Friday, March 1, 2013

NEI Divests from Enbridge Over Northern Gateway

NEI Investments has announced that it will divest its Enbridge holdings from the Ethical Funds portfolio over risks that First Nations' opposition poses to the Northern Gateway pipeline project.

“We have taken the dialogue as far as we can and have been part of some important developments as a result of our efforts,” NEI said in its monthly newsletter. “But in the end, we reached an impasse with the company that we couldn’t overcome.”

NEI said its seven years of discussions with Enbridge have not been fruitless, noting that it has twice received substantial support for shareholder proposals at the company, “showing that we have been successful in getting mainstream investors to seriously consider what would traditionally be considered a social risk as an investment risk.”

NEI also noted that Enbridge has strengthened its link between environmental, social and governance performance and executive compensation. “Forty per cent of the business unit scorecard used to determine executive bonuses is now linked to safety and environmental performance. This is a significant change that should have a ripple effect in the industry. “

Still, NEI said its decision to divest came down to its concern that the Enbridge board does not see substantial First Nations opposition as a reason to walk away from the project. “That means potentially trying to build the pipeline over the objections of First Nations communities and, more importantly, ignoring First Nations’ concerns about aboriginal and treaty rights.”

 “To be clear, we don’t believe this project will proceed,” NEI concluded. “The legal, operational and reputational challenges of building in the face of this opposition have doomed it from the start. We could be proven wrong, but in the meantime we hope the company will take our advice and state that it has no intention of building the project in the face of significant First Nations’ opposition.”

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