Here’s a recent news release from the shareholder advocacy organization Investors for Paris Compliance (I4PC):

• Today I4PC filed a complaint with the Alberta Securities Regulator (ASC) alleging misleading disclosure regarding net zero by Cenovus and Enbridge. The choice of the ASC may come as a surprise to observers who have been expecting complaints to the federal Competition Bureau, sparked by Bill C-59.
• “Investors should not have to rely on citizens complaining to the Competition Bureau to ensure accurate and complete disclosure by public companies when securities regulators have said repeatedly that greenwashing runs counter to securities legislation,” said Michael Sambasivam, Senior Policy Analyst with I4PC. “Lacklustre enforcement of securities law has led to the current situation where oil and gas companies clearly misaligned with net zero are claiming otherwise, misleading investors who often have their own net zero commitments to uphold.”
• The complaint alleges systematic greenwashing by Cenovus and Enbridge, including:
  • Engaging in significant fossil fuel expansion while claiming alignment with net zero – a fundamental contradiction;
  • Setting misleading emissions targets that allow for such expansion, either missing or mischaracterizing scope 3 emissions;
  • Failure to allocate more than a fraction of capital expenditures towards activities consistent with net zero;
  • Public communications, both directly and via industry associations, engaging in overly promotional disclosure regarding net zero; and
  • In the case of Cenovus, incomplete information regarding the current state of its net zero targets and strategies, as the company pulled all net zero disclosures last summer.
• The complaint requests that the ASC conduct an investigation into the net zero disclosures of Cenovus and Enbridge and peer companies to remedy specific instances of overly promotional disclosure, and work with other provincial securities regulators on guidance related to net zero claims by publicly listed companies in Canada.

The reference to Bill C-59 reflects a recent strengthening of the Competition Act, to specifically prohibit ““[making] a representation to the public with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation in accordance with internationally recognized methodology.” But in this case, as noted, I4PC made a strategic decision to pursue an action under securities legislation instead, presumably on the premise that this might be a more effective way to set a broadly-applicable precedent (the remedies sought by the organization seem to be looking to the future more than to “punishing” the two entities).

The complaint might be viewed as urging the Canadian Securities Administrators to put its money where its mouth is. The CSA announced earlier this year that it’s “pausing its work on the development of a new mandatory climate-related disclosure rule,” noting in particular recent developments in the US; only a wild optimist would expect this “pause” to be lifted in the foreseeable future. At the same time, the CSA reminded issuers that “climate-related risks are a mainstream business issue and securities legislation already requires issuers to disclose material climate-related risks affecting their business in the same way that issuers are required to disclose other types of material information.” The I4PC cites various other CSA statements along the same lines, such as:

• “Disclosure about a target to transition to net zero which can be misleading if the issuer does not indicate what is included in its net zero target and if the issuer has no credible plan to achieve such a target.”
• “In order to avoid misleading promotional language issuers should ensure that all ESG disclosures, whether voluntary or required, are factual and balanced. ESG disclosure should be specific and supported by facts and corporate activities, as applicable.”

Under Canada’s regulatory regime, in the absence of a single national securities commission, the primary responsibility for overseeing individual entities is allocated between provincial commissions based on head office location; thus the reference to the Alberta Commission in this case. This might be less than ideal, considering that Alberta is generally viewed as being less engaged with climate-related issues than some of the other provinces; on the other hand, that might lend particular weight to any action the ASC does choose to take. The complaint certainly seems to cite a wealth of evidence in favour of its “greenwashing” claims, to an extent that would almost be funny, if it wasn’t so serious. Still, a Canadian Press story on the complaint quoted an Enbridge statement as saying ““We…remain committed to accuracy and transparency _ and we stand behind the information we share in our reports and communications.” (Cenovus didn’t respond to their request for comment).

It seems that at the very, very least, the two companies might be advised to pull back a bit on the self-serving rhetoric. But if it doesn’t escalate into a formal enforcement action, and given that the Canadian securities commissions don’t make public all their communications with companies, we may never exactly know…

The opinions expressed are solely those of the author.