Statement on political interference from the Alberta government in AIMCo’s governance
Toronto, ON | Traditional territories of the Wendat, Anishnaabeg, Haudenosaunee, Chippewa and Mississaugas of the Credit First Nation
The challenge of managing investments responsibly in the midst of a worsening global climate crisis and an accelerating energy transition is hard enough for any pension fund. But blatant, inappropriate political interference in the governance of the Alberta Investment Management Corporation (AIMCo), Alberta’s “independent” public pension manager, could make prudently navigating these escalating climate risks impossible.
The summary dismissal of AIMCo CEO Evan Siddall, senior executives and the entire board of directors last week by Premier Danielle Smith crossed a line for the Canadian pension model, which prides itself on political independence. Canadian finance and pension experts have panned the move, with Sebastien Betermier, Duane Bratt, Andrew Willis, Jim Leech, Ed Waitzer and Keith Ambachtsheer raising concerns about politicization, as have key stakeholders of AIMCo’s client pension funds, such as the presidents of CUPE Alberta, the Alberta Teachers’ Association and the Alberta Federation of Labour. There is widespread speculation that the Alberta government’s primary motivation is to secure more political control over AIMCo-managed funds and direct more capital into high risk oil and gas.
The openly partisan appointment of a retired politician as the new board chair, along with the director appointment of a deputy minister who is directly accountable to the premier, runs counter to AIMCo’s mandate and the best interests of its client pension plans and their beneficiaries. Such interference erodes any semblance of independence for AIMCo’s governance.
AIMCo was already Canada’s worst major pension fund in terms of managing climate risk, ranking at the bottom of Shift’s annual Canadian Pension Climate Report Card two years in a row. As peer asset owners and managers in Canada and around the world race to adopt science-based investment goals, climate transition plans and a variety of tools for managing climate risks – a logical response to obvious financial and systemic risks – AIMCo remains at the starting line.
Even before the Alberta government’s interference, there was evidence that AIMCo may have been making questionable decisions on investments and climate strategy, driven by the political influence of the fossil fuel industry. A series of high-risk investments in low-quality oil and gas juniors and gas utility interests in Alberta in recent years has led to documented losses.
Alberta’s political culture, in which prudent climate action is attacked as a perceived assault on the province’s oil and gas industry, has long stifled efforts to manage climate risk. Insiders at AIMCo have noted attempts and failures within the fund to approve any sort of climate-related investment strategy in recent years.
AIMCo’s new chair and directors themselves have direct entanglements with the fossil fuel industry. AIMCo director Bob Dhillon sits on the board of Strathcona Resources, which calls itself “one of North America’s fastest growing oil and gas producers.” New AIMCo chair Stephen Harper is a Working Equity Partner with Azimuth Capital, a North American private equity firm with $5.8 billion in energy investments, largely in the oil and gas sector. Alarmingly, Alberta’s finance minister has indicated that Harper’s appointment as AIMCo chair didn’t require clearance from the province’s ethics commissioner, despite reports that the commissioner’s office had already flagged potential conflicts of interest. Another director who was re-appointed to the AIMCo board, Jason Montemurro, was also a partner at Azimuth Capital Management from 2007 to 2019, and made political contributions.
Alberta’s economy is deeply vulnerable to overexposure to the oil and gas industry. The industry’s volatile boom and bust cycles alone were reason enough to establish the Alberta Heritage Savings Trust Fund, which was intended to smooth these cycles through investment in long-term economic diversification. But in 2024, a global energy transition is well underway in response to the climate crisis, sparking an expected long-term structural decline for oil and gas.
It is critical for Alberta to have an independent public investment manager able to prudently manage climate-related risks and invest for the future with the hard-earned savings of Albertans. To do this, AIMCo must have governance that is fully independent from the self-interested whims of industry and government, including a board that is directly accountable to the investment manager’s pension clients, sponsors, beneficiaries and stakeholders, and the freedom to adopt a credible, science-based climate transition strategy for its investments without further political interference.
The climate crisis is not a political issue. Responsible climate governance from financial institutions is prudent, logical and necessary to meet fiduciary responsibilities in the long-term. Political interference in AIMCo is likely to further limit the investment manager’s ability to align its investment strategy with climate safety and long-term growth. Political interference is not in the best long-term interests of AIMCo’s client funds or their beneficiaries.
More information:
Shift’s 2023 Canadian Pension Climate Report Card - AIMCo analysis
Shift’s 2022 Canadian Pension Climate Report Card - AIMCo analysis