Divest from fossil fuels? Or work with oil and gas companies to help them transition to a low carbon footprint - a client's concern and our answer.

I think its fair to say that 2019 was a turning point for many people on the issue of climate change and carbon emissions from the fossil fuel industry. Whether it was Greta Thunberg's appearance on the world stage or the bitter reactions of Albertans in the form of Wexit threats, more and more Canadians are aware of the issues and its beginning to work its way into how they invest their savings and retirement funds.

Indeed, this week a very thoughtful @sarah1212 wrote us with the following "I have a question about the Founders Fund. All my investments are located there and I'd like to ask about the 10% investment on Oil & Gas. I don't suppose my small request will have much influence, but is it possible to no longer invest in fossil fuels? If that means a short term loss, I'm willing to take it rather than invest in what is slowly destroying our planet. Rest assured my next car will be electric. How about a replacement investment in renewable energies instead? Thank you so much for considering my request."

Thank you Sarah for your great question. We fully intend on keeping our clients informed on our journey towards what we are calling Sustainable Steadyhand. Its a new initiative that our team unanimously agreed should be a priority at our last strategy offsite in September 2019. The following captures some of the areas we are working on in this journey.

"Thank you for your note and thoughtful concern with respect to the investments we hold in the oil and gas industry.

Over the last two years my colleagues Tom and Salman have dedicated a great deal of time researching how we can more integrate environmental, social and governance issues into how we run our business and our funds.

For background, all our managers integrate environmental, social and governance (ESG) risks before buying a company. It's fair to say that the managers' focus was historically on the governance of a company, but environmental and social consideration are increasingly becoming a large part of their analysis. As managers that invest for the long-term, understanding these risks is essential.

At this point, we do not plan to divest from oil & gas. The decision was not without debate. We reached this conclusion, however, because we want to be part of the solution and not just criticize from the sidelines. Being an owner gives us a seat at the table, which allows us to engage with companies. We're encouraging our managers to use this position to raise ESG issues with companies they're already invested in or are considering. The approach has led us to companies that are thinking about this seriously. Many of our largest oil & gas holdings rank as ESG 'outperformers' by third party research firm Sustainalytics and none rank as underperformers.

In renewables, we're invested in Northland Power, Canada's largest independent producer of renewable energy. Our managers have looked at many others involved in the space, but do not believe there is an investment case in them yet. Many of the oil & gas companies we have invested in are also those that have made large investments in renewables to help us transition to a low carbon environment.

We are under no illusions that our approach on ESG is perfect. We have yet to find one that is. But like anything we do, we are committed to getting better and you can expect to hear more about this topic from us in the coming year.

Thanks again for reaching out. We value your input and feedback."

Personally, I've long been a believer in negawatts, or reducing my consumption of electricity and other energy inputs. This week I had the benefit of attending a talk by @peter-tertzakian where Peter discussed the three steps of transforming our energy industry from fossil fuel to low carbon. Peter's transformational model highlights disruption, denial and finally transition. Its a long and gut wrenching process. But Peter also said something that's important for us all to consider: "Fossil fuels don't emit carbon, people burning them do". Its a stark reminder that we need to balance the focus on the supply side of the climate change equation with the demand side. We can all be better consumers of energy with a little thoughtfulness and a conservationist mindset.