Campaigners have accused a group of Canadian banks of greenwashing for supporting a US$1.2bn sustainability-linked bond on behalf of Enbridge, an energy company embroiled in a row over a controversial new oil sands pipeline. 

The Royal Bank of Canada (RBC), the country’s largest lender, is one of six banks under fire from campaign group Stand.Earth for its participation in the bond, closed in late June. 

Alberta-headquartered Enbridge, which boasts the largest oil pipeline system in North America, said when announcing the deal that it was consistent with its sustainability framework by “incorporating emissions and inclusion goals into the financing terms”. 

According to a securities filing, part of the facility’s pricing structure includes a 0.05 to 0.1% increase in the interest rate payable if Enbridge fails to meet ethnic and gender diversity targets by 2026. That rate increases by another 0.5% unless it meets greenhouse gas emissions targets by 2031. 

However, in a statement issued in late September, Stand.Earth says: “RBC’s backing of Enbridge and their ineffective sustainability goals, along with a host of other Canadian banking laggards, is a disgrace and pure greenwash.” 

Enbridge-related pipelines have faced heavy protests in Canada and the US, accused of threatening water supply and indigenous land for projects that will emit millions of tons of greenhouse gases. 

“It is time for banks to stop hiding behind so-called sustainable financing and sustainability-linked loans in an attempt to greenwash their continued investments in fossil fuel companies, expanding oil and gas production and building new pipelines,” says Richard Brooks, director of Stand.Earth’s climate finance programme. 

Though RBC has pledged to reach net zero emissions by 2050 from projects it finances, Stand.Earth says it has “poured more than CAD$200bn (US$157bn) into the fossil fuel sector in the five years since the Paris Climate Agreement was adopted in 2015”, citing research by Rainforest Action Network. 

“It set no short or medium-term targets that would reduce its fossil fuel financing on a meaningful timeline and defines ‘sustainable finance’ to include fossil fuel companies facilitating the increase of greenhouse gas emissions like Enbridge,” it says. 

RBC declined to comment when contacted by GTR. The other Canadian banks singled out by Stand.Earth are BMO, CIBC, Desjardins, Scotiabank and TD, all of which either declined to comment or did not respond when contacted. 

The securities filing also lists Canadian branches of HSBC, Merrill Lynch and National Bank as agents involved in the transaction, and in the US, an announcement by law firm Sullivan & Cromwell lists Credit Suisse, Bank of America, Citigroup, JP Morgan and SMBC as underwriters. None are mentioned by Stand.Earth. 


Pipeline controversy 

When contacted by GTR, a spokesperson for Enbridge says the company’s sustainable finance strategy demonstrates its commitment to achieving its environmental, social and governance (ESG) goals. 

“We believe our leadership role in sustainable finance, connecting financing cost to transparent disclosures and achievement of goals, further demonstrates our commitment to our ESG objectives,” they say. 

The company adds it is investing in renewable energy, has committed to net zero emissions by 2050, and employee pay is linked to its ESG targets. 

But Brooks tells GTR he believes that if Enbridge “was truly concerned about respecting human rights, diversity and reducing emissions, it would set itself a much more direct path to phasing out of the oil and gas transportation business, not spending billions on building new fossil fuel infrastructure”. 

One such project includes Enbridge’s highly controversial construction of a new pipeline, known as Line 3, which replaces a previous channel that has deteriorated over time and is currently carrying reduced volumes. Running from Alberta to Wisconsin, it is expected to transport over 750,000 barrels per day once complete. 

Stand.Earth says greenhouse gas emissions from burning that oil would likely total 193 million tons per year, with that increase “locked in for decades given the lifespan of a new pipeline”. 

Protest group Stop Line 3 adds that the pipeline corridor runs through untouched wetlands, as well as treaty territory of the Anishinaabe group of indigenous people. 

“All pipelines spill,” the group says. “Line 3 isn’t about safe transportation of a necessary product, it’s about expansion of a dying tar sands industry. Line 3 would contribute more to climate change than Minnesota’s entire economy.” 

Enbridge has also faced criticism for funding pipeline-related law enforcement actions in Minnesota, which protestors say have resulted in violence against demonstrators and hundreds of arrests. 

And in mid-September, Minnesota’s Department of Natural Resources fined Enbridge US$3.3mn for breaching environmental laws during the pipeline’s construction, resulting in “unauthorised groundwater appropriation”. 

The Enbridge spokesperson says the Line 3 route reflects input from several indigenous communities, and was subject to a “first-of-its-kind Tribal Cultural Resource Survey” over more than 300 miles. In Minnesota, 7% of the construction workforce was Native American, they add. 

The company says the proceeds of the bond will repay existing debts, partially fund capital projects and support other corporate purposes if required.