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Imperial Oil rebuked for its environmental balance sheet
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BY MARTIN VALLIÈRES – La Presse – April 22, 2004
TORONTO – In response to questions from two atypical investors, i.e. a couple of Quebec-based religious congregations, the president of Canada’s largest oil company was pressed to provide a lengthy explanation of his firm’s environmental balance sheet before its shareholders yesterday in Toronto.
Tim Hearn, chairman of the board and chief executive officer of Imperial Oil (better known by its Esso brand), therefore maintained a polite tone throughout, despite the palpable tension in the room.
Indeed, as the annual meeting opened, Imperial Oil had police officers eject two Greenpeace activists who were distributing pamphlets after posing as duly registered individual shareholders and getting by the security barriers set up by the oil company, which included a metal detection gateway.
Greenpeace is spearheading an international campaign against Imperial Oil’s 70% shareholder Texas giant ExxonMobil, decrying what it considers to be the company’s lax and negligent attitude to pollution. Environmental concerns were also behind the intervention of the two Quebec-based congregations at Imperial Oil’s annual meeting.
The nuns, however, preferred a more official approach, using their status as shareholders to register proposals, within the allocated time frame, and submit them to a vote of the company’s shareholders.
One of the proposals, registered by the Fonds Élisabeth Bergeron des soeurs de Saint-Joseph, in Saint-Hyacinthe, requested that Imperial Oil file an annual audited report of its efforts to reduce greenhouse gases. The proposal also requested that shareholders be provided with an assessment of Imperial Oil’s financial liability risk as it relates to the impact of climate change.
Another proposal, registered by the Congrégation des Soeurs de Sainte-Anne, in Lachine, requested that Imperial Oil disclose to its shareholders an assessment and development plan for alternative energy sources.
As is the case with most shareholder proposals at annual meetings, those of the two Quebec congregations garnered a small fraction of shareholder votes, i.e. fewer than 12%.
But for sister Céline Dupuis, who is in charge of this file at the Congrégation des Soeurs de Sainte-Anne, “what mattered most to us was not the vote, but rather the opportunity to express our point of view as a socially concerned shareholder.
“There’s more to this than profits, which is what Imperial Oil’s officers suggest when they flaunt the company’s strong earnings. It’s also important to avoid making these profits at the expense of the environment and of the population as a whole,” added Sr. Dupuis, when reached at her office in Lachine. Last-minute commitments prevented her from attending the annual meeting in Toronto, as she wanted to do.
Still, her congregation’s proposal and that of the Soeurs de Saint-Joseph were explained before the company’s shareholders by Toronto-based representatives of Kairos, an ecumenical organization representing Canada’s major churches and a number of religious groups that coordinate their actions on social and economic issues.
In fact, the two Quebec congregations that submitted proposals for the Imperial Oil annual meeting are also part of the Regroupement pour la responsabilité sociale des entreprises (“Organization for Corporate Social Responsibility”), which campaigned last February against Hydro-Québec’s Suroît gas power station project.
Yesterday, however, addressing Imperial Oil’s senior management and shareholders, Kairos coordinator Joy Kennedy invoked both environmental concerns and business risks in defence of the proposals submitted by the two Quebec religious congregations. “What is Imperial Oil doing about the future costs of greenhouse gas emissions (under the Kyoto protocol) and about the major risk of any shareholder liability for the impact of climate changes?”, Ms. Kennedy asked Imperial Oil president Tim Hearn.
As for Imperial Oil’s alleged lag in terms of alternative energies, Ms. Kennedy pointed out the risks, for corporate shareholders, that the company might be left behind by its competitors. “Other oil companies such as Shell and Suncor are already investing massively in renewable energy. Why isn’t Imperial Oil?” Ms. Kennedy concluded by asking what would be the financial risk for shareholders if, in five or ten years, Imperial Oil were required to make up for lost time in one fell swoop in this area, at a very steep price.
During his lengthy replies, Imperial Oil’s president admitted that “all forms of energy will have their place” during the next few decades as demand increases and known gas and oil deposits are unable to keep up with it. For the time being, however, Tim Hearn claims that alternative energy sources such as wind and solar power are still “too expensive” and are not viable without government grants that would provide investments with a sufficient return for the company and its shareholders.
Moreover, the president praised the company’s positive performance in reducing greenhouse gas emissions from its operations. He also denounced the claims of environmental critics, asserting that Imperial Oil was outperforming its major rivals in Canada.
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