Sustained and growing opposition in British Columbia may turn out to be the least of Kinder Morgan Canada’s problems, after the Alberta Securities Commission (ASC) agreed Monday to review Greenpeace’s complaint that the company failed to adequately disclose the climate risks it faces when it issued its first annual report.
“Under Alberta’s securities law, a failure to fully disclose risks to shareholders can result in fraud charges or class action lawsuits,” Greenpeace Canada notes in a release.
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“The opposition of the B.C. government is only one ripple in a sea of troubles facing Kinder Morgan Canada (KML),” said Senior Energy Strategist Keith Stewart. “In its report to shareholders, the company admits that climate change threatens its facilities, and that the alliance of Indigenous and environmental climate protectors may block construction of its Trans Mountain Expansion Pipeline.” But “despite these disclosures, we believe the company is still underplaying the risk that a successful transition to a low-carbon economy would pose to their business model.”
Monday’s release, a summary of Greenpeace’s 13-page assessment of KML’s 2017 annual report, says the company acknowledged public opposition to the Trans Mountain pipeline expansion, technology and policy changes resulting in reduced fossil fuel demand, and climate impacts like sea level rise and extreme weather, as threats to the project.
However, Kinder failed to disclose legal and fraud investigations facing fossil companies that have bought space on the pipeline, or include a low-carbon scenario in its public analysis. The recent Task Force on Climate-Related Financial Disclosure (TCFD) “recommended that all organizations exposed to climate-related risks use scenario analysis to help inform their strategic and financial planning process—and to disclose how resilient their strategies are to a range of plausible climate-related scenarios,” including compliance with the Paris agreement, Greenpeace notes.
“KML acknowledges that it is exposed to a range of climate-related risks, but does not provide a coherent assessment of how these risks inform their planning or how resilient their business strategy is” in a low-carbon future.
“What is Kinder Morgan’s Plan B for the scenario where the world stops global warming?” Stewart asked. “Whether it’s acknowledging the threat posed by the lawsuits alleging oil companies hid what they knew about climate change, or spelling out what management would do if new technology and climate policies reduce the demand for oil, Kinder Morgan needs to come clean with its investors and the public.”
In another call for disclosure, a shareholder motion in late March instructed Kinder Morgan Canada’s Houston-based parent company to set methane reduction targets by this fall. The proposal “says a strong program of measurement, mitigation, target-setting, and disclosure would reduce the company’s regulatory and legal risk,” the Seeking Alpha blog reports.
In a shocking, truly shocking development, “KMI’s board recommends shareholders vote against the proposal, saying such a report would duplicate other efforts the company is making to reduce its carbon footprint.”
It is hard to retain a modicum of respect for any environmental group who games the legal system, especially if they invoke their sense of moral rectitude and intellectual superiority.
I don’t know why you think anyone is gaming the legal system. Several international bodies, one of them led by the former governor of the Bank of Canada, did necessary and groundbreaking work on disclosure of climate-related risk — not to dictate a course of action for any company, but just to better make sure potential shareholders are informed of the potential risks they’re investing in. Based on that standard, a well-researched package of evidence was presented to a regulator. The regulator assessed the merits of that evidence and decided to investigate further.
Does that mean the environmental group is gaming the system, or providing an essential public service by helping the regulator fulfill its mandate?
And, just curious — if the regulator does eventually conclude that Kinder Morgan, a direct descendant of the disgraced Enron empire, deliberately or inadvertently (since it could be either) withheld information it should properly have provided to its investors…well, now, you wouldn’t be about to accuse Kinder of gaming the system, now, would you?
I enjoy your energy- mix stories. Who or what organizations sponsor the editorial?
Gloria Taylor
I’m glad you like The Mix, Gloria, and thanks for asking.
Ottawa-based Smarter Shift Inc. launched The Energy Mix nearly four years ago, originally as a modest service project and an experiment in community journalism, and has funded it ever since. I volunteer my time as publisher/curator, and Smarter Shift covers fees for the rest of the Energy Mix team and any other expenses that come up. We recently spun off the digest and archive as a separate non-profit, Energy Mix Productions, to better reflect the way the publication is evolving.
The intent is to deliver independent, reliable content that is unbiased in telling individual stories — with a story selection process that is relentlessly and proudly biased toward moving farther, faster on climate change mitigation and adaptation and accelerating the transition to a post-carbon world. I really hope we hit that standard!