Susan on the Soapbox

It was bound to happen sooner or later. The UCP government’s over the top reactions to anything the federal government does finally pushed it into the looney zone.

On May 29, Rebecca Schutz, the Environment Minister, issued a press release railing on about Bill- C-59.

My god, the inhumanity!!!   

Schulz said the federal NDP snuck an amendment into Bill C-59 that  “threatened fines and jail time for Canada’s oil and gas industry if they tried to defend their record on the environment.”

Not true.  There is nothing in C-59 that stops industry from defending its environmental record anytime it wants to.  

“Environmental activists will be able to bring claims against oil and gas companies under so called ‘anti-greenwashing provisions.’”

Actually, it’s the “misleading environmental benefits” provision. The word “misleading” is important. The prohibition is intended to stop companies from misleading the public about their environmental and climate mitigation performance.

The prohibition against misleading the public is not new. It’s a fundamental tenet of securities law and competition law. Why? Because companies shouldn’t be allowed to rip off their investors, shareholders, and the public by spreading lies and half-truths or conveniently forgetting to mention something important.

“Companies that wish to defend their environmental record will have to prove that their claims can be substantiated by an ‘internationally recognized methodology,’ a vague and undefined phrase that creates needless uncertainty for businesses.

Yes, companies accused of misleading the public will have to prove that they are indeed doing what they say they’re doing for the climate.

And yes, the term “internationally recognized methodology” is undefined, but one thing that’s certain is this standard will be a widely accepted standard (similar to the international GAAP rules and other securities laws reporting standards) and not one dreamed up by the environmentalists bringing the action. That should give the companies a high level of certainty and flexibility.  

“Any company not willing to risk millions of dollars in fines and legal fees will be forced to stay silent.”

Ah, no. Any company not willing to risk millions of dollars will be forced to tell the truth. That won’t cost them a dime.   

“C-59, put plain and simply, is an undemocratic gag order. It must be stopped.”

I’m sorry. What?

Due diligence  

Bill C-59 is the opposite of an “undemocratic gag order.” It requires companies to say more, not less, about how they’re going to achieve their climate mitigation objectives.

This is not difficult or complicated (unless the backup for a grandiose statement is non-existent).

Let’s take an example from the Pathways Alliance website. After C-59 becomes law, Pathways would be wise to ask a lawyer to review this statement to ensure it isn’t misleading.*

The lawyer would ask the questions similar to those I’ve set out in bold.

Pathways said: “We have set ambitious targets (what are those targets? please describe) for the oil sands sector to achieve significant annual CO2 reductions (what are the annual reductions? are they “significant”? please quantify) by 2030 and reach net zero emissions from operations by 2050.” (Describe the operations and explain how they will reduce emissions to net-zero by 2050).

These questions would go out to all the companies who belong to the Pathways Alliance and the answers would be analysed by the lawyers in those companies and at Pathways; once everyone was satisfied the answers would be saved in the lawyers’ due diligence/backup files.

If an investigation or action was brought against Pathways under C-59 with respect to that statement, these answers would be produced to support the statement and to show it is consistent with whatever internationally recognized methodology Pathways chose to adopt.

None of this is new

The C-59 process would be no different than the typical corporate securities process followed by any publicly traded company.

I’ve conducted due diligence on securities filings for decades with companies that run complex oil and natural gas businesses to ensure the company’s statements comply with securities laws. The process takes weeks, it involves the CEO and the VPs heading up every department in the corporation, and at the end of the process when everyone is satisfied the company’s statements are not misleading and nothing material has been omitted,and the statements are true, the document is filed with the regulator.    

Not once in my entire legal career has a CEO complained that the process of complying with the obligation to be truthful is akin to “an undemocratic gag order.” It’s simply part of doing business.

Schulz appears to be saying that the industry (which is responsible for 30% of Canada’s emissions and, despite its statements to the contrary, has seen emissions steadily increase since since 2005) should be allowed to say whatever it damn well pleases.  

Sorry, Rebecca. Albertans own the resources these companies are selling, it’s our tax dollars propping up their climate mitigation schemes, we deserve the truth, not bafflegab from companies that pat us on the head and tell us don’t worry, everything will be just dandy in 2050.

That’s why Bill C-59 is a good idea.

*NOTE: I’m not saying the statement is misleading, I’m demonstrating the questions a lawyer might ask to gather the backup necessary to support it.