The Yaqui Tribe in Sonora, Mexico is denouncing Sempra Energy for violating their territorial sovereignty while building the Agua Prieta Pipeline through their land. According to a statement from the tribe, the company obtained signatures from community members through fraudulent acts, circumvented their traditional decision making process, and is failing to guarantee protection of the environment. The tribe is pursuing legal action and physical blockades to stop construction.
This is not the only area where Sempra is running into trouble. In October 2015, one of the company’s natural gas storage facilities near Los Angeles sprung a leak which was not plugged until February 2016. Thousands of people had to be evacuated, and the company is facing criminal charges and as much as $900 million in legal and regulatory expenses. Additionally, a class action lawsuit has been filed on behalf of the company’s shareholders over its alleged failure to disclose that it “lacked the capability to expeditiously repair gas leaks, causing a public hazard.”
Poor performance at one site indicates high probability of poor performance at other sites. The consequences of Sempra’s negligence in Los Angeles should not be scrutinized in isolation; they call for attention to the company’s broader strategy (or lack thereof) for managing ESG risks throughout its operations.
Sources: Bloomberg, Nasdaq