By Jerilyn Klein Bier

Whether or not you’ve got environmentally conscious clients, it pays to know the financial and public health risks associated with a corporation’s toxic chemical policies. And one of the better go-to places for that information is the Investor Environmental Health Network (www.iehn.org).

IEHN is a collaborative partnership of different investment organizations that in aggregate manage more than $30 billion in assets. Its goal is to encourage companies to adopt policies that reduce and/or eliminate toxic chemicals in their products and operations.

IEHN’s operating principle is that safer chemical policies can help companies anticipate and avoid “toxic lockout” from the marketplace in the form of government bans or restrictions on products. In turn, that can reduce reputational and legal risks, as well as enhance brands and create greater long-term shareholder value.

“We needed to move beyond the chemical to chemical and look at the larger picture of what companies are doing,” says IEHN executive director Richard Liroff, who founded the network in 2004. “We’re trying to change the underlying ground rules that apply to all companies worldwide.”

IEHN’s members include Calvert Investments, Domini Social Investments, Parnassus Investments, As You Sow Foundation, First Affirmative Financial Network, faith-based institutional investors and other leaders in sustainable and socially responsible investing. The network is advised by scientific, policy and technical experts from roughly a dozen environmental health organizations.

Liroff, who spent more than two decades directing projects on toxic chemicals and other issues at the World Wildlife Fund, serves as a technical resource for IEHN and has helped develop the rationale for resolutions and written letters to companies.

Body Of Work

IEHN, which analyzes corporate, government and scientific data, gets most of its funding through smaller philanthropic organizations concerned about environmental health. In addition to working on environmental issues involving corporations, the organization does outreach and develops tools such as reports and fiduciary guides for pension plans and other investors.

Among its activities, IEHN has pressed regulators to close corporate liability accounting loopholes that enable companies to conceal damaging scientific findings and their full potential liabilities associated with toxic chemicals. It has also provided suggestions to the Global Reporting Initiative on how it can better address toxic chemicals in its upcoming guidelines.

IEHN’s résumé includes tackling issues such as bisphenol A (BPA) and phthalates used in plastic products, polyvinyl chloride (PVC) in packaging, pesticides in food, and nanomaterials in cosmetics.

One of the coalition’s pressing tasks of late has been calling out energy companies on the environmental and business risks of hydraulic fracturing technology used in oil and natural gas drilling. And IEHN member Domini filed resolutions with Coca Cola in 2010 and 2011 asking it to disclose how it’s responding to safety concerns about BPA used in its can linings.

IEHN members have been the lead filers on two-thirds of the 103 shareholder resolutions on toxic chemicals filed by investors since 2006. Of the 44 resolutions that were voted on during that period (many others were withdrawn due to favorable company responses), two dozen received more than 20% of shareholder votes.

“That’s a significant enough number to get a company’s attention,” says Larisa Ruoff, the director of shareholder advocacy at Green Century Capital Management in Boston, one of IEHN’s partner organizations.

For broader context, a first-year resolution filed with a company needs to get at least 3% of the vote in order to be refiled the following year.

Solutions, Not Just Talk

Roger McFadden, a senior scientist with Staples Advantage, the business-to-business division of Staples Inc., circulates IEHN information with the office supply retailer’s key decision makers. “I view IEHN as a credible and relevant information resource to identify chemicals of high concern, but more importantly, to identify safer alternatives,” he says
As a result of talks with IEHN, Staples has eliminated endocrine-disrupting nonylphenol ethoxylates from its own brand cleaning supplies; stopped using thermal register receipts coated in BPA; and now uses PVC-free packaging materials for its own brands.

IEHN has helped oil and gas exploration company Apache Corp. identify important questions regarding hydraulic fracturing. “While other people spend time preaching to their own choirs and valuing opinion over fact, Rich spends time crunching numbers, reading footnotes, reaching out to new people from across the spectrum, and forging doable-but-meaningful deals,” says Sarah Teslik, Apache’s senior vice president of policy and governance.

Liroff encourages financial advisors to use information resources on IEHN’s web site, including case studies, reports and articles. IEHN staff also provides fee-based services for people who want to dive deeper into these issues.

In addition, Liroff recommends checking out the SIN (Substitute It Now!) List developed by the nonprofit International Chemical Secretariat, or ChemSec. It includes 378 substances identified as very high concern under REACH, the European Community Regulation on chemicals and their safe use.

Down the road, Liroff expects companies will talk more about their toxic footprints like they’ve begun to do with their carbon and water footprints. IEHN’s partner organizations believe that’ll help achieve the trifecta of improved corporate operations, public health and shareholder value.

February 14, 2011 - Green Century Capital Management (Green Century) and the Investor Environmental Health Network (IEHN) are building on the successful shareholder campaign launched last year pressing oil and gas companies to disclose their plans for managing water pollution, litigation and regulatory risks that are increasingly associated with the ever-expanding natural gas hydraulic fracturing operations (also known as “fracking”) in the United States.

“High profile water contamination incidents, new litigation, and public protests that include calls for moratoria on natural gas permitting all suggest sizeable and rising business risks to companies and attendant threats to shareholder value,” said Richard Liroff, Executive Director of the IEHN which, along with Green Century, helped coordinate the resolutions. “Shareholders need assurance that companies are candidly disclosing these risks and are adopting best management practices to minimize them.”

In 2011 shareholder resolutions were filed with many of the natural gas industry’s most significant players, including ExxonMobil*, Chevron*, El Paso*, Cabot Oil & Gas*, Carrizo Oil & Gas*, Anadarko*, Energen*, Ultra Petroleum*, and Southwestern Energy*.

The shareholder proposals ask companies to disclose their policies and strategies for reducing environmental and financial risks from chemicals use, water impacts and a host of other issues. The resolutions also request adoption of best management practices, such as recycling and reusing waste waters, reducing the volumes and toxicity of chemicals, disclosing the chemicals used in fracturing operations and assuring the integrity of well cementing through pressure testing and other methods.

These resolutions build on the success investors had in the 2010 proxy season when similar shareholder proposals received around 30 percent of the vote.  Green Century’s proposal at Williams Companies Inc. received the highest vote, with approval from 42% of voting shareholders**.  “This impressive result is one of the highest on record for a first-year environmental proposal,” said Larisa Ruoff, Director of Shareholder Advocacy for Green Century.  

“We believe these votes send a strong message to the companies that a significant portion of shareholders are deeply concerned about this issue and urge all companies to increase disclosure related to fracturing,” Ruoff said.   In fact, this strong vote led to a productive dialogue with Williams and the company agreed to include a new section on the environmental impacts of hydraulic fracturing in its updated 2009 Corporate Social Responsibility (CSR) report.

Use of hydraulic fracturing, which involves high-pressure injection of water, chemicals and particles deep underground to break up shale formations and release trapped natural gas, has escalated in recent years. Oil and gas companies are increasingly turning to hydraulic fracturing, or “fracking” to unlock vast, yet previously unavailable reserves as conventional natural gas supplies have dwindled. 

Environmental risks stem largely from poor well-construction practices, which can lead to drinking water contamination, well blowouts and gas leaks, and from inadequate wastewater recycling and management practices. Concerns about water contamination incidents are growing as operations expand, creating reputational and litigation liabilities for companies.

Lawsuits have been filed against four companies over alleged water contamination in Pennsylvania.  New York State adopted a temporary moratorium on new permits for fracking. Philadelphia’s city council has urged a ban on fracking in the Delaware River Basin until environmental studies have been completed, and Pittsburgh, which sits atop gas deposits, has banned fracking within city limits.

“Natural gas can play a major role in meeting our nation’s near-term climate and energy challenges, but hydraulic fracturing must be done in a way that protects the environment and public health,” said Mindy S. Lubber, President of Ceres, Director of the $9 trillion Investor Network on Climate Risk and Green Century’s first president.  “Investors believe that companies can profitably minimize fracking’s water contamination, gas leaks and other material risks by adopting best management practices and by phasing out the most toxic chemicals.”

Read the original article here.

Shareholders File Resolutions with Cabot Oil & Gas, Exxonmobil, Chevron, and Other Energy Companies to Spur More Responsible “Fracking” Practices

Published on Jan 21, 2011 - 8:11:55 AM

By: The Investor Environmental Health Network

BOSTON, January 21, 2011 - Leading U.S. investors today announced they have filed shareholder resolutions with nine oil and gas companies, pressing them to disclose their plans for managing water pollution, litigation and regulatory risks that are increasingly associated with ever-expanding natural gas hydraulic fracturing operations (also known as "fracking") in the United States.

Resolutions were filed with many of the natural gas industry's significant players, including ExxonMobil, Chevron, Ultra Petroleum, El Paso, Cabot Oil & Gas, Southwestern Energy, Energen Anadarko and Carrizo Oil & Gas.

"Oil and gas firms are being too vague about how they will manage the environmental challenges resulting from fracking," said New York State Comptroller Thomas DiNapoli, whose office filed a resolution with Cabot Oil & Gas asking for a specific plan to reduce or eliminate the hazards. "The risks associated with unconventional shale gas extraction have the potential to negatively impact shareholder value. I urge companies working in this field to share their risk mitigation and management strategies with investors and the public."

The shareholder proposals ask companies to disclose their policies and strategies for reducing environmental and financial risks from chemicals use, water impacts and a host of other issues. The resolutions also request adoption of best management practices, such as:

* recycling and reusing waste waters;

* reducing the volumes and toxicity of chemicals;

* disclosing the chemicals used in fracturing operations; and

* assuring the integrity of well cementing through pressure testing and other methods.

Use of hydraulic fracturing, which involves high-pressure injection of water, chemicals and particles deep underground to break up shale formations and release trapped natural gas, has escalated in recent years. Oil and gas companies are increasingly turning to hydraulic fracturing, or "fracking" to unlock vast, yet previously unavailable reserves as conventional natural gas supplies have dwindled. ExxonMobil, for example recently spent $36 billion to buy shale-gas company XTO Energy while Chevron purchased Atlas Energy in a $4 billion deal.

The Energy Department recently more than doubled estimates of recoverable shale reserves to 827 trillion cubic feet, the energy equivalent of 140 billion barrels of oil. The American Petroleum Institute estimates that 60 to 80 percent of natural gas wells drilled in the next decade will require hydraulic fracturing.

Environmental risks stem largely from poor well-construction practices, which can lead to drinking water contamination, well blowouts and gas leaks, and from inadequate wastewater recycling and management practices. Concerns about water contamination incidents are growing as operations expand, creating reputational and litigation liabilities for companies.

Lawsuits have been filed against four companies over alleged water contamination in Pennsylvania. New York State adopted a temporary moratorium on new permits for fracking. Philadelphia's city council has urged a ban on fracking in the Delaware River Basin until environmental studies have been completed, and Pittsburgh, which sits atop gas deposits, has banned fracking within city limits.

"High profile water contamination incidents, new litigation, and public protests that include calls for moratoria on natural gas permitting all suggest sizeable and rising business risks to companies and attendant threats to shareholder value," said Richard Liroff, executive director of the Investor Environmental Health Network (IEHN), which helped coordinate the resolutions. "Shareholders need assurance that companies are candidly disclosing these risks and are adopting best management practices to minimize them."

Investors filing the resolutions include the New York State Comptroller (Cabot Oil & Gas, Carrizo Oil & Gas), Domini Social Investments (Southwestern Energy), As You Sow (ExxonMobil and Ultra Petroleum), Trillium Asset Management (Anadarko), Miller/Howard Investments (El Paso and Energen), and The Sisters of St. Francis of Philadelphia (Chevron). Cabot Oil & Gas, Carrizo Oil & Gas, El Paso, Southwestern and Ultra Petroleum are headquartered in Houston; Energen is based in Birmingham, Alabama; Anadarko in The Woodlands, Texas; Exxon Mobil in Irving Texas, and Chevron in San Ramon, California.

According to Kristina Curtis, senior vice president at Green Century Capital Management (GCCM), which coordinated the resolutions with IEHN, "It is critical that shareholders of natural gas companies understand and address the business risks associated with this type of gas drilling. Companies and regulators must ensure this development is done in a way that protects the environment, especially our drinking water, and mitigates potential financial risks"

Though investors are concerned about the bottom line impacts of hydraulic fracturing, many also contend that cleaner-burning natural gas has a critical role to play in both increasing domestic energy supplies and reducing greenhouse gas emissions, and that unconventional methods like fracking make it possible for natural gas to fill that role.

"Natural gas can play a major role in meeting our nation's near-term climate and energy challenges, but hydraulic fracturing must be done in a way that protects the environment and public health," said Mindy S. Lubber, president of Ceres and director of the $9 trillion Investor Network on Climate Risk. "Investors believe that companies can profitably minimize fracking's water contamination, gas leaks and other material risks by adopting best management practices and by phasing out the most toxic chemicals."

In the 2010 proxy season investors filed resolutions with a dozen oil and gas companies and, among those receiving resolutions, Williams began disclosing the measures it takes to ensure well integrity, described its recycling practices, and discussed "green completions" that reduce greenhouse gas emissions and enhance profitability. Range Resources reported its recycling measures in the Marcellus Shale that have saved approximately $200,000 per well and Hess stated it is working with its suppliers to reduce the amount and toxicity of fracking fluids used.

The Investor Environmental Health Network is a collaborative partnership of investment managers, advised by nongovernmental organizations, 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.

Ceres is a leading coalition of investors and environmental groups working with companies to address sustainability challenges such as climate change. Ceres also directs the Investor Network on Climate Risk, an alliance of 90 institutional investors with collective assets totaling $9 trillion.

Read the original article here.