Four companies, EOG Resources, Noble Energy, PennVirginia Corporation and Stone Energy, have responded to shareholder concerns and are improving transparency around the impacts of their hydraulic fracturing operations (fracking) and their efforts to reduce risks to communities and the environment. Investors have consequently withdrawn shareholder resolutions seeking such enhanced reporting.
"Right now, many 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 pressing companies to provide increased transparency," said Luan Steinhilber, Director of Shareholder Advocacy at Miller/Howard Investments, Inc., filer of the resolutions at PennVirginia and Stone Energy.
"We commend these companies for taking steps to provide increased transparency not only on the impacts of their operations but on their risk reduction practices."
"This year's effort builds on the remarkable success achieved by investors last year, when similar proposals received an average 40 percent vote. These high votes send strong messages to companies that significant numbers of their shareholders require increased disclosure on this issue," said Larisa Ruoff, Director of Shareholder Advocacy for Green Century Capital Management, which withdrew proposals from EOG and Noble Energy.
She added, "We are pleased to see that momentum is building and companies are responding to the growing chorus calling for increased disclosure. We encourage the other companies which received resolutions to follow suit."
This season, shareholders have a new tool in their dialogue with companies. In December, the Investor Environmental Health Network (IEHN) and the Interfaith Center on Corporate Responsibility (ICCR) released "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations," which offers a framework for improved corporate transparency and encourages broader adoption of existing best management and reporting practices.
"In order to maintain their social license to operate, companies must fully disclose the steps they are taking to minimize risks, to acknowledge their challenges and failures, and to clearly define the methods they will use to continually improve operations," said Richard Liroff, Executive Director of IEHN. IEHN and Green Century coordinate investors' engagements with companies on fracking.
"The Guide offers a road map for companies to respond to the heightened concerns around fracking, and articulates industry best practices that will reduce the risks, and consequently, the impacts."
This year, shareholders filed resolutions with six additional companies, calling on the companies to provide a detailed account of how they are addressing the risks associated with community concerns, regulatory impacts, tightened regulations, and moratoria. Shareholders expect the remaining proposals will be voted on this spring at company annual meetings.
