Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Here’s an unusual idea: Buy Enbridge Inc. (ENB-T) shares – but not for the hefty dividend yield or the bullish opinions among analysts. Buy the shares because you are an environmentally conscious investor.

This may look like an unpopular position at first glance. The energy infrastructure company, best known for its network of oil pipelines stretching from Alberta to refineries in the United States, is often vilified by environmentalists. These critics associate pipelines with fossil fuel production and damaging leaks.

In particular, Enbridge’s Line 3 replacement project through Minnesota was held up for years by environmental concerns before state regulators finally approved it late last year. Environmentalists still oppose the project.

Story continues below advertisement

TC Energy Corp. (TRP-T), another pipeline company, has faced similar concerns over its Keystone XL expansion project. U.S. president-elect Joe Biden will reportedly kill the project over environmental concerns, as one of his first moves after inauguration.

Yet, investors who prefer to align their portfolios with ESG principles – that is, own shares in companies that score well on environmental, social and governance factors – may be surprised to learn Enbridge scores rather well. (Full disclosure: I own shares, but more because I am beguiled by the stock’s dividend, which is now yielding 7.6 per cent.)

Standard & Poor’s Financial Services last month awarded Enbridge with an overall ESG rating of 75 out of 100, which seems to line up nicely with the principles that underpin responsible investing: The rating is more than the average score of 71 (based on ESG ratings in mid-2020) and much more than a low score of 40 awarded to an unnamed oil and gas company.

Enbridge’s governance component was the highest, at 84 out of 100, largely because of strong oversight and transparency. And the social component was the lowest, at just 56 out of 100, owing to the impact of problems related to accidents and ruptured pipelines.

But the E is what’s key here for investors worried about fossil fuels: On environmental factors, S&P awarded Enbridge with a score of 61 out of 100. Okay, that’s not exactly a ringing endorsement, but it is accompanied with upbeat descriptions of the company’s environmental commitments.

S&P pointed out that Enbridge has a track record of setting and achieving greenhouse gas reduction targets. For example, the company has reduced direct emissions from its Canadian operations by 26 per cent from 1990 levels. Its goal is to reduce emissions by 35 per cent by 2030.

Part of its strategy for meeting these goals rests on investing in renewable energy. Enbridge has invested in 22 wind farms and seven solar energy operations, giving the company an encouraging profile.

Story continues below advertisement

However, can Enbridge win over ESG investors?

That question was addressed in a note last week from Citigroup, which surveyed investors’ views on pipelines (also known in energy jargon as midstream).

According to the survey, about 60 per cent of investors believe the sector will never appeal to ESG investors. And just 10 per cent expect renewable energy will add to midstream cash flow in a meaningful way before 2024.

“In fact, many believe it will never be able to meaningfully add to cash flow,” Citigroup analysts said in their note.

This could be a big issue. Assets tied to ESG investments exploded in 2020, rising to more than US$1-trillion globally by the first half of the year, according to Morningstar – no doubt underscoring companies’ efforts to raise their ESG appeal.

Enbridge can at least show off its ESG score. Investors who insist on avoiding all companies tied to fossil fuels might not be impressed. But anyone willing to focus instead on the company’s efforts to embrace renewables and cut emissions might find the environmental argument worth weighing.

Story continues below advertisement

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies