Enbridge Inc. (ENB) Earnings Call Transcript & Summary

Thank you. We will now proceed with the vote. Please record your vote now, remembering that if you have already voted in advance and do not wish to change your vote, no further action is required. [Voting]

The next item of business is a resolution to ratify, confirm and approve the shareholder rights plan, which encourages the fair treatment of shareholders if there is a takeover bid for control of Enbridge. The shareholder rights plan resolution must be passed for the shareholder rights plan to continue. Otherwise, it will terminate. Our shareholder rights plan is reconfirmed by shareholders every 3 years, most recently in 2020. There are no substantive changes to the plan for 2023. The Board of Directors has determined that the continuation of the shareholder rights plan as described in the management information circular is in the best interest of the corporation and its shareholders and recommends that shareholders vote for this resolution. Mr. Uehara, may I have a motion?

Madam Chair, I move and second that the resolution to ratify, confirm and approve the shareholder rights plan, the text of which is set forth on Page 36 of the management information circular for this meeting be and is hereby approved.

Thank you. Can you please advise if any questions specific to this motion were submitted?

No questions specific to this motion have been submitted.

Thank you. We will now proceed with the vote. Please record your vote now, remembering that if you have already voted in advance and do not wish to change your vote, no further action is required. [Voting]

The next items of business today are consideration of 2 shareholder proposals submitted by DI Foundation represented by Investors for Paris Compliance as set out in Appendix B of the management information circular. The Board of Directors and management recommend that shareholders vote against both proposals. We will first deal with shareholder proposal #1. I will now invite Mr. Duncan Kenyon of Investors for Paris Compliance to present the proposal on behalf of the DI Foundation Mr. Kenyon, may you please present the motion and make your statement?

Thank you, Madam Chair. My name is Duncan Kenyon, [Technical Difficulty] representing the DI Foundation. I move and second that shareholder resolution #1 set out in Appendix B in the management information circular be and is hereby approved. Well-being practices are an element of company's net 0 commitments coming under increasing scrutiny, public policy will largely determine the ability of our economy and companies like Enbridge to reach net 0. What kind of climate policies a company pushes for is therefore directly relevant to net 0 commitment. Unfortunately, Enbridge and Canada's oil and gas sector has, in general, rated quite badly on climate lobbying. A major report by InfluenceMap, who is an adviser to the Climate Action 100+ investor group, finds that the industry engages in net 0 greenwashing, as it claims net 0 alignment on the one hand, while lobbying against climate policy and lobbying in favor of oil and gas expansion on the other. Enbridge received the degrade from InfluenceMap and has been embroiled in meaningful conversations over the past few years in its U.S. operations, including a [Technical Difficulty] conflict in the state of Michigan administration over line 5 and protest against the line 3 pipeline in Minnesota that resulted in one of the largest [Technical Difficulty] pattern of clinical donations to the U.S. to pro fossil fuel politicians who obstruct climate action. There's also a pattern of ailing key decision makers and stakeholders such that Enbridge now finds itself facing large material legal risk, such as the litigation surrounding Line 5 and also are practicing in active lobbying for the expansion of natural gas used in contradiction to credible net 0 commitments. Enbridge claims it has systems in place to governance lobbying, but clearly, the systems are inadequate, given the results. Investors require more disclosure to demonstrate that the Board understands the risk associated with Enbridge's political activities and that it is managing it properly. We encourage Enbridge shareholders to vote for this proposal.

Thank you, Mr. Kenyon. We appreciate your engagement on this matter. As set out in the management information circular, the Board of Directors opposes this proposal and has recommended that shareholders vote against shareholder proposal 1. The reason for this recommendation are explained in full on Pages 123 to 124 of the management information circular. Mr. Uehara, can you please advise if any questions specific to this motion were submitted?

No questions specific to this motion have been submitted.

Thank you. We will now proceed with the vote. Please record your vote now, remembering that if you have already voted in advance and do not wish to change your vote, no further action is required. [Voting]

The final item of business today is the consideration of shareholder proposal #2. The Board of Directors and management recommend that shareholders vote against the proposal. I again invite Mr. Duncan Kenyon of Investors for Paris Compliance to present the proposal on behalf of the DI Foundation. Mr. Kenyon, may you please present the motion and make your statement.

Madam Chair, my name is Duncan Kenyon, and I'm a proxy holder representing the DI Foundation. I move and second that the shareholder proposal resolution as set out in the Appendix B through the management information circular be and is hereby. [indiscernible].

Again, thank you, Mr. Kenyon for your engagement on this matter. As set out in the management information circular, the Board of Directors opposes this proposal and has recommended that shareholders vote against shareholder proposal #2. The reasons for this recommendation are explained in full on Pages 125 to 126 of the management information circular. Ms. Uehara, can you please advise if any questions specific to this motion or submitted?

No questions specific to this motion have been submitted.

Thank you. We will now proceed with the vote. Please record your vote now, remembering that if you have already voted in advance and do not wish to change your vote, no further action is required. [Voting]

That concludes the resolutions to be presented to the meeting. I declare the polls to be formally closed. Thank you again to all our shareholders who voted in advance of or during today's meeting. We will now pause for a moment for the scrutineer to tabulate the preliminary results of the voting and provide those results to us. Ms. Uehara, do you have the preliminary results of the voting?

Yes, Madam Chair. I have received confirmation from the scrutineer that each of the 11 directors have been elected by at least 88% of the votes cast for the election of directors. The motion to appoint PricewaterhouseCoopers LLP as the corporation's auditors and have the audit directors fix the remuneration has been approved by at least 89% of the votes cast on that resolution. The advisory vote on the approach to executive compensation has been approved by at least 90% of the votes cast on that resolution. The motion to ratify, confirm and approve the shareholder rights plan has been approved by at least 97% of the votes cast on that resolution. Shareholder proposal #1 submitted by DI Foundation and represented by Investors for Paris Compliance has been defeated by at least 80% of the votes cast against that resolution. And shareholder proposal #2 submitted by DI Foundation and represented by Investors for Paris Compliance has been defeated by at least 71% of the votes cast against that resolution.

Thank you. I declare each of the resolutions considered at today's meeting in respect to those matters as carried. With the exception of the 2 shareholder proposals, both of which have been defeated. The exact number of votes cast in respect of each matter will be filed on EDGAR and SEDAR and made available on our website. Thank you again for your strong show of support, interest and continued loyalty by attending today's meeting. As all matters of business have been addressed, I now declare the meeting closed. I now call upon Greg Ebel, your company's President and Chief Executive Officer, to deliver his remarks and conduct the general question-and-answer session.

Thank you, Pamela, and good afternoon, everyone. I'd like to start by acknowledging Pamela, your new Board Chair, who is the first woman and first person of color to hold the position at Enbridge. She brings tremendous experience to the company, including senior positions in industry, private practice and government as she served as the Attorney General for the State of Indiana. Pamela has been honored multiple times for her commitment to Board Excellence and Diversity. And it's an honor to work alongside her on your behalf. Since taking over as CEO in January, I've had the opportunity to meet with shareholders, stakeholders, customers and employees. Those conversations will inevitably turn to how to meet energy demand while moving to a lower carbon future and how to do this while keeping costs in check for consumers. We refer to the need for secure, sustainable, affordable energy as energy trilemma and balancing these 3 objectives are the key ingredients to a smart, practical, energy transition. I'm confident about the role in North America and Enbridge can play in solving the trilemma, which will require collaboration with governments, communities and indigenous peoples. At Enbridge, we are focused on tomorrow and the tremendous opportunity to build and invest in our energy future. It isn't an easy task, but we're making progress. And today, I'll spend a few minutes on our strategy, key achievements of 2022, and what we need to advance the energy transition and our mission to be the first choice energy provider in North America and beyond. But to start with, I think it's fair to say that 2022 was an inflection point for the energy sector. Markets were extremely volatile, years of underinvestment in new energy sources compounded by the war in Ukraine caused price spikes, energy shortages and a redrawing of the energy map with countries seeking new secure supplies of energy. Not to mention, emissions were higher than ever before. Almost all energy forecasts show that a growing global population, urbanization and a growing middle class will demand more and cleaner sources of energy for decades to come. Often overlooked when thinking about energy demand is that over 700 million people still have no access to electricity. And 30% of the world's population, some 2.4 billion people use unhealthy cooking fuels like plastics and dung. To address our energy trilemma, virtually all sources of energy are clearly needed. We firmly believe that North America has an outsized role to play by sharing its abundant energy resources with the rest of the world, resources that are produced responsibly, sustainably into the highest standards concerning people and the environment. And Enbridge is one of the best positioned companies to support this effort. The bottom line is that energy is essential to fuel our lives. It is a solution and an opportunity. Enbridge's strategy is to invest in energy systems that will deliver a sustainable future. As you can see here, [Audio Gap] the asset footprint. And we all know that the value of pipe in the ground has never been higher. In our conventional business, we're modernizing existing assets to ensure reliability and to lower emissions. We are extending systems to meet our customer needs and expanding North American export infrastructure to meet that global demand. We are also ramping up investments in lower carbon solutions that complement our assets, including renewables, carbon capture, hydrogen and renewable natural gas. At the same time, we are improving our competitiveness by lowering costs, finding more efficient ways of working and taking pride in our safety-first results-driven culture, where we value high performance in everything we do. Over the last year, we've taken significant steps to advance our strategy and to ensure growth. And here are a few examples. We executed on our export strategy by focusing on providing last mile connectivity to our customers, putting us at the forefront of North America playing a key role in meeting global energy demand. In the U.S. Gulf Coast, we increased exposure to the Permian Basin by acquiring the Cactus II and Gray Oak pipelines, both building off our purchase of Ingleside in 2021, which is North America's premier crude export facility. And we acquired Tres Palacios, natural gas storage facility, expanding our service offering to our gas customers along the Gulf Coast. In British Columbia, we acquired an interest in wood fiber LNG, which will be one of North America's cleanest LNG facilities, and we announced approximately $5 billion of expansion projects along our BC pipeline to support growing demand. Across our footprint, we continue to modernize and innovate our liquids and gas systems, the backbone of our company and a critical component of so much of our past and future successes. On the renewable side, we put Saint Nazaire into service on time, on budget at over $2 billion. This is France's first commercial scale offshore wind facility, producing enough power to serve some 400,000 homes. We're building on that success. In late March, the French government awarded us, and our partners, the opportunity to build a 1 gigawatt offshore wind farm. This is expected to produce more than half the electricity needs to Normandy, France. Also in 2022, we purchased a leading U.S. renewable energy developer, Tri Global Energy, which positions us as a top 10 North American onshore renewable developer. In our gas distribution business and storage business, we started construction on 3 renewable natural gas or RNG projects and a green hydrogen project. These fuels are blended with natural gas to lower the carbon content and emissions. We also made an equity investment in a leading RNG developer, Divert Inc. That provides line of sight to more than $1 billion of additional growth projects. We like RNG because it tackles 2 important issues: food waste and GHG emissions. We're focused on our ESG goals because they help enable our future earnings and enhance our successes. This month, we'll release our latest sustainability report, which will outline our commitments and our progress. Of course, safety is our #1 priority and reducing emissions intensity makes us a better operator, helps to fulfill our promise to be a first choice energy provider and helps future-proof the entire enterprise, while our diversity and inclusion goals are all about recruiting and developing the talent we need for the future. Last year, we created our indigenous reconciliation action plan and 2 very important equity partnerships. One is with 5 indigenous nations to build a carbon capture facility in Alberta, and the other is an amazing partnership with 23 indigenous and Métis communities in our Athabasca pipeline system that we refer to as Project Rocket. These kinds of partnerships, which we intend to do more of, create a stronger connection to and a flow of income for the indigenous communities involved. Our strong performance and growth in 2022 translated into record financial results in the upper half of our guidance target. We increased our dividend for the 28th consecutive year, including a 3.2% increase for 2023 and delivered total shareholder returns of 14%, and we did so by maintaining our disciplined approach to capital allocation by prioritizing balance sheet strength and recommitting to an equity self-funded model, which gives us $6 billion in annual investment capacity. As we look forward, we'll continue to invest in tomorrow. We are opportunity rich with conventional, renewable and low-carbon projects, and we're excited about the opportunities in our $17 billion of secured capital. We have a true super system that offers last-mile connectivity to our domestic and export customers, and we are increasingly offering customers low-carbon solutions. Our recent announcement to develop a blue ammonia facility at Ingleside is an example of how we're using all levers to advance the practical energy transition. The strength of our core businesses, disciplined approach to capital allocation and strong balance sheet puts us in a great position to grow, while delivering leading shareholder returns, including our stable and growing dividend. As you can tell, I'm optimistic about our energy future and our ability as Enbridge as North America to help solve energy challenges. But there's a catch. To meet the world's growing demand for energy, we need to keep building the infrastructure that makes it all happen. The pipelines, the LNG terminals, the wind and solar operations and the power transmission lines. The trouble is that current permitting to build projects lacks transparency leads to inconsistent public consultation, causing delays, uncertainty and cost overruns and under investment. For example, our recent decision by the U.S. Army Core of Engineers on Enbridge's Line 5 Great Lakes tunnel project, will mean that the review and decision for the project will take some 6 years, 3x longer than what's defined in current regulations. Electricity transmission lines, a key bottleneck in accelerating renewables are so backed up, it can literally take 4 to 6 years to finalize an interconnection permit. What we need is transparent, predictable and efficient processes in Washington, Ottawa and at state and provincial levels. We need permitting reform that enables growth. We're seeing some progress, but we can't afford to wait or to let a quest for perfection get in the way of good solutions that have meaningful impact now. Our mission at Enbridge is to be the first choice energy delivery company in North America and increasingly beyond as Enbridge now operates in 5 G7 countries. What I mean by this is to be the first choice supplier to customers to meet their needs and to help them grow, the first choice partner to communities to collaborate and contribute to their prosperity, the first choice investment for shareholders, delivering superior returns and the first choice advisor to regulators and policymakers on energy issues to create win-win outcomes. And of course, the first choice employer to be an inclusive employer of passionate, talented and empowered people. We'll do this by maintaining a strong commitment to the values of safety, integrity, respect, inclusion and of course, high performance. As you can see, we're on a solid path, advancing both conventional and lower carbon growth opportunities to meet the world's needs for secure, sustainable and affordable energy. We are financially well positioned with a strong balance sheet that allows us to grow and take advantage of opportunities. And we have a tremendous team of people at Enbridge, who are smart, innovative and committed to safety. I'd like to thank all of them for their dedication, our Board of Directors for their counsel and commitment to excellence, and you, our shareholders, for your continued support. We're excited about the future that we're creating, which is why we like to say at Enbridge, tomorrow is on. Thank you very much.

We'll now proceed with the general question-and-answer session. Ms. Morley, Enbridge's Director of Investor Relations, will read out any questions that have come in today for Mr. Ebel to respond to. Just a reminder that questions may only be submitted by registered shareholders and duly appointed proxy holders.

Maybe while we're gathering the questions, this is Greg Ebel. I know that we had some technical difficulties. And on the second proposal, Mr. Kenyon may not have finished his statement. So we'll be sure to post that, if that indeed is the case, so that shareholders can see that. Any questions, Ms. Morley?

No questions have been received. So we will pause for 30 seconds to allow time for questions to be submitted.

Well, thanks very much for everybody's involvement here today. And I will turn this back over to the Chair, who can conclude today's meetings.

Thank you, Greg, and thank you to everyone again for attending today's meeting. we truly value your time and commitment to our company. You may now disconnect from the broadcast. Thank you for your support once again.