Ostrum speaks out against oil and gas exploration in the Arctic
Ostrum Asset Management and more than 100 other investors have joined forces in an open letter to support the protection of the Arctic National Wildlife Refuge in the north-east of Alaska against the possibility of oil and gas exploration in this region of the US, which has been protected since 1960.
The group of investors – representing $2.5 trillion in assets under management – used this publication to express their deep concern on the threat of oil and gas development in the region, and highlight the severe risk of destruction of this wilderness area and the ensuing human and ecological effects.
US public opinion is generally opposed to drilling in the Arctic Refuge, so any oil company or bank supporting drilling in the area faces substantial reputational risk. Meanwhile, there is also a considerable financial risk on the COP 21 target of keeping global warming at less than 2°C above pre-industrial area levels out to 21001: so a carbon budget consistent with this 2°C target would make most fossil assets unburnable. Making capital investment in oil exploration in the Arctic Refuge would be an irresponsible business decision at a time when the world is transitioning away from fossil fuels.
Extracting oil and gas in the region would also have a severe impact on the lives of the Gwich'in, a native tribe whose people have lived in the region for thousands of years. The Gwich'in hunt porcupine caribou, which account for 80% of their diet, so a negative impact on the herd’s health (around 200,000 animals) and on the Gwich'in tribe’s lives would be inevitable.
Lastly, there would also be a clear ecological impact, as roads, pipelines, gravel mines, airstrips and other facilities would need to be developed to support exploration and development on the coastal plain, and this would undermine the wilderness character of the Refuge, fragment habitat and displace wildlife. Millions of gallons of fresh water needed to support drilling activities would be drained from fragile Arctic rivers, while oil spills, which already occur on the North Slope2, would harm fish and wildlife in the area.
The signatories to this open letter urge banks and oil and gas companies to fulfil their fiduciary duty to investors and refuse to engage in drilling in the Arctic Refuge. Ostrum Asset Management also calls for fresh support for the vast range of existing clean energy solutions and sustainable industries in Alaska.
1 Current projections are for warming of at least 4°C worldwide if no action is taken. This increase would irreversibly compromise ecosystems and economies.
2 The North Slope is a region of Alaska located on the northern slope of the Brooks mountain range along the coast of the Arctic ocean.