In response to our capital expenditure spending in line with GHG commitments shareholder proposal, Suncor replied in its proxy circular (pp. A1-A4). This is I4PC’s rebuttal of its reply.
Suncor lays out five reasons for opposing the proposal, none of which address why the company should not report on its capital expenditure for meeting its climate commitments. Here are Suncor’s five reasons, with a rebuttal for each:
Specific Claims
Suncor Claim: “We believe Suncor’s existing reports should be used to disclose our plans”
Response: The format of Suncor’s response is not the issue: the content of it is. As we said to Suncor in our engagement, we are simply requesting that Suncor disclose more information regarding its capital expenditure plans and the relationship to its GHG commitments. Suncor can pick which way it wants to report.
Suncor Response: “We engage experts to define decision useful climate disclosure for our shareholders”
Response: It is good Suncor engages with these groups. What has Suncor heard about capital expenditure disclosure related to Suncor’s climate commitments? Please disclose.
Climate Action 100+, a global investor initiative representing US$68 trillion in assets under management, found in its October 2022 Assessment that Suncor “does not meet any criteria” for capital alignment, medium term targets or decarbonization strategy.” CA 100+ has flagged this resolution as being consistent with the goals of the initiative.
Suncor Claim: “We committed to a near term target in 2021 of 10% of our capital allocated to:
- portfolio of base business decarbonization projects, including Pathways Alliance; and
- portfolio of energy expansion projects to reduce emissions in our value chain.”
Response: As we stated in the resolution’s supporting statement, Suncor has not provided details on how the 10% commitment aligns with meeting its 2030 and net zero by 2050 targets by providing specific details on the projects, including cost and GHG reductions from specific projects. A 10% commitment also raises questions about how the other 90% of annual capital allocation is aligned with supporting the company its GHG commitments.
Suncor Claim: “We aligned senior leader compensation with our plans and targets and will steward our progress against vesting criteria for climate related equity compensation in our annual proxy and in our Climate Report”
Response: Compensation is a different issue. Reporting on capital expenditure to meet the Suncor’s climate commitments is a complimentary action as it creates another financial metric that can be used to evaluate senior leaders on the progress towards achieving the climate commitments.
Suncor Claim: “We disclose details on our plans as projects progress from concept to final decision”
Response: Suncor has disclosed some information on the types of projects it envisions will deliver the GHG reductions it needs to achieve its 2030 GHG target, but less on the actual projects themselves. Because of the timelines for constructing many of these projects, financial decisions be imminently required if Suncor expects these projects to contribute towards meeting its 2030 GHG targets. As a result, Suncor should be reporting on spending for those projects.
[1] The Climate Action 100+ initiative flags shareholder proposals and other votes aligned with the goals of the initiative for investors to take into consideration during proxy season https://www.climateaction100.org/approach/proxy-season/
[2] Pg 27 Suncor 2022 Climate report link