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December 28, 2010
Oil Spill Commission Asked to Recommend Improved Disclosure by Offshore Drillers
    by Robert Kropp

The Investor Network on Climate Risk requests that the final report of the BP Deepwater Horizon Oil Spill Commission, due in January, include recommendations that disclosure of risks be improved.

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, established by President Obama in May to examine the causes of the Deepwater Horizon explosion, has set January 11 as the date of its final report. Expected to be included in the report are recommendations for "improvements to federal laws, regulations, and industry practices" to guard against future offshore oil spills.

In advance of the Commission's final report, the
Investor Network on Climate Risk (INCR), a network of 98 institutional investors with more than $9 trillion in assets under management, has sent a letter to the Commission, asking that it recommend the development of guidance from the US Securities and Exchange Commission (SEC) on disclosure by companies engaged in deepwater drilling globally.

The letter, signed by Mindy Lubber, Director of INCR and President of
Ceres, stated that improved disclosure "would help protect investors from future losses by allowing investors to understand the quality of oil and gas companies' risk management policies and practices, and seek to improve them where they are deficient," and asked that the Commission provide recommendations in five areas.

Noting that the financial regulatory reform bill passed by the Senate in July included provisions addressing mine safety, the letter requested the "disclosure of data on safety and environmental performance and violations" by offshore drilling companies, arguing that disclosure of environmental, health, and safety (EHS) policies would help investors "understand the quality of implementation" of such policies.

The letter also called on the Commission to recommend disclosure of governance and management systems, in order to help investors determine the extent of Board oversight, the relationship between executive compensation packages and risk management, and quantitative targets for managing offshore risks.

The letter also called for increased disclosure of investments in accident and spill prevention, spill contingency plans, and contractor selection and oversight.

In the letter, Lubber noted that investors "have already taken steps to improve voluntary corporate disclosure of these risks and opportunities," having sent in August "letters to 27 major oil and gas companies, asking them to disclose information regarding their risk oversight measures."


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