parked cars are and the lane closure. >> the question i had was related to the businesses. there are a lot of businesses that have loading needs and k h concerns, and how do we work with them to ensure, and if we have any sort of, like blinking lights that will go in the bike lane or any way to alert a rider or cyclist that a driver is coming, sort of like when you're in a parking garage, notification to the person coming out. maybe you can talk a little bit about that. >> sure. so wup one of the things we learned about folsom is it would be better if we had a wider striped buffer. so you we've widened it by a foot or howard, so just provides a little extra spags for people getting out of their cars, have a little more room to make sure

they look around, see cyclists. that's something that we heard through the folsom near term evaluation. this is a near term project, so we really want to be conscious of cost and how quickly we can roll this out. i think for the much longer term project that we'll hopefully be bringing to the board next year, we're thinking about those types of designs and those treatments. >> for curb cuts, i think it's easier if you're pulling in a parking space, that's one thing, but if we're talking about a bike lane, we just need to work effectively so that we don't create new conflicts, and people are alert today both activities in a way that they need to be. thank you. >> thank you. >> one thing, mr. 2kgatti is he.

hopefully, he knows and you can confirm that you're that person that simply because the project has been approved by the board doesn't mean you give up on it and someone on staff will be able to work with him to make sure that his business can bet get the deliveries for him in a way that's safe for the cyclist, and that is ongoing. >> yes. we've met with him two or three times at this point, and we have a whole other process >> to our guest, if that's not working, you're free to come back, but from what i've seen in the past, i think that will for you. >> thank you. directors, anymore question? >> this is more general in that the bus placement tends to be far side opposed to near side. that makes a lot of sense when the bus has to pull over and pull back in. but in many cases, people say they're following the bus, and then, the bus stops, and they're stopped in the intersection.

so with this theory, you could put the bus far side or even smack dab in the middle of the street and lessen that issue. i'm just wondering if that's something that's come up. >> that's going back to some of the other near term projects, it's something that we've heard, as well. in some cases we've moved that bus island a little burt down the block so there is a gap for a car that may be following a bus and immediately needs to stop. so either moving the island down the block or over so there is a little more space to wait behind the bus. >> questions? no. i'll just say howard street is such an important part of the bicycle network. so many people travel it every day. anything that we can do to make it safer in the short-term is

great. we'll continue to make sure we work with mr. gatti to make sure his concerns are addressed. i have a motion. do i have a second? [voting] >> all in favor? [voting] >> any opposed? [voting] >> thank you. [agenda item read] >>clerk: and then just while staff is getting setup, directors, just be advised that we have cancelled the closed session for this evening. that will be continued to the next meeting, so following this, we'll return to general public comment and then the beloved director's report. >> very long. >> great. >> hello. my name's nick smith i'm a transportation plan in movable

streets and a project planner, and i will be very quick lower grade highway is the most -- western most residential street in the city. is runs for two miles, from lincoln way to sloat boulevard. it's directly east of the great highway trail of upper great highway, the ocean beach, all of which are big trip generators. the project was born out of concerns about the m.t.a. and supervisor tang's office, heard from residents of lower great highway. these resolved around crossing at places other than the crosswalk, and speeding. [inaudible] >> today, we are just talking about the near term project and later in the year, hopefully, we

will come back with a medium term project, there have been four pedestrian collisions in the past fewive years. the near term project has three major elements, pedestrian advisability zones, also known as daylighting to ensure visibility when patrons are trying to cross the street, painted zones, as well as back and angled parking on the block between kirkham and lawton streets to gain back some of the parking reduced by the previous two elements. so taken together, these three elements over the entire two mile corridor would result in a net reduction of just 14 parking spaces. the project was initiated earlier in the year. since then, the project team

held two open houses, two public hearings and attended multiple community events and meetings, generally, the concerns fell into two categories. those who do feel that crossing the street is uncomfortable and agree that this project would address those concerns but also those who -- who are concerned about the impacts to parking, and we actually modified the original proposal to reduce some of the parking impacts, and we added in that back end angled parking and that's how we arrived at the just net reduction of 14 spaces over two miles. just to wrap up, if approved today, this project would be implemented later this year. thank you. >> excellent. thank you very much. good presentation. i know we have at least one public commenter on this who has stuck with us all evening, so i'd like to go directly to public comment, please. thank you. two minutes, please. >> hello. my name is deidre, and i am an

opponent of this. i have been unaware of my 39 years out there of any significant pedestrian problems, accidents, fatalities or anything. it's a two mile strip. i know that people paspeed. i think that's the biggest issue. i've brought along a photograph from the m.t.a.'s website -- put it face up. >> which will show a very typical intersection, where i failed to see any problem with visibility for pedestrians or drivers, and this is a very typical intersection out there. i'd like to point out that these are dead end intersections where somebody coming from the avenues

either turns right or left. there are, for the most part, stop signs at every intersection. we really don't want to lose every 14 parking spaces. this is a major public beach, lots of surfers. on a nice weekend, honestly nobody can park anywhere close to the beach. i think every parking space is real really important, not only for beachgoers, but people who want to use the paths, everything. the things that we like in this project are crosswalks where they don't exist, stop signs at the avenues which dead end, and we really appreciate the angled parking proposal. we think that the money that -- used for this project can be used elsewhere to better success. thank you. >> thank you, miss galani. directors, do i have questions

for mr. smith? oh, do we have another public comment? oh, i'm sorry. i thought that was our only one. >> i'm not here for myself on this item, actually, 'cause i live nowhere lower great highway, but i'm here for a friend that thought this was going to be at, like, 2:00 or something, and had to leave. i'm a dad of two young children, and i live on 40th avenue. i'm here to speak on behalf of the 240 folks on the west side, best side. it is difficult to say that we are in support of the significantly watered down of the pedestrian safety improvement. of course we support these, but they do not go far enough. so what's the problem here? the completely hysterical resistance to parking removal led by a couple of neighbors.

[inaudible] >> what's the issue here? several times we've ask the sfmta to provide us how much parks was available at the any time of day. i never got any answers so i did my own surveys. last night, i went on the highway and counted how many actual spaces it represented. around 10:00 p.m., everyone was home and parked. [inaudible] >> so you tell me where's the urgency to save working here? it's same the sfmta realizes that what you're up against are car idealogues.

stop negotiating with them. start making our lives and our children's lives safer. thank you. >> thank you, roland. i appreciate you waiting and speaking tonight. anymore public comment? okay. no. seeing none, public comment is closed. directors, comments? i've got a question and a second. all in favor? [voting] >> any opposed. [voting] >> thank you. i know staff will continue to work with you, and thank you again so much for waiting all this time. >> general public comment. [agenda item read] >> roland, followed by taylor, and tarik. >> okay. two minutes. roland, taylor, tarik.

>> this is a great way to endear yourself to -- >> hi, again. thai tailor algren. yesterday when the scooters launched, i'm excited for the scooters to be in san francisco because more two wheeled vehicles moving through the green lane means less cars on the road and less chance of me and my friends getting hit by a car? however, i know the latinodemocratic friends -- [inaudible] >> -- because they had quite a great equitiable proposal. when i got to the app, i

downloaded both the apps and registered yesterday. there was no way for me to discover how -- how to access the low-income program, and nor -- i actually ended up having to, like, send e-mails to the support to find out how to do it? and it was, like, a really confusing process. and so i don't know what the expectations were for the low-income program, but the low-income program should be available on the first day of launch. when we put low-income program as a second -- a second after thought, we are putting our -- our citizens under just an unfair situation, and so i'm disappointed with the launch of the scooter program. i'm not sure if it was -- how the contract was designed, but right now, the access to the low-income program for my neighbors who wanted to sign up

is basically not there. >> i know that tom mcguire is in the audience, and i know that he and his friends will look into that. next speaker. >> while i was in this marathon meeting that someone had tweeted that they made this request for a corral near their house. so the response that he got was thank you for your bike rack request, could you please tell us more about your request. we don't typically site bike racks in neighborhoods that -- [inaudible] >> -- but mr. kapur was surprised, to say the least,

that m.t.a. said no we're not going to go out and single-family neighborhoods and put racks in. >> i'm sure if staff can get more information about the request, that's a block by block decision. i have seen racks in front of residences. again, you're sitting next to the right man. next speaker, please. >> tarik mahmoud, director heinicke -- [inaudible] >> -- 7% on credit cards, and she lowered that money to hundreds of dollars instead of $100,000. when i spoke again director heinicke, you admonished me from

here and i'm here to tell you, get some integrity for yourself. if you would have worked for me, i would have fired you today. going back today, somebody called you a liar, and that lie, you accept it, and you pass a proposal that's not fair. director kitterean is a total liar. she told you in approximate one of hur notes she -- i give her physically signed 64 pages against what she said. and signed in the office. and i sent you also e-mail with that pages, so she gave a wrong data, not talking about -- against that, the driver signatures, and this is what you guys accept, the liars. sorry. >> do i have anymore public comment? anyone? seeing none, general public comment is closed, and i think the last item is our director's

report. >> just to be brief, just three quick things that are, i guess, time sensitive. just want folks to know this weekend, san francisco trolley lines will be on the n-judah line. we are hosting a workshop for the bayview community based transportation plan, so we urge folks to attend. again, that's george davis senior center, tuesday night, 5:30. finally, we will be having an opening house for the embarcadero enhancement project next thursday from 5:00 to 8:00 at the ferry building, and i will spare you all the rest of what i had to tell you about. >> thank you very much, director reiskin. do i have any public on the director's report? seeing none, public comment is closed. >> madam chair, that concludes

the business that we have today. >> we are adjourning in memory of jerry robbins and milton james. all right. thank you all very much. very good presentations.

[ pledge of allegiance ] >> we will start by going into closed session. do i have public comment? there's no >> we are coming out of closed session. is there a motion not to disclose? there's a motion, there's a second.

i always get this wrong. do we need to call for public comment on this motion? we will call for public comment. only on the motion not to disclose coming out of closed session. seeing no public comment, we will close public comment. there's a motion and a second. any discussion? could we take this item without objection? great, item passes. we are now coming back into the regular agenda. why don't we go ahead and start, did you do the pledge of allegiance? >> yes. >> president stansbury: we did the pledge of allegiance. why don't we go to the consent calendar? >> make a motion to approve. >> president stansbury: all right. i'm a little slow this morning. there's a motion and second. why don't we call for public comment on the consent calendar. are there any members who would like to address the commission regarding the consent calendar?

seeing none, we will close public comment. can we take this item without objection? great. we will call for general public comment. if anyone is here to speak on any of the items actually agendized, fossil fuels, we would ask you hold your public comment until we call that item. but if there's anyone else who would like to address the commission generally, now would be a great time to do so, please step forward. >> good afternoon, chairman and the board. my name is -- i'm representing united for respect, i believe last month you met with lily wayne representing united for respect. speaking on your current investment with solis and the impact with the toys r us campaign so hopefully what i say sounds familiar. as you know the san francisco employees retirement system approved a $300 million with

solis, one of toys r us's creditors. when the company went into bankruptcy last year, employees were told the company would survive and emerge stronger, instead the creditors including franklin templeton and others declared toys r us would be worth more dead than alive and march 2018 they went into liquidation. in june bloomberg reported toys r us had a buyer and would have kept half of the retailers 800 stores open, saving thousands of jobs but that deal collapsed when creditors, lead by solis alternative asset management turned in into liquidation. they pressed other debt holders to conclude the company was worth more dead than alive.

in june toys r us closed its doors and more than 33,000 employees around the country lost their jobs. toys r us historically paid severance to employees who lost their jobs when it closed its store but it ended it's severance plan before announcing it was closing. employees were never paid the severance they were promised. kkr and bank capital, firms that owned toys r us opened up dialogue creating hardship fund by affected employees. i will cut to the end here. i ask you all to consider, reconsider any further investments with solis acknowledging you already finalized a third of your commitment to solis fund, thank you. >> president stansbury: thank you very much.

are there any other members of the public who would like to address the commission under general public comment? seeing none, we will close general public comment. next item, please. item 6. >> action item. staff update/recommendations on six strategies to address climate transition risk. >> president stansbury: we can call public comment at any time. due to the smaller crowd, is there any preference from anyone who is here to speak on this item, whether they want to speak now or later? i will hold comment on this item until after staff has a chance to make the presentation, the floor is yours. >> very good. president stansbury, on january 24th this year the board approved six measures to adopt a carbon constrained strategy for spurs investments.

to summarize, the first was to adopt a carbon constrained strategy for $1 in the public market strategy, the second was to hire director of e.s.g. third is partner with institutional investors to promote initiatives that would reduce carbon emissions. fourth was to enhance our engagement activities including partnering with organizations such as series, p.r.i. and others. a fifth was to pursue renewable investments, number six and last item, develop a framework, an approach to identify the most riskiest companies to develop a plan to consider divesting, to develop a watch list and action plan for companies that were also deemed risky but not necessarily warranting divestment. today curt is going to walk us through items 1-5. i will say in the recommendations we will be

asking on item number 1 to remove the word passive that where ever we can find value whether passive or active, that we do so. but we have done a lot on each of these six. curt will walk through items 1-5. andrew will walk through item 6. i think you will see andrew and our partnership together with goldman as we created a really insightful framework for evaluating companies, including action plans and it's very data driven, very fact finded and the application of data and facts to reach a conclusion going forward. we will hear from any p.c. still doesn't support divestment. we will hear from them and they will also give us an update on some market activities that have taken place in the energy sector as well as other public plans since we last, since we

addressed this in january. and with that i will ask curt to walk us through items 1-5. >> thank you, bill. i will highlight select accomplishments or progress areas 1-5. two strategies bill described 1 and 4 are similar, they direct staff to pursue renewable or carbon restrained strategies. committed over 5% over 1.3 billion to such strategies. a billion of which occurred since the january 24th meeting. in march we invested $500 million in passive equity strategy with 50% lower emissions. in july we invested 300 of what will become $500 million with generation capital in a global equity strategy 80% lower emissions than the m.s.e.i. world index. in addition the last couple months we committed $100

million to private market that focused on solar, wind energy storage, ev charging and efficiency investments. bill mentioned strategy number 2 which is not included on the slide before but it was to hire a director of e.s.g. as you know, we hired andrew in the beginning of may. a number of attributes one of which is modesty, he created these slides and refused to acknowledge we succeeded in strategy 2, he has a b.s. in environmental engineering from yale, came with ten years relevant experience, acting as e.s.g. advisor and technical research director. in the few months andrew has been on board he has accomplished a lot towards strategies 3 and 4. 3 and 4 require or ask sfers

develop and support initiatives to reduce carbon emissions, increase sfers proxy and engagement activities. sfers has been an active participant in the working group. we have been active with the climate action 100 initiative. we have engaged with two super major oil and gas companies among the top ten fossil reserve owning companies in our framework andrew will describe in a moment. over this past proxy voting season, sfers voted in 65 shareholder resolutions including key votes at kinder morgan, range resource, that received majority shareholder support. sfers became a significant torrie to a variety of initiatives, agenda launched september 2018, global climate action summit, developed by cdp

series p.i. among others. in addition sfers has taken their own steps becoming a significant signatory. encouraging governments to one achieve the paris agreement goals. disclosure to develop consistent climate related -- finally we will participate in the newly launched c 40 divest invest forum which san francisco is a founding city. finally we will turn it over to andrew to talk about progress made in strategy 6 but to restate, strategy 6, the board directed staff, it was described as identify the

riskiest, dirtiest, define, establish procedures for watch list of high-risk assets, establish goals and time lines for engagements and outline options for targeted phase, divestment process. with that i will turn it over to andrew. >> thank you, curt. good afternoon, commissioners. so as curt said, i will talk now about strategy 6 and he outlined the different components of that, there's sort of a lot to unpack there. so i will try to do that as clear as possible and as efficiently as possible. i will start by talking really about how we have defined what a high risk fossil fuel asset is, how we develop a framework to assess what high risk fossil fuel assets are. i will go into a little bit of details of what that framework

actually is. i will then talk about how we applied that framework to our oil and gas holdings in our public markets portfolios. i will talk about the results of that and then ultimately the recommendations we are making on that. i will try to limit my speaking to about 12-15 minutes here. >> just one question. >> yes. >> i had asked for the riskiest and dirtiest fossil fuels to be removed. are those one? can you address that? is that one in the same riskiest and dirtiest or is there a difference there? so maybe you will address it. >> yeah, yeah. we will certainly address that. we have sort of were assuming that our approach captures that concept of dirtiest and riskiest. we reframed the wording a little bit. but the goal is to not do that.

so really our first step here when we thought about developing this approach was to survey the landscape of existing frameworks tool kits lists out there. to see if any of those was suitable for the task at hand. we found there's a ton of work that's been done in this space but nothing that was really suitable for what we were trying to do. what we did was roll up our sleeves and develop our own approach here. i just want to walk through some criteria we were focusing on. i think this is important how our approach builds on and improvements upon some of the existing approaches out there. so the first thing we wanted to do is design an approach that was forward-looking. when we think of climate risk how it will affect financial markets it's something that is both happening now but will increase in its impacts in the

future. we didn't want to look at metrics that were lagging metrics or static metrics to measure performance, but really think about how could we get a forward-looking view of the future in different scenarios that might play out as climate change becomes more impactful. the second thing we thought about was the different types of climate risk. there's physical risks from climate change, regulatory risks, market risks. there's a lot of dimensions to this. our view is different companies will be positioned differently according to these different risk categories. so there's a framework multidimensional, didn't look at one metric but a set of metrics and would ultimately give us a spread of performance of companies we were looking at. the third thing we thought about, let's get an approach that's really investment relevant. i think a lot of the approaches

that folks take, environmental impacts of companies, their carbon emissions, their fossil fuel reserves, sort of environmental impacts of the companies, are incredibly important and a key part. the other half of that is the financial positioning of companies and we really thought those things work in concert, the environmental impacts could be affected by the financial positioning and ability to address those is affected as well by how the company is positioned financially. and the fourth thing we thought about is an approach that was transparent in its use of data. something we could be clear and communicate in public session here to the board, to other stakeholders, to other asset owners. that might want to learn from our approach or replicate our approach. so we really wanted to focus on

data set that's were widely available and transparent. those are the principles and criteria we thought about as we went into this exercise. the next thing we did was interrogate the situation at hand. so we asked the question of in this wide-ranging scenario where climate change is going to have regulatory impacts, it's affecting the way our global energy systems are being shaped in the future, it's certainly affecting the planet and the people on the planet. there's all these forces at play. could we try to distill those down and coalesce around core concepts of what's going on and then ultimately how is this going to affect fossil fuel companies and their performance in the future?

we arrived at four themes or concepts here. it's clear which will be brought now or in the future. in a 2° scenario. 2° warming of the planet from pre-industrial levels to now, the goal of the paris agreement is to keep us below that level. that means a third of oil reserves, half of gas reserves and 80% of coal reserves will be unburned. so a lot of fossil fuel reserves need to stay in the ground. at the same time, the international energy agency which i think has done the best projections around different climate scenarios, different polycitra policy trajectories, they said even in a 2° world, fossil fuels will still account for 20% of our energy needs.

there will be winners and losers in this scenario. the overall pie will shrink but it's not going to go away in the next 20 years, so we need to understand who is better positioned and who is worse positioned. second, you know, the oil and gas sector itself is energy intensive in the amount of emissions that it produces. we are seeing globally an increase of carbon pricing schemes and regulations that either tax or cap and trade policies put a price on carbon. so this means there's increasing need for companies to be aware of their own emissions, how they are managing those, how they are managing those as a cost now and increasingly into the future. the third trend we looked at was really sort of complex nature of climate regulations globally and where those are going.

there's not a single set of globally consistent climate regulations. there's global agreements, there's regional agreements, national, sub national agreements. i think ten years ago you probably could have said and been right that the fossil fuel industry acted as a unit in denying climate science and opposing all climate regulations. that's not really the case now. you are seeing a bifurcation where some companies are trying to get a seat at the table, advocate for carbon pricing, other climate regulations. and others that are frankly more obstructionist and doubling down on investing in preventing climate regulation. it's our view that companies that do have a seat at the table that are actively managing, what is the risk for them will be better positioned and more nimble in the future.

and then the third or fourth thing we looked at was more about capital discipline of oil and gas companies. it's incredibly capital intensive to explore for oil and gas reserves and to bring those to market. historically he they have taken most of their cash to explore for new reserves, even taking on debt to fund that exploration activity as well. that business model really depends on oil prices being stable or increasing in the future. in the west, four years, 2014 there's been a $300 billion reduction in spending on upstream oil and gas activities. meaning companies are being now more cautious about their investments in acquiring the reserves and investing and bringing those reserves to market.

you are also seeing a different approach for different companies in terms of how they are approaching their spending. some companies are being more conservative, maybe using their cash to pay down debt to return it to shareholders through a buy back or dividend. it's our view companies that are being a little more conservative will be more nimble in the future, should there be a prolonged low price in oil or other needs to spend capital on. four themes we identified here that we think are the drivers of risk for fossil fuel companies into the future. we tried to really simplify each of those four areas into a sort of key set of questions that we wanted to ask. and this is sort of the basis of the framework we developed.

the first fundamentally what a company's fossil fuel reserve mix. what types of reserves are owned. are they relatively cheap or expensive? we think this will guide a company's ability to bring those to market. two, what's the company's own operational efficiency? is it carbon intensive, relative to the amount of revenue it generates? is it making any progress to become more carbon efficient over time? third, what is the koom come's approach to climate policy? is it engaging with regulators, being collaborative and constructive or actively opposing climate regulation? and then fourth, what's the financial health of the company? can we get a sense of its capital discipline. how is cash being spent. is it acquiring new reserves or spending it in other ways and what is the debt burden of companies look like?

do we think they will be able to service that debt going forward? so taking those sort of four question areas, we said can we get quantitative data points to really answer each of those questions and measure those areas. so we did a lot of work, a lot of research working closely with goldman sachs here to find the best data sets we could to measure performance in each area. for the first area, i will spend probably the most time on that, because that's probably the most complex to understand. using a data set from an organization called carbon tracker initiative, which is a think tank of financial industry experts who are now thinking about how to measure climate risks. and what they have done, on a company-by-company basis, taken a data set from an organization

called rystad. it has project-level data for all oil and gas projects all over the world. the geology of those projects, the ownership structure, the type of reserve, and importantly, the economics of those projects. you could get a sense from this database of the break-even price of all of the projects in a company's pipeline. basically all it's planned capex it plans to spend over the next several years. what they then do is they take that plan capex and break-even prices and they compare that to scenarios produced by the international energy agency that show what the price of oil and what the price of gas would be in two different scenarios. one scenario where we achieve the goals of the paris

commitment. limiting warming to 2° celsius. and a second where we actually achieve better than that and achieve it 1.75° celsius warming scenario. so what that means is the price of gas, the price of oil will decline over that time period. that could be plotted against the planned capex and project economics of each of these oil and gas companies and you could see which percentage of their planned capex would be wasted or outside of that scenario. you get a percentage for each company you could think of as wasted or excess capex a company is planning to spend but might not be able to actually bring those projects to market economically. the second area when we look at operational emissions and

efficiency, we are using a more traditional carbon footprint measure. looking at scope one and scope two emissions. we are normalizing this by revenue to get an efficiency measure and we are looking at a second area the percentage change of that efficiency over time, is the company making steps and efforts to improve its efficiency, or is its efficiency getting worse? the third area to look at the approach to climate policy, we use the data set from an organization called influence map that has comprehensively looked at companies engagement in climate policy and regulation. how they have lobbied organizations they have supported. ultimately giving companies the score to say are they actively supporting climate policy and regulation, or are they opposing it?

there are two main parts. they look what the company is directly doing and saying. the second area are they looking to see what organizations that company supports financially or through membership trade groups, chambers of commerce, think tanks, and what those organizations do. so you get an overall score of ultimately how the company is opposing or supporting climate policy. and then the fourth area of financial help and capital discipline, we look at two metrics. one is the altmann d, ultimate measure, five key parts that look at short-term liquidity, profitability, return on assets, market value and their turnover, when we look with help from goldman sachs, 66 energy company bankruptcies over the last ten years,

altmann z score, highly predictive of that bankruptcy, we think this is a very good measure of solvency risk for this industry. the second measure we looked at was a measure of operating cash flow minus capex over total assets. this is giving us a sense of how the company may be spending it's operating cash. is it spending this on capex to develop new assets and acquire new reserves they might not bring to market or using it for other purposes, paying down debt, paying dividends, doing share buy backs or keeping cash reserves. so those are the sort of seven metrics we ended up on in four categories. the goal here is that looking at each of these four categories we can get a holistic, comprehensive view of

climate risk. before we apply the framework, we did consult with a wide range of industry experts to really validate our thinking, validate our views. you could see those organizations on this screen here. i won't go into those in detail but happy to discuss what those organizations do, if you have questions. and then before i talk about the results of the framework, how we applied it, i think it's really clear to just reiterate that where this framework begins and ends, where it measures and doesn't measure, there are some issues we need to be aware of in terms of scope and limitations of a framework like this. one, we have only applied through public market portfolios not private investmentsment we have limited this to the oil and gas sector, so we haven't looked at thermal coal companies, which i will

touch on at the end of the presentation. and then most importantly, the framework is really meant to be a tool to evaluate risk. it's not an investment decision-making framework. it includes no considerations of the valuations of these companies, whether they are priced cheaply or extensively in the market and whether they may be a good investment from that perspective. here i will walk you through how we applied this framework to our oil and gas investments. and let you know what we found here. we started with a universe of 155 companies. we applied the framework to that set of companies. sfers has existing positions in 133 of those companies. when we applied our framework,

seven metrics, what we did, was we flagged any company that had, was performing in the worst quartile in at least one of the climate metrics and also the worst quartile of anyone of those metrics and page 15 of the memo shows which metrics we were calling the core climate metrics and what are the other metrics, essentially the first three categories and then the financial metrics, we didn't flag companies that were just performing poorly from a financial perspective. what this resulted in was 25 companies that had these two risk flags performing in the worst quartile. we are calling high climate risk transition companies. 109 of the companies didn't have those risk flags. and we treat them somewhat

separately. within this set of 25 companies that were high climate transition risk companies, we further identified seven companies that were highest risk amongst those. we define that by looking at the percentage of stranded capex that these companies were projected to have. if they were in the worst quartile. if they were in the worst quartile of bankruptcy risk and the worst quartile, free cash flow, return on assets, how they were spending their cash. we assume these companies were high risk because they have risky reserves in their pipeline. they also have poor financial health measured by their solvency risk. it appears their spending cash on more capex to apply to more reserves. so these are the seven

companies that we would recommend for a targeted phased divestment. the remaining 17 companies on a high-climate transition risk lens, we recommend putting on a watch list to engage with over time. [ please stand by... ] .

-- i think it's clear what die investment entails but i want to

talk about what this engagement would mean. one, engaging with companies in risk and in terms of engaging with companies what we're proposing is to directly engage with companies or engage with them through different collaborative initiatives and really develop a time-bound -- >> commissioner: can you go back to the previous slide. so i'm clear this, five companies are exxon mobil and petrobox -- who are the five? >> wire -- we're on page 20. >> the five companies we have current investments in are

apache, gulf port energy, hess corp, qep resources an wpx energy. we have $10 million of net exposure to them and 8$8.5 million of net exposure that would be divestable. meaning it's not in a coming ald -- commingled account structure. >> not commingled? and there's other high risk through the lens but we don't have current exposure to those companies. >> thank you for clarifying that. in talking here about what the engagement would entail, the

idea is we would be guided by the risk framework and engage based on the risk categories we flagged through the framework and really develop for each company a time bound and company-specific engagement plan that we would execute over a period of several years. we foresee three potential outcomes. one is the company takes steps to identify -- manage the risk we identify and would remain comfortable remaining invested in that company and continue to monitor that company. two, is where the company does not take steps to manage the risk over the time frame we identified, in which case we can consider filing shareholder resolution or restricting investment in those companies. the third category could be companies that begin to make steps not in the time frame but

feel they're making progress to continue engaging with them. in terms of our engagement with managers, we think about that in two ways. one is with our passive managers. we want to focus on engaging with them around how they're thinking about climate risk. how they're asset stewardship programs engage with companies around climate risk and how they're proxy voting policies aligned with a prudent approach to climate risk management. with active managers, on the other hand, we're focussed more on their investment process, understanding why they may hold a company that's on our list of high climate transition risk companies. how they think about these risks and if they agree or don't agree with the process that we've outlined in our framework. and we would hope to engage with those managers over time to further our understanding but

also contribute the research we've done to their thinking. and sort of as a bit of an addendum. i mentioned we didn't directly address thermal coal companies and focussed on oil and gas companies. as you know, our current investment restriction restricts development in companies that generate more than 50% of revenue from thermal coal. we thought it would be prudent to look at companies that generate between 10% and 15% of revenue from thermal coal and further scrutinize those. there are four companies that fall in the category we cooperate cooperately -- currently invested in. we proposed to engage with those companies to understand their plans around their thermal coal business. two companies announced plans to exit the thermal coal business. the other two