November 22, 2021

Sustainable Finance Research Project

Junan (Jacob) Rao

The Environmental, Social, and Governance (ESG) retail fund segment has been gaining tremendous interest from sustainable and responsible investors over the last few years. In the investment industry, a variety of ESG funds are created to meet the increasing demand from investors. Divesting from the fossil fuels industry is attributed to addressing the climate crisis, and that continues to put enormous pressure on energy companies within the context of global energy transition. The Alberta energy sector currently faces many challenges in the capital markets and seeks its place in the world of transitioning into net-zero economy.

With a focus on capital markets and investors, Energy Futures Lab (EFL) initiated the Sustainable Finance Research Project, and it is a policy collaborative work in conjunction with the University of Calgary and InnoTechPioneers in the service of the EFL to examine the effect of reallocations of capital on the Alberta energy sector.

The study is conducted to assess similar phenomenon based on empirical analyses in the Canadian investment industry over the last five years. The Top 18 Alberta energy companies ranked by market capitalizations are identified along with the Top 10 Asset Mangers (AMs) who own and invest in the companies ranked by total shares outstanding. The Top 10 largest Assets Under Management (AUM) funds in each Canadian equity/focused ESG, non-ESG, and Energy Sector retail fund segments are studied to answer two questions – whether the ESG funds segment is the fastest growing retail fund in the Canadian market, and, whether the ESG funds exclude Alberta energy companies, followed by systematic discussions.