The Imperial Strathcona Refinery which produces petrochemicals is seen near Edmonton, on October 7, 2021.Todd Korol/Reuters
Imperial Oil Ltd. IMO-T shareholders have rejected a proposal from an Alberta First Nation that would have made the company disclose the financial effects of climate change on its assets.
The shareholder proposal was the latest development in Athabasca Chipewyan First Nation’s continuing dispute with Imperial, after the oil giant failed to tell the community about leaking oil sands tailings ponds for almost a year. Water tainted with dangerous levels of arsenic, dissolved metals and hydrocarbons has been seeping from the Kearl oil sands project in Northern Alberta into the environment since at least May, 2022, but no local communities were told until a separate incident in February, 2023, spilled 5.3 million litres of waste water.
ACFN Chief Allan Adam told shareholders at Imperial’s annual meeting Tuesday that the eventual cleanup of the company’s long-life oil sands sites was already a pricey problem for shareholders, and it would only get worse as climate change and public calls for environmental accountability place more pressure on the oil and gas sector.
By failing to factor those costs into its forward-looking financial statements, Imperial is not being honest with its investors, Mr. Adam said.
Calgary-based Imperial scores poorly on a number of climate-related financial and policy disclosure measures according to an assessment by Climate Action 100+, an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take action on climate change.
The company does not incorporate material climate-related matters into its audited financial statements or disclose financial assumptions and estimates around climate change, for example, nor has it published a detailed and accurate account of its corporate climate policy positions and engagement activities.
Over all, ClimateAction 100+ found that Imperial’s climate policies do not align with what is needed to deliver on the targets set by the Paris Agreement to limit global warming.
Mr. Adam told shareholders that voting yes on the ACFN proposal would force Imperial to provide a “true financial picture of the health of the company,” including billions of dollars he says it will have to pay to clean up its tailings ponds in the oil sands. And it would allow shareholders to make informed decisions about where to invest their money.
“A vote ‘no’ would be a direct attack on the well-being of our people,” he said.
Imperial chief executive officer and board chair Brad Corson said Tuesday that the company remains “deeply sorry” for the issues at Kearl, and acknowledged it would take time to rebuild trust with the community.
Still, he argued against the ACFN proposal on behalf of the board, saying Imperial already uses various assumptions around the cost of retiring assets, including legal obligations, technical assessments and inflation rates.
Adopting climate transparency per the ACFN resolution would “produce a set of arbitrary and hypothetical views of the future,” Mr. Corson said, rather than the “thoughtful, fact-based approach” the company currently uses.
In the end, around 80 per cent of independent shareholders voted against the ACFN proposal.
Mr. Adam said in a statement that large, institutional shareholders like Goldman Sachs, Royal Bank of Canada and Vanguard should demand higher degrees of transparency from the companies that they invest in – including Imperial.
“Publicly traded companies around the world are starting to disclose climate and environmental liabilities, not out of the goodness of their hearts, but because it is financially prudent,” he said.
“Alberta’s oil sands have an estimated 1.4 trillion litres of tailings ponds that will eventually have to be remediated. Simply ignoring the problem does not remove the financial liability upon taxpayers and company shareholders.”
The Kearl leak and the secrecy around it spurred numerous investigations, including by the House of Commons environment committee, and prompted Imperial’s CEO to apologize. ACFN is also suing the Alberta Energy Regulator.
The oil sands site had its strongest production on record last year, reaching 270,000 barrels a day, which helped contribute to Imperial’s second-highest-ever earnings of $4.9-billion in 2023.
Mr. Corson said momentum at Kearl has continued into 2024, with a record first-quarter performance, averaging 277,000 barrels a day, and record monthly production in both February and March.
He said Kearl is well-positioned to increase production to 280,000 barrels a day in 2024, and has lowered operating costs by more than US$6 a barrel compared with 2022.
Regarding the continuing leak, Mr. Corson said the company has significantly expanded its water seepage interception system, and has stepped up engagement with communities to share information and progress.