A Bridge to the Future of Energy : TD's Report Event
As part of Enbridge's inaugural ESG forum, management also announced the
formation of a New Energies Team to advance low-carbon energy infrastructure
opportunities across the company's energy delivery businesses. ENB has signed an
MOU with Shell to develop North American (excluding Alberta) low-carbon energy
solutions. Through Enbridge's partnership with Vanguard Renewables, the company
will invest ~$100 million in RNG upgrading, transporting, and marketing services,
with the potential for more investments. This note profiles select takeaways related
to energy transition.
Impact: SLIGHTLY POSITIVE
ENB's ESG forum kicked off with a deep dive on the company's environmental
initiatives that touched upon the company's emission goals and pathways,
how sustainability is embedded in company operations, as well as low-carbon
innovations. Management elaborated on initiatives that will continue to welcome
involvement from its stakeholders, including the Indigenous community, and
also provided an update on the approach that ENB is taking to ensure strong
governance.
Management highlighted what it views as some of the more significant
opportunities for improvement as it relates to ESG: 1) implementing lower
emissions intensity in modernization and innovation plans for assets; 2) increasing
advocacy reach to external stakeholders on ENB's contribution to energy
transition as well as its goals and aspirations; and 3) continuing to ensure that
governance policies and procedures remain sound and effective as governance
will underpin success in achieving ESG goals. By using measurement and data to
shift and reprioritize, ENB expects to be focused in achieving the company's goals.
TD Investment Conclusion
The formation of a New Energies Team and strategic partnerships with Shell and
Vanguard Renewables should facilitate navigating ENB's transition to a lower carbon
future and evolve the business mix accordingly, in our view. The company's resilient
business model, long-life assets, and ability to pivot to meet continued industry
changes should warrant a premium valuation. Over the long term, we expect ENB
to continue to have a strong competitive incumbency due to its geographic footprint,
scale, connectivity, and diversification, and we believe that this positions it to play a
role in North America's contracted and regulated energy infrastructure evolution to
support global long-term climate-change goals and continued energy demand.
Recommendation: BUY
Risk: LOW
12-Month Target Price: C$55.00
12-Month Dividend (Est.): C$3.34
12-Month Total Return: 15.4%