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Fossil lending

ConocoPhillips: time to COP the consequences

Written by Josephine Richardson

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ConocoPhillips’ acquisition of the Surmont oil sands facility has raised the amount of revenues attributable to this environmentally destructive fuel. Estimates drawn from recent financial disclosures suggest that 5.6%-11.2% of revenues were attributable to bitumen, surpassing exclusion thresholds used by several institutional investors. While some asset managers have already divested, others — such as Norges Bank Investment Management — could still take action, potentially triggering significant capital outflows.

Since issuing $2.7 billion in debt to finance the acquisition in 2023, ConocoPhillips’ bonds have underperformed relative to the broader market. The company’s long-dated bonds are nearly trading back at issuance spread, suggesting that investors who financed the acquisition may have suffered poor performance while waiting for reporting confirmation.

With more exclusion-driven sell-offs possible in the coming months, ConocoPhillips’ bondholders may face further underperformance. This underscores the financial consequences of investing in high-carbon assets at a time when ESG policies are increasingly shaping capital flows.

About the author

Josephine Richardson

Josephine Richardson

Managing Director, Head of Research

Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.

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