As You Sow’s Hydraulic Fracturing initiative focuses on reducing the financial, environmental, and community impacts of producing natural gas, including the use of hydraulic fracturing (or “fracking”), a controversial method of drilling for natural gas. Reduced impacts result in reduced risk to shareholders.
As You Sow Reaches Agreement with ExxonMobil on Fracking Disclosure
ExxonMobil has agreed to provide increased transparency about the environmental and community risks associated with its shale gas hydraulic fracturing and production practices in response to a shareholder proposal filed by As You Sow, the New York City Pension Funds, and 12 co-filers. In return, shareholders have agreed to withdraw the proposal. ExxonMobil will report how it manages risks for 26 separate parameters in the areas of chemical use, water and waste management, air emissions, community impacts, and management and accountability.
Exxon’s shift toward disclosure and transparency is important, having come after five years of shareholder resolutions seeking better management practices and disclosures about the practices and their effectiveness. Against a backdrop of moratoria, well accidents, environmental disruption, and community harms, company assurances of good practices are no longer sufficient to attract and maintain investment.
Pursuant to the withdrawal agreement, the company will address how it manages the environmental and community risks associated with its hydraulic fracturing and production practices for shale gas using criteria identified in our 2013 report called Disclosing the Facts: Transparency and Risk in Hydraulic Fracturing Operations, authored in partnership with Green Century, Boston Common Asset Management, and the Investor Environmental Health Network. In the report, ExxonMobil was ranked as one of the lowest scoring among 24 companies on transparency and risk in hydraulic fracturing operations, with adequate disclosures in just 2 out of 32 indicators.
The Exxon resolution is part of a coalition effort targeting six major oil and gas companies over failure to disclose measurable reductions in environmental and social impacts of hydraulic fracturing operations. As You Sow has also filed fracking resolutions at Occidental Petroleum and Chevron. You can learn more at our 2014 resolutions table.
Disclosing the Facts
Our newest report, Disclosing the Facts: Transparency and Risk in Hydraulic Fracturing Operations, authored in conjunction with Green Century, Boston Common Asset Management, and the Investor Environmental Health Network, benchmarks 24 companies engaged in hydraulic fracturing against investor needs for disclosure of operational impacts and mitigation efforts. The analysis finds energy producers failing to adequately report efforts to reduce environmental and community impacts, with BP, Exxon Mobil and Occidental at the bottom.
In 2014, investors asked Exxon Mobil and Chevron, two of the largest players in the natural gas industry, to report to shareholders, using quantitative data, the results of company practices to reduce harm to the public and the environment from their fracking operations. The requested data would include:
- Percentage of wells reducing methane emissions using “green completions”
- Total reductions in water pollution and spills
- Sources and amount of water used for shale energy operations by region and reduction measures implemented
- Total amount of air emissions reduced annually
- Systems to track and manage naturally occurring radioactive materials
- Extent to which closed-loop systems for management of drilling residuals are used
- Number of community complaints or grievances filed and how many were resolved
As You Sow is also supporting individual and institutional investors interested in divesting from fossil fuel-based energy and re-investing in carbon-free energies. We provide resources for these investors including research on the risks of fossil fuel-based energy such as coal, documentation that carbon divestment poses minimal portfolio risk, and tools for fossil-free investment.
Hydraulic fracturing is a process of injecting a mixture of water, chemicals, and particles underground at high pressure to create fractures in the ground through which gas flows for collection.
While natural gas development is often viewed as a preferred energy option to coal or oil, and as a source of jobs and economic development to rural communities, investors, regulators and communities are growing increasingly concerned about the environmental and health impacts of this process. Harms associated with hydraulic fracturing and the production of shale gas include: above and below ground water pollution from fracking chemicals; the creation of millions of gallons of toxic waste water which has to be stored, moved, and disposed of; the potential for air pollution associated with trucks, pumps, and other machinery; depletion of drinking water stores; release of methane, a potent global warming pollutant; environmental disturbance and damage; and community impacts including strained social services, increased crime, traffic gridlock, road damage, and noise among others.
- A recent report listed 245 chemicals used in the fracturing process. Ninety-two percent of the products had negative 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.
- Millions of gallons of water are typically used in each fracturing process.
- The EPA, which regulates chemicals used in underground injection under the Safe Drinking Water Act, had its authority to monitor hydraulic fracturing significantly reduced 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.
Hydraulic fracturing is now used in about 90% of operational natural gas wells according to industry reports.
Shareholder Resolutions: As You Sow began filing shareholder resolutions and engaging with companies about their use of hydraulic fracturing in 2010, asking for disclosure of the chemicals used in hydraulic fracturing operations. Those resolutions resulted in the industry creating a site called FracFocus which provides information on toxic chemicals used in hydraulic fracturing. (The site continues to generate controversy regarding failure to disclose ‘proprietary’ chemicals.) Our current resolutions seek transparency and quantitative disclosure about how the Company manages and measures impacts associated with shale gas production across a broad range of issues, from chemicals, to toxic waste management, water use and pollution, air quality, and community impacts.
Among the risks facing companies involved in fracking operations are:
- Legal liabilities: Hydraulic fracturing may expose companies to financial risk from environmental and health impacts caused by their fracking operations, in particular those related to toxic contamination of air and water;
- Reputational risk: Companies that cause harms to communities and the environment, who oppose reasonable regulations, and that are unwilling to disclose information about their management practices and impacts can incur substantial reputational harm;
- Moratoriums: When companies fail to manage the impacts from their hydraulic fracturing operations, or to openly provide information about their practices, community opposition can lead to bans and moratoriums, increasing costs or reducing lucrative opportunities.