February 20, 2015
Contact: Lucia von Reusner, Green Century Capital Management, 617-482-0800, firstname.lastname@example.org
Pointing to industry-wide “failure” to disclose impacts of fracking operations, shareholders filed resolutions urging improvements at six major oil and gas companies this year, including Chevron Corporation,* ExxonMobil,* WPX Energy,* QEP Resources,* SM Energy,* and Chesapeake Energy Corporation.*
Boston, MA – February 26, 2015 – A coalition of investors concerned about the negative impacts of hydraulic fracturing or “fracking,” filed shareholder proposals at Chevron, ExxonMobil, WPX Energy, QEP Resources, SM Energy** and Chesapeake Energy Corporation urging greater transparency in how key risks are being managed, and urging Chesapeake Energy Corporation to recruit environmental experts for its board of directors to improve its environmental performance. The investor coalition, which represents members of the Investor Environmental Health Network including Green Century Capital Management, As You Sow, Mercy Investment Services, Calvert Investments, and the Sisters of St. Francis of Philadelphia argue that the industry’s lack of transparency makes it difficult for investors to evaluate companies’ performances on managing key fracking risks.
“The public has the right to know how a company’s fracking operations impact the local environment and community,” said Leslie Samuelrich, President, Green Century Capital Management, which filed the resolution at WPX Energy. “Companies that fail to meet this information baseline, let alone reduce the potential damages caused by the use of toxic chemicals or methane gas leaks, will increasingly fail to earn the public trust,” stated Samuelrich.
Five of the six companies received “failing” scores in a recent scorecard published by investors that benchmarks companies on their disclosed efforts to mitigate the impacts of their fracking operations on local communities and the environment.
“The potential for harm from fracking operations is very real,” said Danielle Fugere, President of As You Sow. “Those companies that minimize risk through best practices and disclose their progress in preventing environmental and social harm – those are the companies most likely to create and retain value, and in which shareholders are most likely to invest.”
The shareholder proposals note that without rigorous disclosure about how the negative impacts are being managed, investors cannot make informed risk assessments and investing decisions. Five of the six resolutions press the companies to set goals and to provide quantitative reporting on progress towards reducing the impacts of their fracking operations on ground and surface water, air quality, and local communities. The fracking industry continues to face controversies around water contamination and water shortages in areas with high drilling activity. The shareholder proposal at Chesapeake Energy Corporation encourages the company’s board to consider environmental experts for future openings on the board of directors, citing the company’s history of sizeable civil and criminal penalties for infractions linked to its fracking operations.
“Chesapeake Energy has the dubious distinction of having paid $600,000 in criminal penalties for violations of the Clean Water Act, one of the largest ever civil penalties ($3.2 million) collected under Section 404 of the Clean Water Act, and the State of Pennsylvania’s largest fine in 2011 ($1.1 million),” noted Pat Zerega, Senior Director of Shareholder Advocacy for Mercy Investment Services. “Our resolution encourages Chesapeake’s board to recruit an independent director with proven environmental expertise, with the hope that this will help improve corporate performance and accountability.”
Chevron, WPX Energy, Chesapeake Energy Corporation, QEP Resources, and ExxonMobil all received failing scores in a 2014 updated report that benchmarks companies engaged in hydraulic fracturing on their disclosures of operational impacts and mitigation efforts. The report, Disclosing the Facts 2014: Transparency and Risk in Hydraulic Fracturing Operations, benchmarks 30 companies engaged in hydraulic fracturing against 35 key performance indicators, relating to management of toxic chemicals, water and waste, air emissions, community impacts, and governance. The updated report includes a new category on how companies are managing methane leakage, a controversial issue since methane is 86 times more potent than carbon dioxide in terms of “global warming potential” over a 20-year time frame. Shareholder proposals urging companies to reduce methane leakage were also filed at EOG Resources,* Hess Corporation,* Kinder Morgan Inc.,* Marathon Oil,* Dominion Resources,* and Energen Resources Corporation.*
“After years of pressure from investors and community members, Chevron claims that it has its CSSD (Center for Sustainable Shale Development) certification but there is little data for investors to analyze,” said Nora Nash, Director of Corporate Social Responsibility at the Sisters of St. Francis of Philadelphia. “As Chevron refuses to be transparent, vulnerable communities across the country continue to bear the health and environmental risks of hydraulic fracturing with little evidence that one of the world’s largest energy companies is managing its footprint on local health, well-being and human rights.”
“Investors need quantifiable data to objectively measure progress” commented Richard Liroff, Executive Director of the Investor Environmental Health Network (IEHN). “We are urging companies to move beyond anecdotes and generalizations and provide the data that will help investors identify which companies are reducing hydraulic fracturing risks through minimizing greenhouse gas emissions, lowering water usage and using safer chemicals. Addressing these concerns will prove critical for companies hoping to maintain their ‘license to operate’ in local communities.”
Institutional investors have been pressing oil and gas companies since 2009 for greater disclosure of their risk management practices. Proposals continue to receive support from around 30% of shareholders, on average. ExxonMobil, which scored particularly low on reported management of toxic chemicals, air emissions, and water and waste, received a shareholder proposal for the fifth year in a row filed by As You Sow and a host of co-filers. In response to last season’s proposal, ExxonMobil agreed to provide a report addressing 26 issue areas; the report, however, failed to disclose most of the specific requested information about Exxon’s practices, disappointing investors seeking to assess company performance and risks. Chevron is being pressed for the fifth year after also scoring particularly low on reported progress in minimizing toxic chemicals, air emissions, and water and waste, and for failing to disclose practices around water use in drought-stricken Texas. The proposal at WPX Energy was filed by Green Century Capital Management; the Sisters of Saint Francis of Philadelphia filed at Chevron; Mercy Investment Services filed at Chesapeake Energy Corporation; and Calvert Investments filed at QEP Resources and SM Energy.
**SM Energy was not scored.
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Green Century Capital Management is an environmentally responsible investment advisory firm that manages two fossil fuel free mutual funds – the Green Century Balanced Fund and the Green Century Equity Fund, which invests in the companies that comprise the longest running socially responsible index minus the fossil fuel companies in that index. Founded by a partnership of non-profit environmental advocacy organizations in 1991, Green Century Capital Management provides people who care about a clean, healthy planet the opportunity to keep their money out of environmentally irresponsible companies and use the leverage of their investment dollars to encourage environmentally responsible corporate behavior. Visit greencentury.com.
As You Sow is a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies. For more information visit www.asyousow.org.
The Investor Environmental Health Network is a collaborative partnership of investment managers, advised by nongovernmental organizations, concerned about the financial and public health risks associated with corporate toxic chemicals policies. IEHN, through dialogue and shareholder resolutions, encourages companies to adopt policies to continually and systematically reduce and eliminate the toxic chemicals in their products and activities. Visit Investor Environment Health Network or iehn.org.
The Sisters of St. Francis of Philadelphia: Consistent with our mission and values, The Sisters of St. Francis of Philadelphia have social as well as financial objectives for the return on investments. We collaborate with other faith-based investors in realizing our responsibilities for environmental, social and governance issues that affect our local community and communities around the globe. We focus on responsible investing that includes principled purchasing (screens) and active ownership strategies: proxy voting, dialogues, letter writing and shareholder resolutions. We promote the common good by investing in community development organizations that share responsibility for empowering individuals and helping communities to be sustainable. Visit us at www.osfphila.org.
Mercy Investment Services, the asset management program for the Sisters of Mercy and its ministries, works for systemic change in the areas of non-violence, racism, environment, concern for women, and immigration through socially responsible investing. Mercy Investment Services’ multifaceted approach includes corporate engagement, proxy voting, portfolio screening and community investments, maximizing our impact on our community, nation and world. Learn more about Mercy Investment Services at www.mercyinvestmentservices.org.
Calvert Investments is an investment management company serving institutional investors, workplace retirement plans, financial intermediaries and their clients. Calvert Investments offers more than 40 equity, bond, cash and asset allocation strategies, of which many feature integrated environmental, social and governance research. By combining rigorous analysis with independent thinking, our disciplined approach to money management goes beyond traditional factors in order to discover investment opportunities with greater long-term potential. Founded in 1976 and based in Bethesda, Maryland, Calvert Investments manages over $13 billion in assets. Visit www.calvert.com.
*As of December 31, 2014, no securities mentioned were held in the Green Century portfolios. The holdings of the Green Century Funds may change due to ongoing management of the Funds. References to specific investments should not be construed as a recommendation of a security by the Funds, their advisor, administrator, or distributor.
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