Boilers rise above the Cenovus Christina Lake oilsands facility southeast of Fort McMurray, Alta., on April 24.AMBER BRACKEN/The Canadian Press
Oil sands companies are holding back on issuing environmental reports to shareholders as they deal with the fallout from federal legislation intended to ban greenwashing.
Cenovus Energy Inc. CVE-T and Canadian Natural Resources Ltd. (CNRL) CNQ-T both released second-quarter financial results on Thursday. But the usual environmental, social and governance reports were absent for both companies, which they attributed to significant uncertainty around Bill C-59.
The contentious legislation, which received royal assent in June, changes the Competition Act to stamp out false or exaggerated environmental claims. It led several Canadian oil companies and lobby groups to add disclaimers to their websites and social-media feeds, which Energy Minister Jonathan Wilkinson labelled a “gross overreaction.”
Jeff Lawson, the acting chief sustainability officer for Cenovus, called the new rules a “distraction” for the Calgary-based company.
He told an investor call Thursday morning that the legislation has resulted in a tremendous amount of work “for an incredible number of people who are just trying to do the right thing.” He added that it has caused much vexation within Cenovus, which is keen to speak publicly about its environmental goals and actions.
“You get these curveballs thrown at you, and the best thing you can do is try to work through it and not get too frustrated,” Mr. Lawson said.
“There’s a lot of consternation around uncertainty in the wording of the legislation, which is why people have pulled back on disclosure.”
The news rules have also stifled crucial conversations, said Jon McKenzie, the company’s chief executive officer.
“In Canada, we need to have robust discussion on energy policy, because it’s such an important part of our economic fabric of this country,” he said Thursday, adding that he hopes clarity around the rules “happens sooner rather than later.”
Scott Stauth, president of CNRL, called the new rules “concerning,” and said they prevent the company speaking with shareholders and others about its environmental objectives.
“We want to be able to communicate with them, but we need a structure where we understand exactly what the standards reporting is expected to be. And right now, we don’t know what that is,” Mr. Stauth said in an interview Thursday.
“Until we understand standards that we are expected to be held to, it’s very, very difficult – if not impossible – for us to make any comments on our forward-looking ESG targets.”
The Competition Bureau’s consultation with the fossil-fuel sector about the new rules has already begun.
That process is slated to last until September, and Mr. Lawson said he expects clarity on the legislation in the fall.
Cenovus’s 2023 environmental, social and governance report was originally scheduled to be published at the end of June.
But the significant uncertainty created by the Competition Act changes means the company will instead issue an interim corporate social responsibility report in late August, which will address safety, Indigenous reconciliation, inclusion, diversity and governance.
In a media release about its second-quarter financial results Thursday, CNRL said “we regret that we are unable to provide an environment and climate update at this time” because of the new rules.
“This legislation does not change our commitment to the environment and to ensuring safe, reliable operations, only the way in which we are publicly communicating these aspects of our business. As we receive additional guidance, we intend to resume environmental and climate-related disclosure,” it said.
Mr. Wilkinson told The Globe and Mail recently that what is being asked of the oil and gas sector under the changes “is no different than what’s being asked of the pharmaceutical sector, which is you just have to have a basis for the claims that you make.”
Environmentalists have lauded the measure, saying it will help protect consumers by injecting reality into green claims as Canadian regulators drag their feet implementing mandatory climate-related disclosures.
The Alberta government has loudly protested against the new rule, labelling it “draconian” and “authoritarian.”