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Divestment likely not a problem for Enbridge

Enbridge Inc. President and CEO Patrick Daniel speaks at the company's annual general meeting in Toronto on Wednesday, May 9, 2012.


This week saw a relatively small British Columbia investor drop Enbridge Inc. over some of its environmental misdeeds. Others threatened to follow suit. But as the stock endures one of its biggest dips in recent years -- it's down 6 per cent since July 27 -- are the broader markets taking notice?

Here's one data point that suggests the answer is no. The B.C. Teachers' Federation passed a resolution last year calling for its pension funds to steer clear of the company, causing a stir with its planned $6-billion Northern Gateway pipeline, which would carry Alberta oil across the province for export.

The resolution, in part requests that "the BC Investment Management Corporation (bcIMC), through which BCTF teachers invest their pension funds: divest of its stocks in pipeline operator Enbridge."

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For Enbridge, being punted by bcIMC, and the $92-billion in B.C. money it runs, would be a major blow.

So what changed after the resolution? Nothing. B.C. teacher pensions, it turns out, still hold Enbridge stock.

Why? Because the committee that oversees teacher pensions is independent, and could see no good reason to back away from the pipeline company or its lengthy record of consistent growth in returns.

"We are required under the legislation to invest our funds in the best financial interest of our members," says Joann Cain, chair Teachers' Pension Board of Trustees, a joint trusteeship that includes BCTF and B.C. government nominees – but is required to follow the direction of neither.

"Overall, we have to take the high road on not impairing the plan's risk and return profile," Ms. Cain said. "Bottom line is we have not divested in Enbridge. So we still hold Enbridge shares through our bcIMC pooled funds."

And while she said there is concern over the environmental issues facing Enbridge – whose reputation has suffered due to a series of high-profile spills and conflicts with first nations groups who don't want Gateway crossing their territory – investors tend to effect more change by sticking with a company over abandoning it.

It's worth pointing out, too, that bcIMC is a noted "responsible investor" with an open ear to the issues facing the energy industry. It works, for example, with both the Investor Network on Climate Risk and the Carbon Disclosure Project, and it has been recognized for helping bring social and environmental concerns into broader discussions of financial risk.

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In other words, if bcIMC isn't dropping Enbridge on environmental grounds -- even after the people whose money it manages ask it to -- there's a reasonable chance others aren't, either. And the drop in Enbridge stock? Analysts think it's more related to profit-taking after all those years of gains, and a shift into riskier energy names whose values have been battered this year.

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