A group of several dozen investors has filed shareholder resolutions with nine oil and gas companies demanding they disclose more information about how they plan to manage water pollution and the litigation and regulatory risks associated with the controversial practice of natural gas hydraulic fracturing.
The shareholder resolutions, filed by investors ranging from the Office of the New York State Comptroller to socially responsible asset management funds, are the latest investor effort aimed at companies that engage in ‘fracking’, a method of extracting natural gas deposits from deep shale foundations located across the northeast US.
The technique involves drilling deep into the rocks and then injecting millions of gallons of water and chemicals that open fissures in the shale, allowing the gas to escape. The method has drawn the ire of environmentalists, who warn the chemicals can pollute drinking water and create millions of barrels of wastewater that may harm wildlife.
‘Oil and gas firms are being too vague about how they will manage the environmental challenges resulting from fracking,’ says New York State Comptroller Thomas DiNapoli in a press release announcing the decision. ‘The risks associated with unconventional shale gas extraction have the potential to negatively affect shareholder value. I urge companies working in this field to share their risk mitigation and management strategies with investors and the public.’
Ola Fadahunsi, a spokesperson for the comptroller’s office, says the New York State pension fund stands at $132.8 bn and owns stakes in Cabot Oil & Gas and Carizzo Oil & Gas. The other companies targeted by investors include Anadarko, Chevron, El Paso, Energen, ExxonMobil, Southwestern Energy and Ultra Petroleum.
The resolutions were coordinated by Ceres, a coalition of investors and environmental groups that works with companies to improve their business practices. Last year, those investors filed more than 100 different shareholder resolutions dealing with climate and energy issues, including resolutions demanding more disclosure on how companies are preparing for potential cap and trade legislation, a CERES spokesperson says.
Last year, several investors also targeted fracking by filing resolutions requesting information on which chemicals companies were using the practice. About 42 per cent of investors in the Williams Companies voted in favour of that resolution, prompting the company to comply with the request, the spokesperson adds.
Opponents of fracking have praised this year’s effort. ‘I think this is part of a broader trend,’ says Claire Sandberg, campaign director of FrackAction, a New York-based advocacy group that opposes fracking. ‘Investors are starting to wake up to the high level of systemic risk inherent in this process, as communities start to demand accountability – which, in many cases, could prove extremely expensive.’
Alex Lotorto, a Pittsburg-based organiser with MarcellusProtest.org, notes: ‘We still don’t know the cumulative effects of industrial-scale drilling. There are two things investors need to consider. First, if you hold stock in these companies, are they exaggerating their numbers? Second, what is the prospect of lawsuits from property owners, stakeholders and businesses in the areas where they are drilling?’