TransCanada Corporation’s annual meeting this month will consider a shareholder initiative to analyse the long-term business risk the Calgary-based pipeliner faces in the transition to a low-carbon economy, after management accepted a resolution submitted by two Quebec religious orders.
“The proposal would require TransCanada to report on how it is assessing long-term risks and opportunities that arise as a result of global efforts to avert the worst impacts of climate change,” the Globe and Mail reported last week, citing a release by Montreal-based AEquo Shareholder Engagement Service. “The company should also provide analysis based on various scenarios, including one in which governments act to limit the average increase in global temperatures to less than 2.0°C.”
“TransCanada has long recognized the need for transparency in our greenhouse gas reporting,” added spokesperson Mark Cooper. “We are committed to continually improving our disclosure, and we welcome this opportunity to provide—within reason—external reporting that meets the needs and expectations of shareholders and stakeholders on this increasingly important issue.”
The Globe notes that TransCanada, the company behind the Keystone XL and former Energy East pipeline proposals, already discusses climate-related risks in its annual report, and submits an annual risk and opportunity analysis to the U.S. Carbon Disclosure Project. Its 2017 CDP report acknowledged that climate concerns had had an impact on its project approvals and represented a “reputational risk” as well as an operational one.
“However, the company focuses largely on its direct emissions, and has not analyzed how a rapid transition to a lower-carbon energy economy would affect the demand for pipeline capacity from North American oil and gas producers,” the Globe notes. While Cooper adhered to the fossil industry line that oil and gas will continue to be “a key source of reliable and affordable energy for the foreseeable future,” the Globe’s Shawn McCarthy notes that institutional investors “are putting increasing pressure on energy companies in particular to disclose their climate-related risks in a manner that can be used to compare industries and companies within sectors on their vulnerabilities.”
While securities law requires companies to disclose any material risk arising from climate change, Æquo CEO Jean-Philippe Renaut said energy companies’ climate risk reports are often limited to an inventory of existing regulations and an attempt to play down wider concerns.
“In theory, any information on the markets that helps investors understand how the company evolves in this context is useful,” he told the Globe. “If the investors don’t find it convincing, it is their duty to push back and say this is not worth the paper it is printed on, or is not rigorous enough.”