FOR IMMEDIATE RELEASE
SEC Action Validates Investor Concerns about Hydraulic Fracturing Operations
Increasingly successful shareholder resolutions on behalf of investor coalition seek increased disclosure on environmental risk management
New York, NY/Falls Church, VA—Thursday, August 25th, 2011 - This morning, the Wall Street Journal reported that the Securities and Exchange Commission (SEC) is pressing oil and gas companies to provide increased disclosure on the financial risks associated with the environmental impacts of their fracturing operations. This action by the SEC comes after two years of investor pressure in the form of resolutions by members of the Investor Environmental Health Network (IEHN) and the Interfaith Center on Corporate Responsibility (ICCR).
Since 2009, an investor coalition led by IEHN, Green Century Capital Management, and members of ICCR, has pressed two dozen companies to increase their disclosure on key business risks associated with hydraulic fracturing, particularly the fate of wastewater and the management of chemicals associated with hydraulic fracturing operations. As these hazards have triggered public outcries and regulatory moratoria, the investors believe it is crucial to learn how companies are addressing and minimizing them.
“As shareholders, we laud the SEC for taking this important step to protect investors by providing a more accurate picture of the environmental and business risks associated with hydraulic fracturing,” said Larisa Ruoff, Director of Shareholder Advocacy for Green Century Capital Management, a member of ICCR. “Without comprehensive disclosure, investors have no way of knowing which companies are actively managing and mitigating the risks inherent to this type of development. We view the SEC action as crucial to protecting shareholders from undisclosed risks,” she continued.
During the last two years the coalition filed shareholder proposals requesting greater disclosure on fracturing operations with 16 companies including Chevron, ExxonMobil, Chesapeake Energy, Range Resources and Cabot Oil & Gas. In an effort to omit resolutions from their proxy ballots, some of the natural gas companies asserted to the SEC that their existing disclosures on their websites already “substantially implemented”proposed resolutions' requests for additional information on water usage, well casings and toxic materials. The SEC staff rejected these arguments and the resolutions appeared on company proxy ballots for all shareholders to consider. The first year, a remarkable 30% of the shares voted supported the proposal and this year, average support increased to 40%, including a near majority vote (49.5 %) at Energen Corporation. This level of support is nearly unprecedented for a new shareholder proposal.
“At company annual meetings, shareholders have been sending a loud and clear message to companies reliant on fracturing operations that increased disclosure is necessary,” said Richard Liroff, Executive Director of IEHN. “Now the SEC is working to support these investor inquiries to ensure transparency on critical business risks,” he continued.
According to ICCR member Sr. Nora Nash of the Sisters of St. Francis of Philadelphia, “Resource extraction is changing our lives and our landscapes and nobody knows for certain what the long-term cumulative effects might be. Companies that are voluntarily disclosing are showing leadership. The SEC’s intervention to establish improved reporting parameters for the industry as a whole is necessary to protect investors.”
Director of Communications
About the Investor Environmental Health Network (IEHN):
The Investor Environmental Health Network is a collaborative partnership of investment managers and advisors, 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. IEHN members manage more than $30 billion in assets.
About the Interfaith Center on Corporate Responsibility (ICCR):
Currently celebrating its 40th year, ICCR is the pioneer coalition of active shareholders who view the management of their investments as a catalyst for change. Its 300 member organizations with over $100 billion in AUM have an enduring record of corporate engagement that has demonstrated influence on policies promoting justice and sustainability in the world.