||Chesapeake Energy Corporation
||Natural Gas Hydraulic Fracturing
||Benedictine Sisters of Mount St. Scholastica
||Withdrawn in response to corporate commitments
Securing an Independent Director with Environmental Health Expertise for
Chesapeake Energy's Board of Directors
Extracting oil and gas from shale and other formations, using horizontal drilling and hydraulic fracturing technology, has become a controversial public issue. Leaks, spills, explosions and community impacts have led to bans and moratoria in the United States and around the globe.
Measurement and disclosure of best management practices and impacts is the primary means by which investors can gauge how companies are managing risks and rewards of their operations. The Department of Energy's Shale Gas Production Subcommittee recommended in 2011 that companies "adopt a more visible commitment to using quantitative measures as a means of achieving best practice and demonstrating to the public that there is continuous improvement in reducing the environmental impact of shale gas production." (emphasis in original)
The 2011 report, "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations," articulates investor expectations for best management practices and key performance indicators. It has been publicly supported by investors on three continents representing $1.3 trillion in assets under management and by various companies.
In a 2013 report entitled "Disclosing the Facts: Transparency and Risk in Hydraulic Fracturing Operations," Chesapeake Energy scored only 5 out of a possible 32 points. The company does not report to the CDP's climate change and water projects, provides scant information on its greenhouse gas reduction efforts, is silent on management of risks from naturally occurring radioactive materials in its operating areas, and otherwise falls short in disclosing metrics and systematic polices necessary for investors to evaluate how the company is minimizing risks associated with water, waste, and toxic chemicals management. Absent quantitative reporting and objective metrics, shareholders cannot reliably assess the effectiveness of company policies intended to mitigate the risks of company hydraulic fracturing operations.
The company has also been subject to high profile federal and state enforcement actions in Pennsylvania and West Virginia resulting in sizeable penalties.
The Board of Directors, in its oversight of issues of risk and disclosure, can help ensure that our Company improves its record of transparency and accountability.
THEREFORE, BE IT RESOLVED: Shareholders request that, as elected board directors' terms of office expire, at least one candidate be recommended who shall have designated responsibility on the board for environmental matters with at least the following qualifications:
- has an advanced degree in environmental science or pollution studies, and is widely recognized in the business and environmental communities as an authority on relevant environmental science matters such as preventing, tracking or remediating water pollution with toxic materials, reducing risks from airborne toxicants, and assessing the impact of pollutants on human health, as reasonably determined by the company's board, and
- will qualify, subject to exceptions in extraordinary circumstances explicitly specified by the board, as an independent director under the standards applicable to a NYSE listed company.