Investors for Paris Compliance (I4PC), a shareholder advocacy organization, yesterday filed a complaint with the Alberta Securities Commission (ASC), alleging that two major energy companies have engaged in misleading disclosure regarding their net zero plans. The complaint targets Cenovus Energy and Enbridge Inc., two reporting issuers that are principally regulated in Alberta. A copy of the full complaint is available here [PDF].
The complaint is based on section 92(4.1) of the Securities Act (Alberta), which prohibits reporting issuers from making misleading or untrue statements that would reasonably be expected to have a significant effect on the market price or value of a security, as well as CSA Staff Notice 51-333 Environmental Reporting Guidance and CSA Staff Notice 51-358 Reporting of Climate Change-related Risks. The complaint also makes reference to the anti-greenwashing provisions of the Competition Act that were introduced through Bill C-59.
Submissions. I4PC submits that:
- Cenovus and Enbridge have a “core net zero contradiction” by engaging in significant fossil fuel expansion while claiming alignment with net zero;
- Cenovus and Enbridge have consistently failed to meet core transition metrics on net zero, particularly around capital expenditures;
- Cenovus and Enbridge have consistently engaged in “overly promotional disclosure regarding net zero”, both directly and via associations; and
- Cenovus has been allowed to foster investor uncertainty with lack of clarity regarding its net zero commitment (which I4PC expressly ties to Cenovus’ withdrawal of net-zero disclosures prompted by Bill C-59).
Remedies Sought. I4PC requests that the ASC grant the following remedies:
- An investigation be launched into existing and past climate disclosures of Cenovus and Enbridge to assess the accuracy and adequacy of their disclosures.
- Because the practices of Cenovus and Enbridge are repeated by other Alberta-registered oil and gas companies, that the investigation also consider evidence from peers and competitors.
- That overly promotional disclosure in relation to net zero be corrected for all Alberta-registered oil and gas companies.
- That the ASC work with the Canadian Securities Administrators (CSA) on specific guidance related to the use of net zero terminology and claims by reporting entities in Canada, as it has done, among other matters, with ESG-related retail investing.
Next steps. It is unclear whether the ASC will launch an investigation as a result of the complaint. If it does and finds that there are possible breaches of Alberta securities law, it may decide to initiate a formal hearing, wherein a tribunal would rule on whether breaches took place and, if so, whether to impose administrative sanctions to protect the public and enforce compliance with regulatory requirements.
For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.
