BMOJanuary 11, 2023 | 16:25 ET~ Fortis FTS-TSX
Rating Market Perform Price: Jan-10 $55.28 Target $60.00 Total Rtn 13%
ESG Tear Sheet
Bottom Line: We believe Fortis's approach to ESG is best-in-class within the Cdn. Energy Infrastructure sector.
Fortis's GHG emission targets are clear and credible, it has linked ESG goals to its lines of credit and executive compensation, and its disclosures are strong and aligned with leading benchmarks.
It does lag on certain ESG KPIs mainly due to its ownership of coal assets in Arizona (although the exposure is modest).
Overall, we believe Fortis' ESG strategy sets the pace for the industry.
Key Points Fortis's ESG strategy has some positive takeaways, particularly with respect to GHG emission targets, breadth and level of disclosures, and D&I. From a health and safety perspective, some of the gaps that we see include lack of specific targets, though we note that KPIs screen strongly.
FTS reports alongside GRI, SASB and TCFD recommendations and has linked ESG goals to its credit facility and executive compensation --- all best practices we have seen in the Cdn. Energy Infrastructure sector.
Fortis was also one of the first utilities to publish a standalone TCFD report, another best practice.
Please see our report titled, “Canadian Energy Infrastructure: Seven ESG Themes to Rule Them All” for findings from our research into ESG performance of the Canadian Energy Infrastructure industry. The methodology that we used to set up BMO Capital Markets’ ESG Tear Sheets is available here.