By Mitchell Zimmer
After being part of the first graduating class of the Masters in Environment and Sustainability (MES) program in 2008, Dayna Linley has quickly established herself as a world class analyst in the field of sustainable and responsible investment. Her skill has led her to win a 2012 Responsible Investment Independent Research Award.
Linley says that she owes a lot of her success to Ivey Professor Rob Klassen who brought in Kevin Ranney from Jantzi Research to speak in one of her classes. It was here when she first learned about how asset managers obtain responsible investment and corporate governance research for investors interested in sustainable development.
“I was totally enthralled,” says Linley. “I thought the work they were doing was so interesting and I went up and I spoke to him afterwards and I was probably a very keen student and he basically said to me ‘We generally hire MBAs.’”
Although she was discouraged she kept her eye on the company and continued with the Masters of Environment and Sustainability program. “It just so happened that summer when I was graduating they came out with a job posting and they wanted someone in oil and gas and my work experience was in oil and gas. So I just thought, ‘I know they hire MBAs but I think that I’m a really good fit for this’, so I applied and it just sort of worked out.”
Linley first job at Jantzi Research was tracking junior oil and gas companies. She very quickly moved on to the senior companies. It was at this point when Jantzi entered into a series of mergers where the company eventually became part of Sustainalytics , a company based in the Netherlands. Linley’s portfolio suddenly shifted to an international
focus. “I got to track global oil and gas companies which is the big thing once we moved on to Shell and BP and Exxon,” she says. “It was exciting because our perspective changed. When you are just looking at Canadian companies you only know certain issues and you know it from a Canadian regulatory perspective. When you start going global the issues are much different. “
These additional global concerns range from human rights abuses, to operations in conflict regions, to corruption and bribery. “It doesn’t matter how good you risk policies are, things are happening on the ground that you can’t control and how do you evaluate those,” says Linley. “I think that the scope of the issues changed a lot and the severity of the issues have changed as well. What we considered to be a large monetary find changed when we went global and then it’s much more complex because you have to start understanding the operating environments. Obviously operating in a country like Columbia is not the same as operating in Canada, or operating in Syria is not the same as operating in Singapore.”
Evaluating risk for investors in the oil and gas industry is more involved than the studying the geology and the mechanics of extracting and transport. “That’s why we try to bring extrafinancial research where we’re looking at on environment, social and governance,” says Linley. “Nothing we do is financial directly, but these things have the potential to impact the bottom line. It’s interesting because one of the biggest risks we think in ultra deep water drilling is bribery and corruption because a lot of what’s happening is in the deep basins off of West Africa. The environmental impacts are definitely an issue, but bribery and corruption is one of the main issues.”
There are also issues that involve jurisdictions and regulatory concerns. “Some countries just have more regulations than others and some are just not regulated at all, they trust the companies to go in with best practices and in some cases, when you are dealing with the big multinationals, they do have very strong practices. When your dealing with some of the more junior companies, their objectives are different, they just want to get the oil out of the ground as fast as possible,” says Linley. She then adds, “I think some of the bigger companies that we would consider more contentious actually have very strong practices. When you mention the jurisdiction issues that gets really complicated.” Linley then cited an example. “China is actually claiming a bunch of the South China Sea when the exclusive economic limits belong to Vietnam and other countries. That’s going to be a interesting case because China is auctioning off the oil and gas rights and Viet Nam is actually auctioning off the same oil and gas rights. We don’t know how companies can deal with that risk initially, but for now we are flagging it as an issue. Investors should pay attention to this if they have a company that’s invested its assets in one of these regions.”
Linley then mentioned how the MES program supplemented her Earth Sciences degree to help her sort out all of these multifaceted issues in her line of work. “That’s a strong point of the MES program. It’s meant to be collaborative and interdisciplinary” she says, “my undergrad is in science but I wasn’t able to analyse the depth of information that I needed for my job with just science. I needed to understand that the social is important and the governance is important. I think that’s what a program like this did for me; it brought business and policy and strategy concepts into my science background. Once you have a full basket of tools it’s easier to deal with complex issues and I think that most things that happen in the world these days is complex, it’s not just a straight X gets you to Y sort of thing.”