InvestorsChallenge Natural Gas Companies to Increase Transparency, Reduce Risks toPublic Health and the Environment From Fracking Operations    Shareholders file resolutions withChevron*, Exxon Mobil*, and 8 other companies to spur more responsiblemanagement practices   Boston, MA—For a third consecutive year, concerned investors havetargeted energy exploration and production companies that rely heavily onhydraulic fracturing (fracking)and fail to disclose critical information aboutthe ways they are managing the associated risks.     Public concern about the environmentaland social impacts of fracking operations are growing across the country andcan have real business implications for the companies involved.   “Bans and moratoria are denials of companies’ sociallicense to operate and impose a wide range of costs on companies, ranging fromthe costs of delays to complete loss of access to valuable resources where sunkcosts must be written off,” said Larisa Ruoff, Director of ShareholderAdvocacy for Green Century CapitalManagement (Green Century). “Right now, companies are not providinginvestors, or the communities in which the companies operate, sufficientinformation on the steps they are taking to address and mitigate the risksassociated with hydraulic fracturing operations so shareholders are demandingincreased transparency.”   This year, shareholders have filed resolutions with ten companies,including Exxon Mobil, Chevron and Chesapeake Energy* calling on the companiesto provide a detailed account of how they are addressing the risks associatedwith community concerns, regulatory impacts, tightened regulations, andmoratoria.    “This year’s effort builds on the remarkable successachieved by investors last year, when similar proposals received an average 40percent** vote.  These high votes send strong messages to companies thatsignificant portions of their shareholders require increased disclosure on thisissue,” said Richard Liroff, Executive Director of the Investor Environmental Health Network(IEHN).  IEHN and Green Century coordinate investors’ engagements withcompanies on fracking.    These resolutions are part of a broader investor initiative challengingcompanies to address climate and sustainability risks.  Thus far in the2012 proxy season, investors working with Ceres, a coalition of investors andpublic interest groups working with companies to address sustainabilitychallenges, have filed 86 resolutions with 69 companies.   “Investors are concerned about the financial risks associatedwith the environmental, health, and social impacts of fracking,” saidMichael Passoff, Senior Strategist for As You Sow, which has filed atExxonMobil and Ultra Petroleum* since 2010.  “Concern about watersources, toxic chemicals, and wastewater has led to new regulations in severalstates and proposed federal legislation. Explosions, contamination incidents, and millions ofdollars in fines demonstrate that things can and do go wrong,” hecontinued.   This season, shareholders have a new tool in theirdialogue with companies.  In December, IEHN and the Interfaith Centeron Corporate Responsibility (ICCR) released “Extracting the Facts: An Investor Guide to DisclosingRisks from Hydraulic Fracturing Operations,” which isintended to help increase disclosure and mitigate the impacts of fracking.    “In order to maintain their social license tooperate, companies must fully disclose the steps they are taking to minimizerisks, to acknowledge their challenges and failures, and to clearly define themethods they will use to continually improve operations,” said LauraBerry, Executive Director of ICCR.  “The Guide offers a road map forcompanies to respond to the heightened concerns around fracking, andarticulates industry best practices that will reduce the risks, andconsequently, the impacts.”     Shareholder proposals were filed at Anadarko*,Chesapeake Energy, Chevron, EOG Resources*,Exxon Mobil, Noble Energy*, Penn Virginia*, RangeResources*, Stone Energy*, and UltraPetroleum.  These proposals have been filed by the following investors and investor advisors:  As You Sow,Green Century Capital Management, Mercy Investment Program, Miller/HowardInvestments, Sisters of St. Francis of Philadelphia,and Trillium Asset Management. 
Shareholders file resolutions with Chevron*, Exxon Mobil*, and 8 other companies to spur more responsiblemanagement practices
 
Boston, MA—For a third consecutive year, concerned investors havetargeted energy exploration and production companies that rely heavily onhydraulic fracturing (fracking) and fail to disclose critical information aboutthe ways they are managing the associated risks.  
 
Public concern about the environmentaland social impacts of fracking operations are growing across the country and can have real business implications for the companies involved.
 
“Bans and moratoria are denials of companies’ sociallicense to operate and impose a wide range of costs on companies, ranging from the costs of delays to complete loss of access to valuable resources where sunkcosts must be written off,” said Larisa Ruoff, Director of ShareholderAdvocacy for Green Century CapitalManagement (Green Century). “Right now, companies are not providinginvestors, or the communities in which the companies operate, sufficientinformation on the steps they are taking to address and mitigate the risksassociated with hydraulic fracturing operations so shareholders are demandingincreased transparency.”
 
This year, shareholders have filed resolutions with ten companies,including Exxon Mobil, Chevron and Chesapeake Energy* calling on the companiesto provide a detailed account of how they are addressing the risks associated with community concerns, regulatory impacts, tightened regulations, and moratoria. 
 
“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 portions of their shareholders require increased disclosure on this issue,” said Richard Liroff, Executive Director of the Investor Environmental Health Network (IEHN).  IEHN and Green Century coordinate investors’ engagements with companies on fracking. 
 
These resolutions are part of a broader investor initiative challenging companies to address climate and sustainability risks.  Thus far in the 2012 proxy season, investors working with Ceres, a coalition of investors and public interest groups working with companies to address sustainability challenges, have filed 86 resolutions with 69 companies.
 
“Investors are concerned about the financial risks associatedwith the environmental, health, and social impacts of fracking,” said Michael Passoff, Senior Strategist for As You Sow, which has filed at ExxonMobil and Ultra Petroleum* since 2010.  “Concern about watersources, toxic chemicals, and wastewater has led to new regulations in several states and proposed federal legislation. Explosions, contamination incidents, and millions of dollars in fines demonstrate that things can and do go wrong,” he continued.
 
This season, shareholders have a new tool in their dialogue with companies.  In December, IEHN and the Interfaith Center on Corporate Responsibility (ICCR) released “Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations,” which is intended to help increase disclosure and mitigate the impacts of fracking.
 
“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 Laura Berry, Executive Director of ICCR.  “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.”  
 
Shareholder proposals were filed at Anadarko*, Chesapeake Energy, Chevron, EOG Resources*,Exxon Mobil, Noble Energy*, Penn Virginia*, RangeResources*, Stone Energy*, and UltraPetroleum.  These proposals have been filed by the following investors and investor advisors:  As You Sow, Green Century Capital Management, Mercy Investment Program, Miller/HowardInvestments, Sisters of St. Francis of Philadelphia, and Trillium Asset Management. 

Sustainability Reporting describing the company’s environmental, social and governance business practices—co-filed with Walden Asset Management

Hydraulic Fracturing: Community Impacts – Risk Assessment -- disclosure on the impacts of fracking on local community and the financial risks of these impacts. This resolution includes both environmental impacts to water quality, health impacts from exposure to water and air, and is broad enough to include social ills documented in fracking towns.

Here is a sampling of the significant press coverage after last year’s votes.

New: Political Spending Resolution – response to Citizens United ruling. Calls on corporations to review policies and oversight processes related to political spending and public policy, both direct and indirect including through trade associations, and present a summary report by September 2012.

Each summer, animal activists travel across the country to meet and discuss the latest topics of the animal rights movement. This year, animal agriculture was once again the focus. The Humane Society of the United States (HSUS) hosted its annual Taking Action for Animals Conference in Washington, D.C. on July 15-18, and Farm Animal Rights Movement’s Animal Rights 2011 Conference (AR 2011) was held two weeks later on July 21-25 in Los Angeles. Both events claimed to have “record-breaking” attendance, attracting a combined total of more than 1,600 activists from around the world, ranging in age from 20-60 years old.

Securing rights for farm animals and the promotion of a vegetarian or vegan lifestyle to the mainstream public were hot topics at both meetings. Attendees were given tips on how to utilize social media, create “undercover” videos and craft effective messages to share their views with others. Speakers and exhibitors also encouraged aspiring activists to hold demonstrations, signature drives for ballot initiatives and leafleting campaigns.

The largest activist groups attended and sponsored both meetings, although messaging differed between audiences. Nathan Runkle, Executive Director of Mercy For Animals, Erica Meier, Executive Director of Compassion Over Killing, and Gene Baur, President of Farm Sanctuary, spoke at both meetings. They encouraged a more aggressive, physical approach to eliminating animal agriculture at AR 2011, which is seen as the more extremist meeting. For more information about the most active animal rights groups, access the Alliance’s updated activist profile report.

Both conferences discussed a growing embrace of the vegetarian lifestyle in the mainstream media. Speakers used inflated statistics (often citing their own studies) to increase misconceptions about animal agriculture and its effects on the environment and one’s health. The sessions on farm animal rights were the most widely attended at both conferences, with five presentations devoted to the topic including, ”The Global Campaign Against Factory Farming,” “Advances in Farm Animal Protection,” and “Agriculture Campaigns.”

TAFA included a formal vegan banquet with keynote speakers HSUS President and CEO Wayne Pacelle and Congressman Jim Moran (D-Va.). Both speakers stressed the importance of lobbying and having a presence in Washington, D.C. to promote animal rights on Capitol Hill. TAFA and AR 2011 featured an exclusively vegan menu for all guests. It should be noted that, in contrast to the lifestyle choices advocated for by the conference speakers, 97 percent of Americans enjoy meat, milk, and egg products as part of their diet.

Throughout TAFA, HSUS shared examples of celebrities and mainstream media outlets that promote a vegetarian or vegan lifestyle. Though HSUS regularly attempts to portray itself as a mainstream organization, many of its conference speakers and attendees strongly advocate for animal rights. At AR 2011, the recommended tactics discussed were more extreme, including use of violence, sabotage to farms and other illegal actions.

Most people are not aware of these animal activist groups’ true motives to end all animal agriculture and rid the human diet of meat, eggs and dairy. For example, the “Meatless Monday” campaign is marketed as a mainstream idea to cut meat out of the diet for one day a week to improve one’s health and the environment. However, this well-funded campaign was founded by the husband of a wealthy, longtime animal rights activist and it actually pushes an extreme animal rights and environmental agenda by promoting false claims about animal agriculture.

“Meatless Monday” was discussed at both TAFA and AR 2011 by HSUS, Compassion Over Killing, and Mercy for Animals, all who referred to the campaign as a start to a vegetarian or vegan outreach lifestyle. Numerous celebrities, school systems, mainstream media and even cities were mentioned as having joined the campaign. Each presenter claimed that at least 51 percent of the American public is familiar with the “Meatless Monday” campaign, and that 18 percent actively participate, though a source for the statistic was not produced. Josh Balk of HSUS discussed the campaign as a way to not only get people to start eating vegetarian, but to “save 1.4 billion farm animals.”

The new agreement between HSUS and United Egg Producers to seek federal legislation for housing standards for egg laying hens was also discussed at both conferences. Audience members seemed upset about the agreement, noting HSUS “caved” by giving up its cage-free campaign. Others were frustrated because they had devoted time and energy to collecting signatures for the ballot. Kitty Jones, a 17-year-old student, was praised for her individual work of collecting more than 10,000 signatures for the proposed Washington state ballot initiative campaign. On the other hand, some of the activist groups viewed the agreement as a “monumental victory” for HSUS, although some attendees were wary of working with the agriculture industry. HSUS staff asserted that the biggest hurdle would be agricultural lawmakers in Congress.

Farmers and ranchers should educate themselves on the threat these groups represent. Unfortunately, most people are not aware of these extremists groups’ true agenda against animal agriculture. TAFA and AR 2011 showcased animal activists’ real beliefs that are often hidden behind emotionally appealing and celebrity funded public relations campaigns. It is critical that all stakeholders correct the misinformation presented by these activist groups, showcase the wonderful families and businesses involved in farming, ranching and food production and share with the public your commitment to your animals, the environment, food safety and continuous improvement. The Alliance will continue to work to bridge the gap between farmers and consumers to show that while today’s agriculture industry has evolved to meet the needs of society, the same core values remain.

Nestlé Waters North America, PepsiCo and the Coca-Cola Company have all received a “B-” letter grade for their recycling efforts in a new report, which criticized the beverage industry’s pace in improving recycling.

“Waste & Opportunity: U.S. Beverage Container Recycling Scorecard and Report” by As You Sow is the shareholder advocacy group’s third review of the beverage industry since 2006.

The report gave Nestlé Waters North America the highest rank out of the major companies. In particular, the firm received the highest score on container recovery for establishing better recovery goals than its peers and having stated tactical strategies for attaining those goals, the report said.

As You Sow said the beverage industry has made slow progress on recycling since the last edition of the report in 2008. But the 2011 report does contain some signs that the industry may increase its commitments to recycling soon.

The Coca-Cola Company, which As You Says has been historically opposed to container deposit systems, indicated it is now “neutral” on a deposit system administered by an independent third party, an apparent softening of its position, according to the advocacy group.

Several survey respondents also said that in developing a recycling program, they are most likely to support programs that set recycling fees that are paid by producers or importers, included in the price of the product and administered by industry.

However, brewing companies were largely absent from the survey participants, with Anheuser Busch refusing to participate. As You Grow says this suggests the company’s transparency policies are getting worse. The firm received the second highest score in the report’s 2008 edition.

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.