Canadian pension fund pours millions into Alberta tar sands firm

UN PRI signatory CPPIB backs Laricina

The Canada Pension Plan Investment Board has made a C$250m (€188m) investment in privately held Alberta tar sands developer Laricina Energy.
The purchase gives the C$127.6bn CPPIB a 17% stake in Calgary-based Laricina and the right to nominate a board director at the company.
“Laricina has an experienced and proven management team and has strong growth potential from its world class resource base,” said André Bourbonnais, CPPIB’s senior vice president of private investments.
“We are pleased to be making an investment that we believe will deliver attractive returns over the long term.” Toronto-based CPPIB was advised by Macquarie Capital Markets.
Laricina employs the ‘in situ’ method of oil extraction, where steam is injected into frozen sand. This is said to use less water than other methods but analysts at the Pembina Institute say the technique emits more greenhouse gases and sulphur dioxide than surface mining.The purchase follows CPPIB’s decision not to back shareholder resolutions seeking environmental reports on the controversial tar sands projects at oil majors BP and Shell earlier this year. It will come as a snub to campaigners who have urged large Canadian public pension plans to be more visible in addressing the whole tar sands issue.
CPPIB is a member of the UN Principles for Responsible Investment and adopted its policy on responsible investing in 2005 and considers ESG factors from a risk/return point of view. It encourages companies to adopt policies and practices that enhance long-term financial performance.
Laricina argues the Alberta tar sands industry is making “dramatic progress” in environmental management and that the developments are vital to the Canadian economy, jobs and energy security.
CPPIB spokesperson Linda Sims was quoted as saying the fund believes Laricina is “proactive” in managing environmental issues.