B4 | RE P O RT O N BUS I N ES S
OPINION & ANALYSIS
Oil confronts its image problem – is it enough?
Cenovus commitment is
nothing new, and many
wonder if targets are
more than aspirational
ADAM
RADWANSKI
OPINION
T
he announcement by one
of Canada’s major oil pro-
ducers would have been a
jaw-dropper, just a few short
years ago.
Cenovus Energy didn’t just
promise this week to reduce per-
barrel greenhouse gas emissions
by 30 per cent by 2030, from a
2019 baseline, which is ambitious.
It also pledged to work toward
“net-zero” emissions by 2050,
which given the environmental
toll of extracting bitumen could
seem borderline outlandish.
But for an industry that hopes
to continue profiting off Alberta’s
oil sands, this kind of messaging
is becoming the new normal. And
depending on how companies
such as Cenovus answer skeptics’
questions about what the com-
mitment means, it still might not
be enough to reverse the reputa-
tion problem that threatens their
future.
Rita Trichur and her husband, Christophe Joly, attend their wedding reception in Toronto. The ceremony in 2003 cost $50,000, the equivalent of $66,000 today. COURTESY OF RITA TRICHUR
Trichur: Economic uncertainty has wealthy Indians curtailing wedding expenses
FROM B1
When factoring in inflation,
that’s the equivalent of more
than $66,000 today – a total that
doesn’t include the thousands of
dollars they spent on 22-karat
gold jewellery since my birth in
anticipation of my wedding day.
If my parents had invested the
50-grand in a TSX index fund,
and reinvested the dividends, it
would be worth more than
$180,000 today.
With Indian wedding season
under way, parents of a whole
new generation are about to
blow their savings – whether
they can afford to or not. The av-
erage cost of an Indian wedding
in Canada is $100,000, according
to a documentary titled Little In-
dia Big Business. Some have
events that stretch over an entire
week.
Sanity needs to prevail. Cultur-
al expectations for big weddings
are out of whack with economic
realities in Canada. Since most of
us don’t earn money like Bolly-
wood movie stars, it’s time to
face some hard truths about our
finances and teach our kids that
it’s the marriage that counts, not
the wedding.
That message is starting to
Although it is among the more
forward-looking players in the
sector, when it comes to recogniz-
ing climate-change impacts, Cen-
ovus is not the first to set these
sorts of goals to reduce emissions.
Last summer, Canadian Natural
Resources Ltd. announced a simi-
lar “net zero” aim, albeit without
a target date, and MEG Energy has
indicated that aspiration as well.
Others will likely follow.
The impetus, to some extent, is
political pressure. Cenovus’s tar-
gets ostensibly mirror those be-
ing pursued by Prime Minister
Justin Trudeau’s government,
which is committed to an overall
emissions reduction by 2030 un-
der the Paris Agreement, and has
promised to put Canada on a path
to net-zero by the middle of the
century.
More so, the pressure is finan-
cial. With environmental, social
and governance (ESG) considera-
tions increasingly factoring into
investors’ decisions, Alberta’s oil
producers are at risk of being bad-
ly starved for capital.
Spend time in Alberta, and you
will still hear considerable dis-
missal of the idea that global de-
mand for oil and gas will signifi-
cantly decline in the foreseeable
future. But you will also hear, in-
cluding from some major players
in the sector, talk of providing
“the last barrel of oil.” The latter
take root in the motherland.
Wealthy Indians are cutting
back on wedding expenses be-
cause of economic uncertainty,
according to a report in the Fi-
nancial Times earlier this month.
Not only is India’s economic
growth slowing, gold prices are
rising because of tensions in the
Middle East.
Even the Indian government
has also weighed in on the issue,
criticizing weddings for being too
big and wasteful of food. On aver-
age, Indians will spend roughly
one-fifth of their accumulated
wealth on a child’s wedding, ac-
cording to a report by KPMG and
Google. If you’ve attended an In-
dian wedding in Canada, it’s easy
to see that many immigrants and
their children maintain that level
of grandiosity.
Big weddings are often a status
symbol in India. But in the Cana-
dian context, visible minorities,
and especially new immigrants,
face other financial challenges.
While our relatives in India often
imagine expatriates and their
children as well-to-do, visible mi-
norities in Canada can expect to
make less money, relative to
white men, despite higher levels
of education, according to a new
report by the C.D. Howe Institute.
at once suggests that demand will
decline, and signifies a belief that
Alberta’s extractors can clean up
their environmental act enough
to avoid being among the first
edged out.
Initial reaction to Cenovus’s
announcement on Thursday,
from those who help shape per-
ceptions, offered the sector some
cause for encouragement. The
energy and environment think
tank Pembina Institute, for in-
stance, issued a statement calling
the goal-setting “a great example
of leadership at the individual
corporate level.”
But almost immediately, there
were also questions about wheth-
er the long-term goal in particular
is anything more than aspiration-
al, amid what University of Cal-
gary research fellow Sara Hasti-
ngs-Simon (who is also a Pembi-
na fellow) called “a lot of pieces
missing” in the announcement.
Among the ambiguities that
Ms. Hastings-Simon and others
point toward is the extent to
which executive compensation is
tied to meeting emissions-reduc-
tion targets. (In its news release,
Cenovus stated that “considera-
tion will be given to enhanced op-
portunities to link ESG perform-
ance to executive and staff com-
pensation,” while noting that en-
vironmental performance is
already included on a scorecard
The study found that visible-
minority women earn 17 per cent
less than white men, while the
gap for visible-minority men is 8
per cent.
Immigrants, especially recent
arrivals, have a tougher time
finding work in this country be-
cause of how their work experi-
ence and skills are valued in the
Canadian labour market, the
study said. It found the earnings
gap between Canadian-born
white men and recent-immigrant
visible-minority men and wom-
en was 40 per cent and 61 per
cent, respectively.
Immigrants come to Canada
DILBERT
G TH E G LOBE AND M AIL
influencing pay.)
But the biggest open questions
are about technological capacity.
While the reduction in intensity
by 2030 might mostly be achieved
with advancements already in
the works – such as increased use
of co-generation units and con-
tinuing efforts to curtail methane
leaks – Cenovus acknowledged in
the announcement that net-zero
would require solutions “beyond
those that are commercial and ec-
onomic today.”
In an interview, Al Reid, the
Cenovus executive vice-president
responsible for the company’s
sustainability efforts, pointed to
carbon capture and storage as
topping the list of such would-be
solutions. As Mr. Reid put it, the
technology currently works “here
and there.” There are still major
advances needed to scale up.
Another technological leap,
the development of solvents to
replace steam in bitumen extrac-
tion, is further along by Mr. Reid’s
estimate. But there remains un-
certainty about the extent and
timeline of that replacement, and
the timeline.
And to achieve net-zero, with-
out relying very heavily on car-
bon-offset purchases, there
might need to be technology
barely even on the radar yet.
The argument from Mr. Reid is
that industrywide reductions in
with an average of roughly
$47,000 in savings, according to a
2015 study by Bank of Montreal.
Given that many immigrants also
fund their parents’ retirement,
it’s hard to see how spending
$100,000 on a wedding makes fi-
nancial sense.
Instead of bankrolling big
weddings, parents should ensure
their kids are positioned to reach
their maximum earnings poten-
tial as individuals. University tui-
tion fees are expensive and hous-
ing costs a fortune even in the
suburbs. So, if Indian parents are
really interested in helping their
children, there are better uses for
| SATUR DAY, JAN UARY 11, 2020
greenhouse gas intensity over the
past decade show Alberta’s ex-
tractors are capable of moving as
swiftly as Cenovus’s goals sug-
gest.
Not that reaching those goals
would placate those who see con-
tinued fossil-fuel reliance as in-
compatible with climate impera-
tives. Environmental activists will
point to Cenovus promising only
a flat-lining of total emissions by
2030 despite the reduction in
GHG intensity per barrel, which
would mean a significant in-
crease in how much oil it pro-
duces. And they will highlight
that about 80 per cent of oil-and-
gas emissions comes from con-
sumption, which won’t be
changed by more efficient extrac-
tion.
But Cenovus isn’t playing to
that perspective, so much as to
people – particularly with invest-
ment dollars to spend – who be-
lieve there will be enough long-
term demand for at least the most
environmentally competitive
producers to still be selling their
product decades from now.
An announcement like this
week’s may be a good start in
making the case that Canadian
companies can fit that bill. They
have little time to waste in follow-
ing through with specifics, if they
hope to win the uphill perception
battle.
their money. I’ve told my own
two children that I’ll fund their
education – not their weddings.
Our daughters, in particular,
should be financially independ-
ent long before tying the knot.
Although paying for my wed-
ding wasn’t a financial setback
for my parents, I still wish they’d
saved the money or spent it on
themselves. I never wear my
wedding saris or all that gaudy
gold jewellery.
My parents, though, have no
regrets.
“Give it another 17 years,” my
dad said this week. “Then you’ll
see that we were right.”