This season, we filed this lobbying resolution with Enbridge. Here is our investor memo regarding the proposal, and here is our detailed rebuttal of Enbridge’s opposition statement.
An element of companies’ net zero commitments coming under increasing scrutiny is their lobbying practices. Public policy will largely determine the ability of our economy and the companies that comprise it to reach net zero. What kind of public policy a company pushes for is therefore directly relevant to its net zero commitment.
Unfortunately, Canada’s oil and gas industry in general rates badly on climate lobbying. A major new report by InfluenceMap (advisor to CA100+) finds the industry engages in “net zero greenwashing” as it claims net zero alignment on the one hand, while lobbying against climate policy and in favour of fossil fuel expansion on the other.
Enbridge and Cenovus are two of the companies assessed by InfluenceMap, receiving a D and D- respectively. Enbridge has been particularly politically controversial over the past few years in its U.S. operations, drawing the ire of the State of Michigan administration and sparking one of the largest acts of civil disobedience in recent U.S. history in Minnesota.
Investors have a direct interest in ensuring that the companies they invest in are doing what they say they are doing – that their disclosures are accurate. Many investors now also have their own net zero commitment, meaning they need their investees to follow suit in a credible manner. The political lobbying misalignment of companies like Enbridge and Cenovus is therefore an investor issue.
This season we filed lobbying proposals with both Enbridge and Cenovus asking for more disclosure on their lobbying. They responded in opposite ways.
To its credit, Cenovus’ management recommends voting FOR the proposal we filed there. This is encouraging as Cenovus is acknowledging that it can do better. We look forward to following up with the company on its lobbying disclosure.
Enbridge’s response, on the other hand, has been sharply negative. The company failed to engage on the proposal, and in its management circular Enbridge disparages I4PC and takes the petty step of removing the spacing in the proposal and putting it into a small italicized font, thereby making it hard to read.
This response is broadly consistent with what we’ve observed of Enbridge’s pattern of political activities, which includes:
- The use of political front groups like ‘Great Lakes. Michigan Jobs.’, ‘Minnesotans for Line 3,’ and ‘New Yorkers for Affordable Energy’ to lobby for fossil fuel projects and against climate action, and a failure to disclose these activities to shareholders.
- A pattern of political donations to pro fossil fuel candidates who obstruct climate action, like Joe Manchin.
- The alienation of key decision makers and stakeholders such that Enbridge now finds itself facing large material business risk, such as the litigation surrounding Line 5.
- Lobbying for fossil fuel expansion, in contradiction to its net zero commitment.
Enbridge claims it has systems in place to govern its lobbying, but clearly these systems are inadequate given the results. Investors require more disclosure to demonstrate that the Board understands the risk associated with Enbridge’s political activities and is managing it properly.
InfluenceMap has prepared a memo with further information regarding Enbridge in the lead up to the vote at its AGM. We encourage Enbridge shareholders to vote FOR the proposal.
