Shareholders request that Cenovus Energy Inc. (“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.1 These targets should address Cenovus’ 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.
The oil and gas industry is responsible for a significant portion of Canada’s total GHG emissions, and is the largest contributor to Canada’s methane emissions.2 Given the global shift towards a lower-carbon future and Canada’s commitment to reduce GHG emissions under the Paris Agreement, the oil and gas sector faces potentially significant exposure to climate-related transition risks and opportunities. These stem from factors such as:
• climate-related policies and regulations;
• shifting market demand and access;
• technological innovation and development.
The recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) offer a clear framework for companies to disclose how they are assessing and managing climate-related risks and opportunities. Global investors representing over $30 trillion USD in assets under management have called for large GHG-emitting companies to align their reporting with the TCFD recommendations and take action to reduce GHG emissions across the value chain.3 The TCFD recommendations include the disclosure of targets for key climate-related metrics, for example GHG emissions or capital expenditure alignment with a 2 degree emissions pathway, and performance against these targets.
While Cenovus states that it “has long recognized the need to assess and manage climate change related risks,”4 the company’s disclosure of climate-related targets has been inconsistent, resulting in uncertainty for investors about how climate-related risks are being managed. In its 2016 Corporate Responsibility Report, Cenovus published a GHG emissions reduction target of “a 33 percent reduction in our total upstream greenhouse gas (GHG) emissions intensity by 2026, compared with our January 2016 levels;” however, there is no mention of this target in the 2017 Corporate Responsibility Report or the 2018 report ‘Cenovus’ Carbon Disclosure’.
Cenovus shareholders require clear, consistent and comprehensive disclosure on the company’s plans to transition to a low-carbon future and how it is progressing against this objective. Establishing and reporting against targets will provide investors with assurance and allow for more effective investor management and mitigation of climate-related risks.
1 International agreement adopted in December 2015 under the United Nations Framework Convention on Climate Change.
2 Government of Canada. (2018). Canada’s methane regulations for the upstream oil and gas sector. https://www.canada.ca/en/environment-climate-change/services/canadian-environmental-protection-act-registry/proposed-methane-regulations-additional-information.html
3 Climate Action 100+. http://www.climateaction100.org/.
4 Cenovus Energy (April 2018). Cenovus’ Carbon Disclosure: Managing climate-related risks.