Canadian banks are lending Enbridge over $ 1 billion with questionable sustainability requirements

Canada’s largest banks have signed a new deal to inject $ 1.5 billion into Enbridge that will help the oil and gas company expand its pipeline network, and the vast majority of that money is called “linked sustainability” in the companies. term sheets.

Of the $ 1.5 billion Enbridge receives, $ 1.1 billion It is “linked to sustainability”, which means that the interest rate changes over time based on whether the company complies with its environmental, social and corporate governance (ESG) goals. These goals include reducing the intensity of greenhouse gas emissions by 35% by 2030 compared to its 2018 emissions, and goals to increase racial diversity among its staff and the number of women on its board of directors.

The other $ 400 million it is not tied to these efforts and comes with different terms.

The groups behind the financing are the investment arms of RBC, BMO, TD, CIBC, Scotiabank, National Bank of Canada, Dejardins, HSBC and ATB Financial, as well as Merrill Lynch Canada, a subsidiary of Bank of America. The exact breakdown of how much money each contributed is unknown.

Calgary-based Enbridge says that “sustainable finance strategy, ”Of which this is a part, plays a key role in your effort to meet your ESG Goals because it connects financing costs with ESG disclosures.

“We also have committed to net-zero emissions by 2050, and annual performance toward that and all of our ESG targets have been linked to executive and employee compensation, ”spokeswoman Tracy Larsson said in an email.

Still, the terms of the recent financing make it clear that Enbridge plans to use the money to pay off debt and for capital expenditures like pipelines.

“The (corporation) does not intend to allocate net proceeds specifically to projects or business activities that meet environmental or sustainability criteria,” Enbridge says in the risk factors section of the terms of its financing agreement linked to sustainability.’s climate finance director Richard Brooks says the money is to build the Enbridge pipeline network.

“The money that comes into the company, even at the corporate level, will go to large capital expenditures and in this case, it would be all the pipelines that Enbridge is expanding,” he said.

Enbridge is behind the controversial Line 3 pipeline that climate and indigenous rights activists have been protesting against. Line 3, which runs from Edmonton to a terminal in Wisconsin, was first built in the 1960s, and Enbridge is now expanding its capacity, thereby blocking the oil sands infrastructure.

Canada’s largest banks are pumping $ 1.5 billion into #Enbridge that will help the oil and gas company expand its pipeline network, and the vast majority of that money is referred to as “linked sustainability” in the term sheets. #cdnpoli

From May 2020 to April 2021, Enbridge invested more than $ 500,000 in a fund called Public Safety Escrow Trust Account that pays surveillance expenses related to Line 3, informs the Minnesota reformer. VICE reports that the amount has swelled to almost $ 2 million in late August due to the summer protests.

“Enbridge does not direct any police response. Community police and sheriffs are responsible for public safety, ”Larsson said.

Because the funding can be used for general corporate purposes, Brooks said Enbridge could use the money for law enforcement activities.

“Paying for the police is, unfortunately, part of (Enbridge’s) operations, so these days for a Canadian company to pay the police to remove indigenous land defenders from their lands at this time of reconciliation, I think it’s disgusting and offensive, ”Brooks said.

Brooks also called Enbridge’s commitment to reducing emissions intensity as part of its ESG targets a “slap in the face” because the target only addresses emissions for which the company is directly responsible, not including emissions created. when fossil fuels finally burn.

The problem lies “in the product that they are going to send and facilitate expanded use, which in the case of Line 3 is tar sands oil,” he said. “They’re building infrastructure that has a lifespan of decades, (and) once we build it, we’re basically blocking its use for many years.”

Tara Houska of the Giniw Collective, an indigenous-led organization leading protests against Line 3, called it greenwashing to say that bank loans are linked to sustainability.

“I don’t think there is any way to try to paint a tar sands company as sustainable,” he said. “The product that they are taking from the earth is one of the most carbon intensive processes to create oil around the world ”.

Houska said that in its experience of campaigning against North American and European banks, Canada stands out as being resistant to change.

“Canada has been one of those places where, because the industry is so deeply rooted with the government and with the financial sector, it has been really difficult to gain traction,” he said.

“But I hope Canadians will pay attention to that and think about how their financial sector, and their banks, are as entrenched in the fossil fuel industry as their government, which is buying pipelines these days.”

Since the Paris Agreement was signed, Canadian banks have given $ 694 billion to fossil fuel companies in loans, and they have also invested $ 125 billion in them, according to a report by the research firm Deep, based in Amsterdam.

RBC was the largest funder, providing $ 164 billion in loans to fossil fuel companies. It was followed by Scotiabank with $ 157 billion, TD with $ 144 billion, BMO with $ 116 billion, CIBC with $ 100 billion and the Desjardins Group with $ 13 billion.

When it comes to equity investments in fossil fuels since Paris was signed, RBC was back at the top with $ 45 billion. It was followed by TD with $ 26 billion tied up in fossil fuels, BMO with $ 21 billion, Scotiabank with $ 17 billion, CIBC with $ 16 billion and Desjardins Group with $ 1 billion.

John Woodside / Local Journalism Initiative / Canada National Observer

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