In 2011, As You Sow filed four shareholder resolutions asking energy companies to report on the environmental risks of fracking. Two of three resolutions that went to vote recieved over 40% support, an extraordinary show of support for such a new issue.

Read company-specific information about our shareholder resolutions on the pages listed below or read our press release (PDF):

• Anadarko Petroleum Corporation (withdrawn)
• Chevron Corporation (40.5%)
• ExxonMobil (28.2%)
• Ultra Petroleum (41.7%)

>>Recent media clippings for our fracking program

Background

As You Sow began filing shareholder resolutions and dialoguing with companies regarding their use of hydraulic fracturing in 2010. Among the risks facing companies involved in fracking operations are:

• Regulatory risk from new regulations proposed at the state and federal level that may impose significant new costs to hydraulic fracturing operations.
• Legal liabilities as hydraulic fracturing may expose the company to financial risk from environmental and health impacts, in particular those related to toxic contamination of air and water.
• Reputational risks from the growing public and political concern on this issue as exemplified by the vocal opposition by New York City Mayor Michael Bloomberg that hydraulic fracturing poses an unacceptable threat to the unfiltered fresh water supply of nine million New Yorkers.

Click here to read a fact sheet detailing these risks (PDF).

The utilization of hydraulic fracturing has changed dramatically since its introduction 60 years ago, and according to industry it is now used in about 90% of operational wells today. Hydraulic fracturing is a process of injecting a mixture of water, chemicals and particles underground to create fractures through which gas can flow for collection.

While natural gas development is generally viewed as a preferred energy option to coal or oil, and as a source of jobs and economic development to rural communities; communities, regulators and investors are growing increasingly concerned about the environmental and health impacts of this process.

While there are air pollution and land issues associated with hydraulic fracturing, it is the impacts on water that is raising most of the scientific, political and public concern and opposition. Hydraulic fracturing fluids are known to include toxic and carcinogenic chemicals:

• A recent report listed 245 chemicals used in the fracturing process. Ninety-two percent of the products had health effects.
• Independent tests in Colorado found at least 65 of the chemicals used in fracturing fluids were defined as hazardous under six major federal laws and if these same chemicals were released from an industrial facility, reporting to the EPA would be mandatory.

Further clouding the issue, the EPA which regulates chemicals used in underground injection under the Safe Drinking Water Act – had its authority to monitor hydraulic fracturing stripped by the 2005 Energy Policy Act. This legislation was shepherded through Congress by former Vice President Dick Cheney, a former CEO of Halliburton - the company which pioneered hydraulic fracturing and one of the leaders in this field.

In 2010, several votes on hydraulic fracturing proposals received 5 to 6 times higher than average investor support.

For Example:

• Williams Companies 42%
• Cabot Oil and Gas 36%
• EOG 31%
• ExxonMobil 26%

These are excellent first year votes and so far over the SEC thresholds that shareholders and companies know the proposal can be re-filed every year unless the company addresses the risks from these issues.

The most significant thing about receiving such high votes on first year social proposals is that it demonstrates mainstream investors are already aware of and concerned about these issues.

* image: Wespionage/Flickr