Cenovus and Enbridge Accused of 'Greenwashing' by Shareholders Over Net-Zero Commitments

Cenovus Energy and Enbridge are accused of "greenwashing" by a shareholder group, alleging they are misleading investors by exaggerating or misrepresenting their net-zero commitments. The complaint, filed with Alberta's securities regulator, claims the companies are overstating their climate progress and failing to disclose the true extent of their emissions. The group argues that the companies' statements are not aligned with the Paris Agreement goals.

A complaint filed with Alberta’s securities regulator has accused Cenovus Energy Inc. and Enbridge Inc. of misleading investors by exaggerating or misrepresenting their net-zero commitments. Investors for Paris Compliance (I4PC), a climate-focused shareholder group, filed the complaint on Tuesday, marking the first attempt in Canada to use securities law to penalize energy companies for “greenwashing.”

The complaint alleges that Cenovus and Enbridge’s pledges to achieve net-zero greenhouse gas (GHG) emissions by 2050 are not credible. The group argues that the companies omit emissions from customers burning fuels, known as “scope 3 emissions,” in their targets and offer scant detail about concrete plans to achieve their ambitions. Michael Sambasivam, a senior policy analyst at I4PC, stated, “This suggestion that Canada can produce the last barrel of oil, we don’t find credible. We’re not asking these companies to cease operations, but through the securities complaint, we are asking them to be more honest in their advertising (and disclosures).”

Securities law prohibits companies from making misleading or untrue statements or leaving out material facts. I4PC contends that evolving guidance from Canadian regulators suggests environmental, social, and governance (ESG)-related disclosures must meet the same standards of accuracy as financial reporting. This means that net-zero claims viewed as overly promotional or misleading are potentially in breach of securities rules.

Energy companies like Cenovus have only pledged to achieve net-zero emissions from their facilities and operations, Sambasivam said, and that’s a target that does not include emissions from the combustion of the oil they produce, which represents the vast majority of lifecycle emissions. “We’re not even seeing capital expenditure strategies to achieve even their really limited scope of net-zero commitment,” he added.

The decision to target the companies through securities complaints rather than through Ottawa’s brand-new anti-greenwashing provisions—known as Bill C-59—may come as a surprise to industry watchers who had expected the legislation to trigger a wave of complaints to the Competition Bureau. Immediately after Bill C-59 passed, several major oilpatch companies, including Cenovus and other members of the Pathways Alliance, an oilsands consortium group, removed almost all environmental claims from their websites and social media, citing a chilling effect on environmental communication.

I4PC may still pursue complaints under the new legislation but is currently pursuing a securities complaint since investor protection is part of the Alberta Securities Commission’s mandate. I4PC may also be betting that despite Bill C-59’s lower hurdle for environmental claims, pursuing a greenwashing case before the Competition Tribunal is still likely to be a costly and potentially risky affair.

Greenpeace has also filed a complaint against an energy company with the ASC, although it was not about greenwashing. In its 2023 complaint, the activist group alleged Suncor Energy Inc. failed to adequately disclose the risk that its assets could be stranded in the event of a transition to a low-emissions economy.

References:
[1] https://financialpost.com/commodities/energy/oil-gas/cenovus-enbridge-accused-greenwashing-under-securities-law
[2] https://www.ainvest.com/news/alberta-indigenous-loan-agency-denies-involvement-meg-energy-takeover-bid-2508/
[3] https://finance.yahoo.com/news/cenovus-enbridge-accused-greenwashing-under-040554027.html