For both companies, fossil fuels are the sector responsible for most of the emissions.
The report also estimates the emissions of both companies in 2021. It calculated that Sun Life was responsible for 222 million tons of greenhouse gases, while Manulife was responsible for 277 million tons. To put that in perspective, Ontario and Quebec combined emissions in 2020, the most recent year available, it was 225.8 million tons.
If fossil fuels continue to burn, the impacts on the health of Canadians will accumulate. The Canadian Institute for Climate Choice estimates the financial cost of heat and ozone-related deaths to be between 5.2 billion Canadian dollars and 8.5 billion Canadian dollars for heat-related deaths, and between 87 billion Canadian dollars and 246 billion Canadian dollars. for ozone-related deaths, depending on the amount of pollution. is released into the atmosphere in the next few years.
“There is a clear tension between the core mission of life and health insurance companies and their investments in fossil fuels,” the report reads. “Unless this tension is addressed in favor of rapid decarbonization, its core business will face increasing challenges as the climate crisis increases risk and causes widespread adverse health outcomes.”
Should investors persuade polluters to improve or eliminate them altogether?
Price said that based on conversations he has had with both insurance companies, he believes they are sincere in wanting to improve their climate performance. But the data shows they have a long way to go. They are big ships that need to turn quickly, he said.
A review of companies’ fossil fuel policies shows where there is room for improvement. The report notes that Sun Life does not report all emissions for which it is responsible and does not have a general policy to phase out fossil fuels. While Sun Life says it supports net-zero public policies, the company does not take a public position on other key climate issues. Manulife reports some but not all of its emissions, has “weak” carbon exclusion policies, and has no disclosed policy on how its lobbying aligns with its goal of net-zero emissions, according to the report.
Price wants to see insurance companies set clear targets for reducing their financed emissions and show how they plan to meet them. The way a financial institution plans to reduce its financed emissions underscores a burning debate for shareholders: is it better to engage with the board of directors of a polluting company to encourage better climate performance, or to deprive that company of more financing?
“Our purpose of helping our clients achieve lifetime financial security and live healthier lives cannot be achieved without serious action to address climate change and support a transition to a lower carbon future,” said CEO of Sun Life, Kevin Strain, in a statement last year. “That is why we are committed to integrating climate strategies into our investment businesses and working collaboratively with our clients, stakeholders and the industry at large, towards this common goal.”
Similarly, when Manulife announced its net-zero emissions commitment in May last year, Global Chief Sustainability Officer Sarah Chapman called decarbonizing Manulife’s portfolio “a top priority in achieving our 2050 ambition.” .
Like the banks [insurance companies] will come back and say, well, our preference is engagement, and our response to that is engagement without escalation is pointless,” Price said. “You have to have some responsibility in that process, so you have to set some metrics and then tell us how you’re meeting those metrics, and if your companies aren’t meeting those metrics, then you’re going to have to get out. from them.
“That’s what climbing means to us; you’re not going to have these endless engagement processes that go nowhere.”
Examining how Sun Life and Manulife voted on shareholder resolutions at the annual general meetings of influential companies this year suggests that they are not using their influence to encourage emission reductions.
Sun Life voted against resolutions by BMO, RBC, TD, Imperial Oil and other companies in which it is a shareholder that would require banks to take advisory votes on climate plans and for Imperial Oil to stop exploring and developing new oil fields and gas. Manulife bid to delay emissions reductions by voting against policies that would require banks like BMO and TD to stop financing new oil and gas reserves, and by voting against resolutions that would require Enbridge to align its net-zero commitment with science. . Manulife also voted against a resolution that would prevent RBC from funding fossil fuel projects that face significant opposition from Indigenous Peoples.
The report recommends that Sun Life and Manulife disclose all financed emissions, adopt short- and medium-term goals in line with climate science, and implement a set of decarbonization strategies to meet those goals, including policies on phasing out fossil fuels. and how insurance giants work with companies they invest in to reduce emissions.
In a statement, Chapman said Canadian National Observer the company is “in the final stages of setting short-term science-based funded emissions targets” and expects to disclose them in its 2022 environmental, social and governance (ESG) report.
“We are exploring all mechanisms to achieve decarbonization to meet our emission reduction targets,” he said. “Optimizing our returns as society transitions to a net-zero economy means continuing to invest in and grow our CAD42 billion green asset portfolio, engaging in climate-related public policy development, and maintaining strong standards.” ESG for our own business and commitments. ”
In a statement, Sun Life spokeswoman Kim Race said the company believes addressing climate change is “essential” and will announce interim emissions reduction targets later this year.
“We meet with more than 200 bond issuers a year and participate in initiatives like Climate Action 100+ and Climate Engagement Canada,” he said. “Through these efforts, we work with other investors to influence large emitting companies that account for a large portion of our financed emissions to understand their sustainability plans, strategically reduce carbon emissions and encourage their transition to new sources or models of energy”.
Race added that Sun Life has engaged with Investors for Paris Compliance and “mostly agrees with their assessment.”
“We believe the steps we are taking will enable us to achieve our long-term goals and we are committed to continued engagement with all of our stakeholders and our industry,” he said.