Western Standard - July 29, 2022


Tammy Nemeth on international efforts to stunt Canadian energy development

Mentioned
Bakken Brian Moynihan Nemeth Corey Brad
Myke Thomas on real estate Will the bubble pop？ DOCUMENTARY： Abandoned But Not Forgotten By Canada’s Generals

Episode Stats


Length

12 minutes

Words per minute

166.46

Word count

2,056

Sentence count

128

Harmful content

Toxicity

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode of the podcast, we are joined by environmental economist and author of the book "Sustainability on Steroids: The New Accounting Standards for Sustainability in the 21st Century" to talk all things sustainability and climate change. In this episode, we discuss the new Global Baseline Standard for Accounting for Carbon Emissions (GAS) adopted by the International Financial Reporting Standards Board (IFRS) and what it means for companies across the value chain.

Transcript

Transcript generated with Whisper (turbo).
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 You know, there's just so much going on. I mean, we've got a world in an energy crisis. We've got
00:00:04.460 a country that's sitting on some of the best energy resources on the planet, yet we still
00:00:09.060 seem to be determined to shut ourselves in. Absolutely. And there's this new global baseline
00:00:14.740 standard for sustainability and climate-related financial disclosures, which is basically ESG
00:00:20.860 on steroids. And it's been drafted by this organization called the International Financial
00:00:25.900 Reporting Standards Foundation. Now, Canada is one of the 140 jurisdictions that follows
00:00:31.960 the IFRS standards, and they're meant to provide some level of standardization of accounting
00:00:37.720 standards in the world. Now, after COP26, a new International Sustainability Standards Board
00:00:44.320 was created out of the IFRS, and its goal is to create a global baseline for accounting
00:00:52.980 for carbon emissions, anything related to sustainability, climate, and they have three
00:00:58.180 building blocks, sustainability, climate, and then industry-specific standards. Canada has
00:01:03.880 agreed to support this initiative. We lobbied for, and we got one of the ISSB offices in Montreal.
00:01:11.040 It was inaugurated at the end of June. Then, at the same time, we created the Canadian Sustainability
00:01:18.000 Standards Board, and its job, they said, is to work in lockstep with the ISSB to implement
00:01:25.060 this new baseline in Canada. So, right now, they've issued a proposed draft standard. It's
00:01:32.920 open for comment until Friday, so time is quite short to put in your opinion about what this
00:01:39.140 thing means. And although hydrocarbons are the main target right now, agriculture is affected,
00:01:47.100 pretty much every industry that operates in Canada. There are 68 industries that fall under
00:01:52.700 this standard for accounting for a person's climate footprint.
00:01:58.000 Well, yeah, and they use the word sustainability. That's kind of been a loaded word for quite
00:02:02.980 a long time because you can just read so many things into it to push a further agenda. And
00:02:09.320 it's pretty, you know, subjective, or I mean, objective, what somebody would define as sustainable.
00:02:15.620 I mean, they can point to anything and say it's unsustainable and we need to reduce it,
00:02:18.780 but they don't go any farther with that. And right now, as you said, it's hydrocarbons. And yeah,
00:02:22.700 there's quite a move on our farms. Like, it just seems like madness when we're all suffering from cost
00:02:26.840 the living increases. Exactly. And the cost to implement this for small businesses or even
00:02:32.820 large businesses, when the Security Exchanges Commission was doing something similar in the
00:02:37.720 United States, their comment process ended in June. They estimated to comply with these new standards
00:02:44.640 would cost a company up on average $644,000 a year. Now, how is a small mom and pop operation
00:02:53.340 or a small oil producer or a farmer or a rancher supposed to pay $644,000 to comply with all these
00:03:01.940 new standards? Like, one of the things that they include is the monitoring of scope three emissions.
00:03:08.420 Now, a lot of this sounds arcane, right? You've got scope one, scope two, scope three. What does all
00:03:14.060 this stuff mean? Well, scope three is everything. So whatever a company produces, they're supposed to
00:03:19.620 follow it down the value chain. Who's using it? How much are they using it? How are they disposing of
00:03:25.160 it? How did the product get to somebody? What happens with it down the road? They're supposed to
00:03:30.800 account all of that as part of their emissions profile. So the more you produce stuff, the higher
00:03:37.620 emissions profile you're going to have, which would seem rather weird that you're trying to
00:03:43.840 basically cut down businesses that produce things. So then we'll all become a service economy, I guess.
00:03:55.220 Yeah, I mean, it just seems so inane and unreasonable. I mean, the term we hear a lot, too, is that ESG. So
00:04:02.420 environment, social and governance. But I mean, again, and that's loaded as well. I mean, now you got to start
00:04:10.160 talking about social impacts. And well, that's all over the map. But I mean, part of the problem I see
00:04:16.540 is companies won't push back on this. Like they're beaten into silence. They're afraid to speak up and
00:04:22.800 they keep complying and complying. And to be honest, I think they're kind of somewhat the authors of their
00:04:28.260 own destruction until they stand up for themselves here. Absolutely. And you know, there's no way a company
00:04:33.520 can comply out of this. You just can't. It'll permeate everything. And like with the oil and gas
00:04:41.060 companies, if you're an exploration and production company, they want you to account for the embedded
00:04:47.700 emissions in your reserves, which will count against a company, because the standard is meant to be used
00:04:54.740 by banks, by insurers and investors. So if they're trying to limit the amount of emissions in their overall
00:05:01.400 portfolio, what are the odds they're going to support a company that has large reserves? Because
00:05:06.560 those reserves will be counted against the company. So in a time of energy insecurity, as you mentioned,
00:05:13.440 why are we adopting a policy or a standard that will basically compromise our oil and gas reserves?
00:05:23.120 Well, they'll be counted against a company. Yeah. And some of those bars, I mean, one of the things
00:05:27.720 that people forget, and it drives me bananas when I hear from some people saying, oh, Energy East was
00:05:31.800 shut down because it wasn't financially viable. Well, no, it was shut down because the government
00:05:35.380 made it financially unviable. It was always viable before that. And the big one was they were going
00:05:41.220 to make the producers responsible for downstream emissions. Well, you don't know what the end user is
00:05:47.080 going to do with that product. Maybe they're going to consume it in a non-emission sort of manner.
00:05:52.280 But I mean, it's something you can't commit yourself to. So the investors pulled out.
00:05:55.240 Exactly. And honestly, for what's supposed to be an accounting standard,
00:06:00.480 why would you require companies to account for something they're not in control of?
00:06:05.140 Usually in accounting, you can only account for things for which you're responsible.
00:06:09.700 And therefore, if you misstate something or you omit something, you can be held liable because
00:06:14.440 that's under your control and you didn't report properly. But with this, it really leaves companies
00:06:21.400 open to litigation for mistakingly say something or they omitted something that an activist investor
00:06:28.160 thought they should have included. So it'll open up a can of worms for litigation for the
00:06:33.640 for companies. And it's really death by a thousand cuts.
00:06:37.600 Well, and likewise, just like in the case of Vancouver, with their lunatics and city council 0.90
00:06:42.640 are suing oil companies for global impacts while overlooking all the benefits, you know,
00:06:47.480 of those long lifespans and not freezing to death in winter. But I mean, it's the same sort of
00:06:52.900 principle. They want to hold companies responsible for downstream emissions when they had no control
00:06:57.980 over those to begin with.
00:06:58.840 Exactly. And if I can just segue a bit into agriculture, because with the new fertilizer
00:07:05.700 ban or reduction that they that they that they're putting forward, what this standard does is it says
00:07:11.920 that if you're a livestock producer and you sell your livestock to, say, JBS or, you know, a big meat
00:07:19.540 producer, that meat producer will require you to say whether or not you operate in an area of high or
00:07:26.460 extreme high risk water stress. Well, if you look on and they and they use the World Resources
00:07:32.060 Institute aqueduct program, very controversial, the data is not so good, they don't use provincial
00:07:37.820 data or anything. And if you're found to be in one of these areas, you could be denied funding from
00:07:45.760 the banks, or the producers will say, Look, we've committed to reducing our sustainability stresses in
00:07:52.520 areas of high to extreme high risk water. So I'm sorry, we can't take your livestock, we can't take
00:07:58.600 your grain. So it's yet another attack on agriculture at a time of food insecurity, where these these poor
00:08:06.360 ranchers and farmers are going to be held to account for emissions and operating in high to extreme high
00:08:12.920 risk water areas. And if I can just point out, that's pretty much all of Western Saskatchewan or Western
00:08:18.600 Canada, southern Saskatchewan, southern Alberta, southern Manitoba, all fall within that region.
00:08:23.640 And it also happens to be the region for fracking, where the Bakken plays are where all the major
00:08:30.360 shale plays are in the United States, almost all of them fall within an extreme or high extremely high
00:08:37.320 water stress area. So it looks like we could be binding ourselves to this agreement or these policies
00:08:44.040 in a few days. What sort of enforcement, though, is there if we sign on? I mean, we get a lot of these
00:08:49.720 things, they're aspirational, they talk about it, but they don't actually mean to follow through, or maybe
00:08:54.920 they do mean to, but they've always failed. I mean, we've never hit even close to an emissions target
00:08:58.840 yet. What sort of trouble could we get in if another government comes in the future says, Well,
00:09:04.040 we're not going to comply with this? By doing the IFRS standard, the banks will do it. So it's a way
00:09:12.680 for governments to get around the bad press and the anger that will come. It'll be left to the banks,
00:09:19.800 the insurers and the investors who sign on to this. If Canada, with its Sustainability Standards Board and
00:09:27.800 its Montreal office for this, if they agree to implement it, there might be a possibility down
00:09:34.360 the road that a future government can say, You know what, I don't think we want to do this, we're
00:09:38.520 not gonna, we're going to say it's not enforceable in Canada. But if all the banks are saying we want
00:09:45.880 this, it'll be difficult, it'll be difficult to do. And that's why they're doing it this way,
00:09:51.480 so that no one can escape. And Brian Moynihan of Bank of America was very clear in May when he said,
00:09:57.960 this is a way that no one can escape from it, to bring it in through the accounting standards,
00:10:03.320 because it'll just become another part of accounting, and no one will escape.
00:10:09.720 It sounds insidious. As you said, there's a few days to write letters. I mean,
00:10:14.440 as one of my commenters, Brad said, you know, the million dollar question, what can we do about it?
00:10:19.240 Well, I've been encouraging as many people as possible to write a comment letter, you know,
00:10:25.080 expressing your support of the Canadian oil and gas history, emphasizing energy security,
00:10:30.040 no scope three emissions, no scenario analysis, stop the the water stress thing, because that
00:10:36.360 it will just devastate Western Canadian agriculture and our petroleum industry that operates in the
00:10:42.600 Bakken place, or even in the Western sedimentary basin, because that pretty much falls within that,
00:10:48.760 that high stress area. So you can send a letter to comment letters at IFRS.org,
00:10:55.880 and they post them probably within 24 hours. So if you send a letter, it gets up there right away.
00:11:02.520 And it's, it's a way to at least express discontent before it gets implemented here in Canada.
00:11:09.800 Great. And where else, before I let you go then, can people find more information about this than,
00:11:15.240 you know, to find those addresses and that, if they haven't written it down?
00:11:19.480 I wrote a report about this called Counting Carbon Molecules. It's on my website, which is
00:11:24.520 thenemethreport.com. And it has links to my podcast, my op-eds that I've written recently, and this new
00:11:33.480 report about it. And I have the information there on where they can go to submit comments at ifrs.org.
00:11:40.600 So please go to my website, check it out. It's thenemethreport.com.
00:11:45.160 Great. And then help me pronounce, correct the pronunciation of your name as I was asking at
00:11:50.680 the start of the show. So Nemeth report. Okay. I appreciate that. Well, thank you for coming on
00:11:56.440 today. There's still a, you know, a few days to go. Hopefully some folks get there. Maybe sometimes
00:12:00.280 common sense prevails. It seems we usually have to fight pretty hard for that to happen though.
00:12:05.080 So thank you very much for coming on today. And I hope we can talk again down the road.
00:12:10.840 Thank you so much, Corey. Have a good day.