Oil & gas companies’ shareholders want plans and risks communicated

An interesting article on share holders passing resolutions for companies to practice better transparency on risks associated with fracking, and to have a strategy for addressing climate change & curbing greenhouse gas emissions.

Leading U.S. investors filed shareholder resolutions with
Exxon-Mobil, Chevron, Chesapeake Energy, ConocoPhillips and 14 other oil and gas companies, pressing them to disclose their plans for managing risks associated with greenhouse gas (GHG) emissions and natural gas fracking.

…Investors want detailed financial accounting for how natural gas firms are addressing risks associated with fracking: community concerns, regulatory changes and drilling moratoriums.

Resolutions were filed with: EOG Resources, Chevron, Penn Virginia, Anadarko Petroleum, Range Resources, Chesapeake Energy, Noble Energy, Ultra Petroleum, Exxon Mobil, and Stone Energy. Public concern about the environmental and social impacts of fracking operations are growing across the country and can have real business implications for the companies involved.

“Bans and moratoria are denials of companies’ social license
to operate and impose a wide range of costs on companies, ranging from the costs of delays to complete loss of access to valuable resources where sunk costs must be written off,” says Larisa Ruoff, Director of Shareholder Advocacy for Green Century Capital Management, one of the filers.

“Right now, companies are not providing investors, or the communities in which the companies operate, sufficient information on the steps they are taking to address and mitigate the risks associated with hydraulic fracturing operations so shareholders are demanding increased transparency,” she says.

I know this falls more in line with their being able to regulate themselves (they will still fight federal level regulation on fracking and greenhouse gases), and I’m not sure how successful these shareholder resolutions will go, but it is bittersweet to see investors request similar actions from these companies that echo the science community and the general public’s concerns. It is enlightening to see the drilling practices described as a ‘social’ contract, and that public concerns do weigh on these companies’ shareholders.

-BT

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