The Canadian oilsands have been targeted by one of the UK's largest socially responsible investors, which has called for a stop to future development.  At the same time, an international coalition of investors-including Canadian SRI investors and international mainstream investors-have called on the US Securities and Exchange Commission to rewrite proposed reporting rules on petroleum reserves to reflect the "potentially enormous" financial and ecological risks associated with oilsands development.

The actions represent an unprecedented challenge to the growth of the Alberta oilsands by the investment community.

On Sept. 11, a group of Canadian and international investors joined forces to urge the US Securities and Exchange Commission to request that oil and gas companies factor in the carbon impacts of future barrels when accounting for their reserves.

The SEC is currently considering new proposals for the way in which oil and gas companies report their reserves to try and create more internationally consistent standards of reporting.  In the letter to the SEC, the investors argue that climate change policies being developed to reduce carbon emissions could over time render certain assets uneconomic-particularly those which require high carbon emissions to extract.  They urge the SEC to impose new reporting rules on oil and gas companies that would require them to access the carbon impact of future barrels, not just the number of barrels a company may have.

The report was signed by, among other investors, F&C Asset Management in the UK, and Meritas Funds in Canada, both SIO members.

Meritas CEO Gary Hawton told Canwest News Service that "oilsands operations present considerably higher risk to companies and their investors.  We think investors should be made fully aware of those risks," which he said include financial, environmental, social and "reputational risks."

On Sept.16, 20 members of the UK Social Investment Forum, the sister organization to the SIO in the UK, attended a meeting sponsored by Co-operative Asset Management, which has called for a halt to new licensing of tar sands projects.  Co-operative Asset Management is one of the largest socially responsible investors in the UK, with assets of more than $5 billion.

Paul Monaghan, head of social goals and sustainability at Co-operative Asset Management, said the group was drawing increasing support and talks were planned with a wider group of investors.  He expressed concern that UK oil companies BP and Royal Dutch Shell had declined to attend and hoped they would be at future meetings.

A new report by Greenpeace UK, also released Sept. 16, warned of increasing financial risk for BP and Shell, which have invested heavily in the Alberta tar sands.

The report, co-authored by Greenpeace and PLATFORM and entitled BP and Shell, Rising Risks in Tar Sands Investment, states that shortfalls in the strategic reserves of BP and Shell are leading to a "distortion of management perspectives", resulting in underestimates of risk.

"We always knew that tar sands were a risk to climate, but now it's becoming clear that they're a risk to the bottom line as well, "said Mike Hudema, Greenpeace tar sands campaigner.  "Albertans should be aware of the monstrous economic risks that ther government is taking on their behalf."

The report examines a number of factors which threaten the long term profitability of the sector:

• Low carbon fuel standards under consideration by US presidential candidate Barack Obama and already implemented in California threaten to close sections of the American market to products derived from tar.
• Acute labour shortages and the rising cost of delivering gas to the tar sands threaten to stifle the planned expansion of the sector.
• An unrealistic reliance on the untested carbon capture and storage (CCS) technology risks leaving the companies with huge stranded assets in the future, as international climate change regulations are strengthened at Copenhagen next year.
• The extensive clean up operation and potential future litigation from local communities carry significant brand risk.

For a full copy of the report visit: http://www.greenpeace.org.uk/risingrisks

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