By Laura Gosset, Senior Shareholder Engagement and Policy Analyst
Working with institutional investor clients, last quarter SHARE filed proposals asking for meaningful reduction targets for the potent greenhouse gas, which accounts for 15 per cent of Canada’s total emissions
Climate change is an urgent crisis and in order to prevent the worst of its impacts, companies must have a plan to start reducing their greenhouse gas (GHG) emissions now.
Methane is a particularly harmful greenhouse gas that has over 70 times more global warming potential than carbon dioxide in the short term. The oil and gas sector contributes 44 per cent of Canada’s total methane emissions, most of which comes from upstream activities, and given recent studies that have pointed to inaccuracies in measurement, that figure is likely a low estimate.
There is a strong business case for reducing methane emissions, and it can be done using existing technologies. Drastic reductions are necessary beyond what is required by current regulations to keep global warming within a safe limit. Yet very few oil and gas companies in Canada have disclosed measurable methane emissions reduction targets.
That’s why this quarter, SHARE took action on the issue of methane emissions in the oil and gas sector. SHARE spoke up on behalf of our institutional investor clients who wanted to use the power of active ownership to advocate for companies to increase their ambition on methane emissions reductions. We attended the corporate annual meetings of five of the top Canadian natural gas producers (Cenovus Energy, Encana, Peyto Exploration and Development, Seven Generation Energy, and Tourmaline Oil), asking these companies whether they will adopt their own ambitious, company-wide quantitative targets to reduce their methane emissions. By raising these questions at company annual meetings, we focused the attention of company leadership on the issue of methane and promoted awareness among investors and other stakeholders of the need for methane emissions reductions.
The responses we received at these AGMs highlighted which companies were demonstrating leadership, including Tourmaline Oil Corporation, Canada’s top natural gas producer, whose CEO committed to disclosing a methane emissions reduction target during the company’s annual meeting. However, it also highlighted which companies are lagging behind their peers: the CEOs of both Encana and Peyto Exploration and Development signalled at their annual meetings that they are not currently considering adopting methane emissions reduction targets, leaving shareholders in the dark about their plans to reduce methane emissions going forward.
Cenovus Energy Inc. set a target to reduce its emissions in 2016, but the company quietly dropped this target in subsequent years. At the AGM of Cenovus Energy Inc. in April 2019, SHARE presented a shareholder proposal filed on behalf of the Fonds de Solidarité des Travailleurs du Québec (FTQ) requesting that Cenovus set and publish targets that are aligned with the goal of the Paris Agreement to limit global average temperature increase to well below 2 degrees Celsius relative to pre-industrial levels. The proposal received 10.55% of shareholder votes, showing strong initial support for an issue that will only continue to gain importance.
While these are positive steps, we still have much work to do to ensure that companies adopt targets that result in meaningful emissions reductions. Building off of our progress, we plan to continue engaging producers in constructive dialogue alongside our institutional investor clients to ensure that targets are ambitious, address both the short and medium term emissions, and that progress is reported annually.
Because every percentage point reduction in harmful emissions makes a difference, we will continue to demand action from the industry by engaging with these companies and more, to help put us on track for a safe and sustainable future.