Climate change expertise lacking in Canadian boardrooms, report says
Shareholder advisory firm study finds none of the 39 producers or 13 utility companies reviewed have board members who identify climate change as area of expertise, though companies defended their boards
CALGARY—Canada’s biggest oil and gas producers and utilities appear to lack expertise in climate change at the board level despite their dependence on selling energy products linked to the issue, says an institutional shareholder advisory firm.
The Shareholder Association for Research and Education said in a report Jan. 10 that none of the 39 producers or 13 utility companies, whose recent disclosure documents it reviewed, lists climate change as an area of knowledge for any board member.
“We are seeing increasing momentum on climate change here in Canada and it’s clear to us that companies specifically need to be paying attention to their climate risks and opportunities,” report author and SHARE analyst Laura Gosset said.
“The specific goal of this report was to take stock of the current state of disclosure on climate competency at the board level of companies.”
She said SHARE intends to contact the members of the TSX energy and TSX utilities sub-indexes it named in the report to discuss how they can better communicate and expand on what they’re doing to address risks from climate change.
TransAlta Corp., Suncor Energy Inc. and Cenovus Energy Inc., which were among several companies named in the report, defended their boards.
“TransAlta’s board is highly diverse, with many of its directors holding senior positions in energy companies and energy markets in which climate change and carbon management have been a priority for several years,” TransAlta spokeswoman Stacey Hatcher said in an email.
Suncor shareholders passed a resolution at the company’s annual general meeting last April that called for more disclosure on how it’s assessing and ensuring corporate resilience in a low-carbon economy.
“That speaks specifically to carbon risk disclosure and climate change,” Suncor spokeswoman Sneh Seetal said, adding the company has been working since then to comply with the resolution.
Cenovus spokesman Brett Harris said in an email the company’s climate change expertise is ensured in part by having a dedicated vice-president of environment and sustainability, as well as an executive vice-president of business innovation.
In its report, SHARE said that while many companies address environmental risks, those issues tend to be about meeting regulatory requirements related to pollution and remediation.
Climate change risks, on the other hand, involve dealing with changing physical weather patterns, access to natural resources and market conditions, it said.
“Climate change issues are inextricably linked with areas of business like corporate strategy, risk assessment, capital expenditures, operations, trade, financial performance and asset valuation,” the report said.
“And yet … it is not clear that companies are acknowledging this risk at the board level, let alone positioning the company to address it.”
In December, an international task force appointed by Bank of England governor Mark Carney recommended the private sector do more to disclose the risks climate change pose to their businesses and what they’re doing to adapt.