As we previously predicted in a 2014 article, The Rise of Policy Activists?, policy activism in Canada is gaining speed. In this year's upcoming proxy season, a hot topic for policy activists is the potential transition to a global low-carbon economy.
Canada is currently working towards a national climate change plan and one of the tools being considered is a national carbon tax. If implemented, energy companies would be required to pay a national tax on greenhouse gas emissions.
One of Suncor's shareholders, NEI Investments, filed a shareholder proposal last month demanding that Suncor address its long-term survival plans. In particular, it demands that Suncor "provide ongoing reporting on how it is assessing, and ensuring, long-term corporate resilience in a future low-carbon economy."
NEI Investments' proposal will be put to a shareholder vote at Suncor's annual general meeting on April 28, 2016. While shareholder proposals are technically non-binding even if they receive a majority of votes, this proposal has Suncor's support and Suncor has even recommended that shareholders vote in favour of the proposal.
NEI Investments explains its position in a report entitled The End of the World as We Know It: Transitioning to a Low-Carbon Energy System. It states: "We believe the energy transition is already underway and change is now inevitable. As a result, investors face both risks and opportunities, but more importantly, we believe investors have a responsibility to actively drive this transition."
South of the border, shareholders of Exxon – the world's largest publicly traded oil company – recently brought a similar proposal requiring Exxon to account annually for the risks of climate change legislation. Exxon objected, arguing that the proposal was vague and that Exxon already published carbon-related information for shareholders on its website. The US Securities and Exchange Commission, however, found that Exxon's public disclosures do not appear to "compare favorably with the guidelines of the proposal" and ordered the shareholder resolution to be put to a vote at Exxon's annual meeting this May.
While the specifics of Canada's climate policy remain to be seen, it is clear that a climate change plan is on the agenda for Canada and other countries around the world. Policy activism will continue to rise as investors become increasingly conscious of the risks of climate change.
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