A Case Study on the Legal Impacts of Corporate Sustainability Pledges in the Alberta Oil Sands

Jeffrey Bone

Abstract


Suncor Energy Inc. is Canada’s largest oil and gas producer with significant operations in the Alberta oil sands. In its 2010 Sustainability Report, the corporation made several long-term environmental pledges. This paper confronts a hypothetical situation involving these environmental pledges. What if Suncor’s commitments prove to be effective from an environmental standpoint, but they become more costly from a financial perspective than Suncor anticipates? In accordance with their statutory fiduciary duties, Suncor directors have a choice to make between two options. First, the company could increase or maintain expenditures in order to meet these commitments. Second, the company could limit its projected expenditures with the consequence that environmental commitments will not be met due in part to financial constraints. This case study applies Canadian corporate statutory fiduciary duties to these alternatives and ultimately finds that such pledges do not create legal liability for directors when they fail to uphold environmental commitments. However, directors may be entitled to follow through on voluntary environmental pledges that are more costly than initially anticipated without incurring liability from disgruntled shareholders. 


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