Proxy Alert

Proxy Alert: Shareholder proposal on adopting climate-related targets at Ovintiv Inc.

Ovintiv Inc (formerly Encana Corp.)
Symbol: OVV (TSX/NYSE)
Annual Meeting Date: April 29, 2020
Filer: Pension Plan of the United Church of Canada,supported by the Shareholder Association for Research & Education (SHARE)

Shareholder proposal on adopting climate-related targets at Ovintiv Inc.

The climate-related risks and opportunities that oil and gas companies and their shareholders face in the wake of a shift towards a net-zero GHG emissions economy have been put on full display due to recent global events. In the midst of unprecedented economic uncertainty, something that has become increasingly clear is that these risks and opportunities are likely to intensify as a result of factors such as increasing climate-related policies, shifting market demand, and technological innovation and development.

To manage and adapt to these risks, the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) released a set of recommendations that have received wide support from companies, governments and investors alike. Included in these recommendations is that companies should disclose climate-related targets, widely recognized as an important means of assuring investors that climate-related risks are being appropriately managed and mitigated.

Ovintiv Inc., a leading oil and gas producer in North America, has not made clear how it plans to reduce its emissions and manage its climate-related risks in an increasingly carbon-constrained environment. Unlike many of its peers, Ovintiv has not disclosed any climate-related targets, resulting in uncertainty for investors about how climate-related risks are being managed.

The proposal filed by the Pension Plan of the United Church of Canada, supported by the Shareholder Association for Research & Education (SHARE) seeks information about Ovintiv’s climate-related targets:

Resolved, That Ovintiv Inc. (“Ovintiv”) disclose climate-related 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 and pursue efforts to limit the increase to 1.5°C. These targets should address Ovintiv’s key climate-related risks and opportunities over medium and long-term time horizons.  Such targets should be quantitative, subject to regular review, and progress against such targets should be reported to shareholders on an annual basis.

Vote recommendation rationale

As one of the largest natural gas producers in North America, it is important for Ovintiv to clarify its plans to transition to a low-carbon future and how it is progressing against this objective through clear, consistent and comprehensive disclosure.

In contrast to many of Ovintiv’s direct peers in the oil and gas sector, Ovintiv has yet to disclose any climate-related targets and does not appear to have plans to do so in the near-term. While Ovintiv has suggested that requesting it disclose climate related-targets is ‘unduly demanding’, many oil and gas companies have disclosed climate-related targets. A recent review indicated that the majority of the world’s top 25 energy companies have disclosed their climate-related targets and performance against those targets.

In response to the proposal, the company states that “climate-related considerations are integrated into key planning and risk management processes”; however, without quantitative emissions reduction goals and targets, the company’s disclosures lack a crucial component of the TCFD recommendations on climate-risk management.  Specifically, the company’s current disclosures on GHG emissions provide little information for shareholders about its anticipated GHG emissions trajectory going forward.

The company also refers to industry-wide emissions reduction targets under the Alberta Climate Leadership Plan and Canada’s emissions reduction targets. We believe the company needs to increase its transparency around its intended contribution to meeting those targets as well as its intended plans for reducing GHG emissions from its operations across all jurisdictions.

While Ovintiv states in a general sense that it is committed to reducing its emissions, the complete absence of any specific climate-related target inserts uncertainty into investor understanding of the company’s climate strategy and efforts, and causes shareholders to question whether the company is taking the necessary and appropriate steps to address its climate related risks in a timely fashion. Task Force on Climate-related Financial Disclosures. (2017). Recommendations of the Task Force on Climate-related Financial Disclosures.

The Task Force on Climate-related Financial Disclosures. (2019). 2019 Status Report.

The regulations are designed to ensure the sector’s methane emissions are reduced by 40 – 45% by 2025, relative to 2012 emissions.

SHARE’s Recommendation:

Vote FOR the shareholder proposal on adopting climate-related targets at Ovintiv Inc.

Link to full proposal:


Michael Toulch
Senior Analyst, Engagement & Policy
Shareholder Association for Research & Education

OECD Due Diligence Guidance for Responsible Business Conduct, 2018.

Bernstein, Aaron and Larry Beeferman, “The Materiality of Human Capital to Corporate Financial Performance,” Pensions and Capital Stewardship Project, Labor and Worklife Program, Harvard Law School, April 2015.

David Kucera and Dora Sari. 2019. “New Labour Rights Indicators: Method and Trends for 2000-2015”, International Labour Review.

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