In the last proxy season, the 35 most prominent shareholder activists, who together manage more than $500 billion in assets, filed resolutions with nine oil and gas companies pressing them to disclose their plans for managing the risks of gas hydraulic fracturing -- or “fracking”-- which is increasingly common.
On average, 40% of shareholders supported resolutions about natural gas fracturing, up from 30% last year. Investors withdrew resolutions at Anadarko Petroleum, Cabot Oil & Gas, El Paso Corporation and Southwestern Energy when the companies agreed on more disclosure.
“Hydraulic fracturing can potentially poison local water supplies, pollute the air and leave us with a waste management nightmare,” said Thomas P. DiNapoli, New York State Comptroller, who filed resolutions with Carrizo and Cabot as trustee of the $140.6 billion New York State Common Retirement Fund. “Natural gas is a
crucial part of the nation’s energy supply, but it has to be extracted the right way.”
Fracking was just one of the core environmental concerns this proxy season.
Investors also withdrew 45 resolutions after companies agreed to take steps to address climate change and problems with natural gas, scarce water, coal ash disposal and oil refining.
“The strength of this year’s proxy season shows unwavering investor concern about how companies are managing the environmental risks of fossil fuel sourcing and the ongoing shift to a clean, low-carbon global economy,” said Mindy S. Lubber, president of Ceres, which coordinates the shareholder resolutions along with the Interfaith Center on Corporate Responsibility (ICCR). “Investors want stronger assurances companies are effectively navigating these key market trends.”
The Pew Charitable Trust reports that clean energy investment and finance worldwide has grown six-fold since 2004, but Americans are far behind with an investment of $34 billion, compared to $94 billion in Europe and $54 billion in China.
Investors filed a record 28 resolutions with 18 electric power providers, who face pending EPA regulations that will require that they pollute less. The resolutions sought information about coal-based power production.
After a positive response, investors withdrew resolutions at Dominion and Southern Company, Entergy, Xcel, and FirstEnergy. Resolutions at Ameren and First Energy received significant support. “The strong votes on coal ash disposal demonstrate that a significant portion of shareholders require increased transparency on the companies’ efforts to reduce the environmental and health hazards associated with coal combustion waste,” said Larisa Ruoff, Director of Shareholder Advocacy for Green Century Capital Management and lead filer on the resolutions with FirstEnergy and Southern.
Dominion, Southern Company and PPL Corporation agreed to significantly expand disclosure on the availability of water. Scarce water is a growing challenge.
Southern Company agreed to prepare a comprehensive "water action report," in response to a resolution filed by the Connecticut Treasurer’s Office, as fiduciary of the Connecticut Retirement Plans and Trust Funds. The report will describe the company’s water management philosophy, water use and consumption by generation type, water discharges, and emerging risks, including water risks in its fuel supply chain. One of the nation’s largest electric generators, Southern is based in water-strapped Atlanta, Georgia, where a federal judicial order may reduce the city’s water withdrawals by as early as 2012, and credit rating agency Fitch has said it may have to downgrade the city’s bond ratings because of the water problem.
Investors persuaded Virginia-based Dominion to commit to respond to the Carbon Disclosure Project’s water survey, which asks companies to report their water use and risks associated with changing water availability. Pennsylvania-based PPL agreed to report on the water intensity of its generation, its water resources and cooling system types and water rights of major facilities.
Oil Refinery Safety
After a string of mishaps in the refinery industry during the past year that led to 19 deaths and 25 serious injuries, the AFL-CIO Reserve Fund filed resolutions calling for action, winning support from 54.3% of Tesoro shareholders and 43.3% at Valero Energy. An identical resolution at Sunoco was withdrawn after the company agreed to more disclosure and safety measures.
Walden Asset Management re-filed a resolution with Layne Christensen this year after the company resisted producing a sustainability report, even after a record-breaking 60.3% vote on the resolution last year. This year, the company took the unusual step of recommending a vote “FOR” Walden’s resolution, leading to the remarkably high 92.8% vote. The company also published its first sustainability report.
Comprehensive sustainability reports, issued on a regular basis, have prompted companies to measure and comprehensively manage risks and opportunities from energy and water use to waste management to stakeholder concerns and emerging risks in supply chains.