Two of Canada’s energy giants are being accused of painting an overly rosy climate picture for their investors.
What happened: Canadian oil companies Cenovus Energy and Enbridge are facing a first-of-its-kind greenwashing complaint under securities law. The energy giants are accused of misleading investors by exaggerating their net-zero commitments while continuing to expand fossil fuel production.
- A shareholder group, Investors for Paris Compliance, filed the case with the Alberta Securities Commission this week.
Catch-up: Ottawa has been cracking down on greenwashing, passing a law last year known as Bill C-59 that makes it easier for companies to be sued for misleading climate claims. Companies unable to back up their environmental claims can be taken to court and face hefty fines.
- After the law passed, a number of firms, including RBC and Canada Pension Plan Investments, backtracked on environmental pledges, while an oil company coalition scrubbed its website of climate claims.
- Investors for Paris Compliance said it could still sue the oil companies under Bill C-59, but wanted to start with a securities complaint focused on protecting investors.
Why it matters: Greenwashing violations could now be punished under the same framework that governs financial fraud. If regulators side with investors in the Cenovus and Enbridge case, it could force companies to prove their climate math with the same rigour as their balance sheets.
Yes, but: Some critics argue that with stricter greenwashing laws — and little wiggle room to boast about their do-goodness publicly — companies will simply quit their environmental initiatives altogether.—LA