Funds Holding $1 Billion Call for Largest Natural Gas Producer To Come Clean on its Protections for the Public and the Environment
City Comptroller John C. Liu and the New
York City Pension Funds today announced they have filed a shareowner
proposal calling on Exxon Mobil Corporation (NYSE: XOM) to release
quantitative data on its efforts to safeguard the
public and the environment from its hydraulic fracturing (“fracking”)
operations.
“Fracking
carries significant concerns about poisoned drinking water, toxic
chemical leaks, and explosions,” Comptroller Liu said. “Exxon Mobil
says, ‘Don’t worry, we’ve
got it covered’ and asks us to take it at its word. Until the company
shows us hard data on what it has done to protect the public and
environment, shareowners cannot be confident that the necessary
safeguards exist.”
The
risks that fracking poses to water and air quality have led to bans and
moratoria in the U.S. and around the globe and could directly affect
Exxon’s long-term value. The shareowners’ call for quantitative
measurements is consistent with the U.S. Department of Energy’s
recommendations on shale gas production. The U.S. Department of Energy
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.”
Exxon
has repeatedly resisted calls that it provide investors with detailed
information on its safety measures. The data that Comptroller Liu
and fellow shareowners are requesting includes, but is not limited to:
the air emissions from fracking that Exxon has reduced per region per
year; the number and kinds of community complaints or grievances and
whether they remain open or resolved; the goals
and systems used to reduce potentially harmful chemicals in fracturing
fluids.
Comptroller
Liu and the NYC Pension Funds filed the first-time shareowner proposal
jointly with As You Sow, a nonprofit environmental advocacy
group that has been engaging Exxon on its fracking practices and
disclosures on behalf of the Park Foundation since 2010.
“As
every top-rate business knows, what gets measured, gets managed,” said
Danielle Fugere, As You Sow President and Chief Counsel. “Exxon
has repeatedly failed to measure the harms its fracking operations
cause to air, water, and nearby communities, or any progress it is
making towards reducing those harms. Exxon shareholders need this
information to make sound investment decisions.”
This
resolution is part of a nationwide investor initiative calling on 11
major oil and gas companies to improve the way they manage and measure
the risks associated with natural gas fracking operations.
New
York City Comptroller John C. Liu serves as the investment advisor to,
custodian and trustee of the New York City Pension
Funds. The New York City Pension Funds are composed of the New York
City Employees’ Retirement System, Teachers’ Retirement System, New York
City Police Pension Fund, New York City Fire Department Pension Fund,
and the Board of Education Retirement System.
The New York City Pension Funds held 11,377,013
shares of Exxon (NYSE: XOM) valued at $ 1,010,694,708.95
as of 2/4/2013.
__________________________
TEXT OF SHAREOWNER PROPOSAL:
Quantitative Risk Management Reporting for Natural Gas Extraction Operations
Whereas,
Extracting
oil and gas from shale formations using horizontal drilling and
hydraulic fracturing technology has become a highly controversial
public policy issue.
Leaks,
spills, explosions, and adverse community impacts have led to bans and
moratoria in the United States and around the globe. These include
New York State, the Delaware River Basin, the Province of Quebec, and
France. Certain Exxon Mobil operations in Germany, for instance, have
been subject to a local moratorium on drilling.
The Department of Energy’s shale advisory panel 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)
Investors
require detailed and comparable information about how companies are
managing risks and rewards from natural gas extraction operations.
A 2011 report, “Extracting the Facts: An Investor Guide to Disclosing
Risks from Hydraulic Fracturing Operations,” outlines best management
practices and key performance indicators. Publicly supported by
investors on three continents ($1.3 trillion in assets
under management) and by various companies, the guide emphasizes
quantitative reporting on key performance indicators.
Talisman
Energy has published “Shale Operating Principles,” stating “We will
measure our progress by setting quantitative performance metrics
[and] … disclose …progress…via publicly available reporting.”
BG
Group states it “will provide regular updates on … progress against the
targets” set out in its “Operating Principles for Unconventional
Gas.”
Exxon Mobil does not provide such quantitative reporting. Its
Operations Integrity Management System
is a
generalized framework for companywide operations, but lacks criteria
specific to shale energy operations. Exxon Mobil’s subsidiary, XTO
Energy, signed onto the “Appalachian
Principles” which specify what companies “should do” rather than what
they currently do or commit to doing.
Resolved:
Shareholders request the Board of Directors
to report to shareholders by October 30, 2013, and annually thereafter,
using multiple quantitative indicators, the results of company
procedures and practices, above and beyond regulatory requirements, to
minimize any adverse environmental and community impacts
from the company’s natural gas extraction operations associated with
shale formations. Such reports should be prepared at reasonable cost and
omit confidential information.
Supporting Statement
Proponents suggest the reports include the percentage of wells using “green completions;”
total amount of air emissions reduced annually on a categorical
and regional or site basis; percentage of drilling residuals managed in
closed-loop systems; percentage of recycled water used in each regional
operation; quantity of fresh water used for
shale operations by region, including sources; numbers and types of
community complaints or grievances, and portion open or closed; goals
and systems for reducing the use of potentially harmful chemicals in
fracturing fluids; and enforcement statistics, including
numbers of violation notices or administrative actions alleging
violations with potential to harm health or environment, and aggregate
value of all penalties during the year.
__________________________
In addition to Comptroller Liu, the New York City Pension Funds trustees are:
New York City Employees’ Retirement System: Janice
Emery, Mayor’s Representative (Chair); New York City Public Advocate
Bill de Blasio; Borough Presidents: Scott Stringer (Manhattan),
Helen Marshall (Queens), Marty Markowitz (Brooklyn), James Molinaro
(Staten Island), and Ruben Diaz, Jr. (Bronx); Lillian Roberts, Executive
Director, District Council 37, AFSCME; John Samuelsen, President
Transport Workers Union Local 100; Gregory Floyd,
President, International Brotherhood of Teamsters, Local 237.
Teachers’ Retirement System: Janice
Emery, Mayor’s Representative; Deputy Chancellor Kathleen Grimm, New
York City Department of Education; Mayoral appointee Freida Foster and
Sandra
March, Melvyn Aaronson (Chair) and Mona Romain, all of the United
Federation of Teachers.
New York City Police Pension Fund: Mayor
Michael Bloomberg; New York City Finance Commissioner David Frankel;
New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch,
Patrolmen’s Benevolent Association; Michael Palladino, Detectives
Endowment Association; Edward D. Mullins, Sergeants Benevolent
Association; Louis Turco, Lieutenants Benevolent Association; and, Roy
T. Richter, Captains Endowment Association.
New York City Fire Department Pension Fund: Mayor
Michael Bloomberg; New York City Fire Commissioner Salvatore Cassano
(Chair); New York City Finance Commissioner David Frankel;
Stephen Cassidy, President, James Slevin, Vice President, Robert
Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair,
Uniformed Firefighters Association of Greater New York; John Dunne,
Captains’ Rep.; James Lemonda, Chiefs’ Rep., and James
J. McGowan, Lieutenants’ Rep., Uniformed Fire Officers Association;
and, Sean O’Connor, Marine Engineers Association.
Board of Education Retirement System:
Schools Chancellor Dennis Walcott; Mayoral: Rosemarie Maldonado,
Jeanette Moy, Ian Shapiro, Tino Hernandez, Judy Bergtraum, Freida
Foster,
Allison Rogovin, Dawn Walker, and Milton Williams; Patrick Sullivan
(Manhattan BP), Kelvin Diamond (Brooklyn BP), Dmytro Fedkowskyj (Queens
BP), Robert Powell (Bronx BP) and Diane Peruggia (Staten Island BP); and
employee members Joseph D’Amico of the IUOE
Local 891 and Milagros Rodriguez of District Council 37, Local 372.
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