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Canadian oil and gas pipeline company Enbridge Inc. is presenting its sustainability bond framework to investors this week and is receiving mixed reviews from analysts.

The proposal, the first from a North American pipeline operator, is a litmus test for the fast-growing ESG investment product that Wall Street hopes will fuel a bond issuance boom.

Unlike green bonds, which allocate proceeds to particular projects, sustainability bonds require borrowers to meet environmental and social goals or suffer financial consequences, such as an increase in the bond interest rate. Enbridge proposes to issue bonds that could pay higher interest rates or mature sooner if the company fails to reduce its greenhouse gas emissions by 35% by 2030 and increase racial and gender diversity within its workforce and its board of directors.

According to a research report from Barclays PLC, the proposal has clear targets to report each year and has received a favorable second-party review from the ISS ESG consultant.

But the bonds have some pretty significant blind spots, including the lack of penalties for leaks and spills, a much greater environmental risk to pipeline operators than emissions, Barclays said. One of Enbridge’s pipelines crossing Michigan has become a political hot potato due to alleged environmental hazards.

Enbridge is also proposing that its emissions reduction be calculated on a 2018 benchmark, giving itself a head start as it has already reduced them by 25% since then, according to Barclays. The targets are modestly important to Enbridge, as they exclude so-called scope 3 emissions – from companies that burn Enbridge gas ships, for example – according to ISS ESG’s second-party opinion.

Comparable bonds issued by Italian energy company Eni SpA this month included Scope 3 issues in their targets, Barclays said.

“Our sustainable financing framework provides transparency to our stakeholders and positions us well to successfully lead our industry towards a more sustainable and inclusive energy future,” Enbridge CFO Colin Gruending said in a statement.

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