Our 2011 shareholder resolution with ExxonMobil requests the company to publish a report on the environmental risks of fracking and policy options the company can adopt to mitigate these risks.

28.2% of investors supported this resolution. Learn about how to interpret shareholder votes here. Exxon CEO Rex Tillerson admitted to reporters after the meeting that the company "knows there are risks" associated with fracking.

Our 2010 shareholder resolution calling for the company to disclose the risk from fracking received 26% investor support, about five times the average vote for a first year environmental resolution.

Read our rebuttal to the company's opposition statement or for a full discussion of the reputational, legal, and regulatory risks to the sector, refer to our fracking page.

Background

In December 2009, ExxonMobil announced a $41 billion merger with XTO Energy, the company's largest since its $81 billion merger with Mobil in 1999.

At the heart of this merger is XTO’s wide range of natural gas holdings across the country. ExxonMobil’s US natural gas operations are primarily centered in the Piceance Basin in Colorado. Yet, XTO is involved in every major gas play in the country including the Barnett shale region of Texas, the Bakken formation in North Dakota, and the large deposits in the Marcellus shale formation in New York, Pennsylvania, West Virginia, and Ohio.

ExxonMobil views natural gas as a major area of expansion and is aggressively moving to be the industry leader. This move will vault ExxonMobil from being the ninth largest natural gas company in the US - to the undisputed #1 industry giant.

Yet this also moves ExxonMobil into the center of the storm brewing over hydraulic fracturing.

Shareholders spoke with company senior management about these concerns and were simply told that fracking is completely safe.

ExxonMobil itself offered the most striking indication that future regulations have the potential to dramatically influence natural gas development using hydraulic fracturing. ExxonMobil and XTO’s merger agreement included a provision that caught many investors’ attention.

The provision states that ExxonMobil has the right to back out of the deal if state or federal regulations significantly restrict hydraulic fracturing, rendering it illegal or commercially impracticable. This is a clear indication that the company recognizes there is substantial risk associated with potentially increased regulation.

Along with regulatory risk that could greatly increase operation costs, there are also legal liabilities from health impacts, and reputational risk from growing public and political opposition.

ExxonMobil isn't telling shareholders that story, and in the absence of meaningful disclosure, shareholders have no way of fully assessing the risks and rewards from investing in the company.