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Shareholder action on fracking

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Shareholder action on fracking includes a variety of tactical approaches aimed at improving oil and gas company "fracking" practices by those with a financial stake in power, finance, or related companies. Such actions include:

  • Shareholder resolutions
  • Calls for regulation to ensure market predictability
  • Screening by socially responsible investment funds and institutional portfolios
  • Including fracking-related issues such as fines and litigation in SEC reporting requirements for publicly traded companies

Carbon Disclosure Project

On June 14, 2012, the North American Investor Network on Climate Risk (“INCR”), the European Institutional Investors Group on Climate Change (“IIGCC”), and the Australia/New Zealand Investor Group on Climate Change (“IGCC”) issued a joint statement calling on companies and governments to take effective action to minimize methane emissions from unconventional oil and gas production made possible by hydraulic fracturing. The groups make up more than 200 members with total assets of more than $20 trillion. The three investor groups announced that they are working with industry and experts, in collaboration with the Carbon Disclosure Project, to develop an investor framework for disclosure to enable investors to evaluate companies’ progress in tackling methane leakage and reducing methane emissions.[1]

Investment firms call for best practices

On May 16, 2012, Boston Common Asset Management (Boston Common), the Investor Environmental Health Network (IEHN), and the Interfaith Center on Corporate Responsibility (ICCR) announced that 55 major investment organizations and institutional investors with nearly $1 trillion in assets under management have united to support best practices for the fracking of shale gas, as embodied in the 2011 IEHN and ICCR report, "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations."

The investment firms cited state and local fracking bans, inconsistent drilling company practices, and growing shareholder unrest as creating an unstable financial environment for investing in fracking companies without their commitment to best practices.[2]

Shareholder resolutions

In the 2010 and 2011 proxy seasons, 21 shareholder resolutions at 16 companies for improved practices for fracking received strong support, averaging 30 percent votes on six resolutions going to votes in 2010, and 40 percent votes on five resolutions voted on in 2011.[3]

Divestment Campaigns

Campus divestment campaign

In 2012, students at more than 100 colleges across the country began protesting the investment of their school’s endowment funds in large fossil fuel companies, as part of a campaign to persuade universities to rid their endowments of stock in fossil fuel companies.[4]

In November 2012, Maine's Unity College Board of Trustees voted to divest from fossil fuels.[5]

Hampshire College in Massachusetts approved a policy in 2012 of investing in environmentally responsible companies that it said would rid its portfolio of fossil fuel stocks.[6]

Reports

"Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations," IEHN and ICCR, December 2011 report.

The guide is organized around 12 core goals and supporting practices and indicators:

  • Manage risks transparently and at board level;
  • Reduce surface footprint;
  • Assure well integrity;
  • Reduce and disclose all toxic chemicals;
  • Protect water quality by rigorous monitoring;
  • Minimize fresh water use;
  • Prevent contamination from waste water;
  • Minimize and disclose air emissions;
  • Prevent contamination from solid waste and sludge residuals;
  • Assure best in class contractor performance;
  • Secure community consent; and
  • Disclose fines, penalties and litigation.

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