Shareholders
of major natural gas drillers, led by Green Century Capital Management
and the Investor Environmental Health Network, are asking companies and
their service suppliers for greater transparency about the business and
environmental risks associated with fracturing.
Production from traditional reserves of natural gas has been dwindling,
and an increasing number of new wells require hydraulic fracturing, or "fracking"–a
process where water, chemicals and particles such as sand are injected
into the ground under extremely high pressure–to unlock vast reserves
previously unavailable. It has been estimated that up to 80% of new
wells will require some form of hydraulic fracturing.
As use of this process has increased, a catalogue of harmful
environmental and community impacts allegedly linked to fracturing has
emerged, with the potential contamination of water resources being a
central concern.
The investors say they have "engaged" 20 natural gas companies and filed shareholder resolutions with 12, including Cabot Oil & Gas
Corporation (NYSE: COG), Chesapeake Energy (NYSE: CHK), ExxonMobil (NYSE: XOM), Hess
Corporation (NYSE: HES), EOG Resources (NYSE: EOG), and Range Resources (NYSE: RRC).
The shareholder proposals ask companies to increase
transparency regarding the environmental impact of their operations and
encourage companies to mitigate risks by switching to less toxic
fracturing fluids and adopting best practices for drilling and managing
wastes.
Richard Liroff, Executive Director of the Investor Environmental Health
Network explains, "High profile water contamination incidents, new
litigation, and public protests that include calls for moratoria on
natural gas permitting all suggest sizeable and rising business risks
to companies and attendant threats to shareholder value; shareholders
need assurance that companies are candidly disclosing these risks and
are adopting best management practices to minimize them."
According to Larisa Ruoff, Director of Shareholder Advocacy for Green
Century Capital Management, "It is critical that shareholders of
natural gas companies understand and address the business risks
associated with this type of gas drilling." She continues, "Companies
and regulators must ensure this development is done in a way that
protects the environment, especially our drinking water, and mitigates
potential financial risks."
"Shareholders believe that through
the adoption of best practices and policies to phase out the most toxic
chemicals used in this process, companies can ensure that they are both
protecting the environment and their balance sheets from unnecessary
and potentially devastating risks," said Ruoff.
Investors and investor
advisors involved in this initiative include As You Sow, Green Century Capital Management,
Miller/Howard Investments, Catholic Healthcare West, First Affirmative
Financial Network, the Mercy Investment Program, the New York State
Common Retirement Fund, the Shareholder Association for Research &
Education, Pax World Management, the Sisters of St. Francis of
Philadelphia, the Sustainability Group, and Trillium Asset Management.
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