May 08, 2013
Resolution Calls on CONSOL Energy to Report on Stranded Assets
by Robert Kropp
Up to 80% of known fossil fuel reserves will have to stay in the ground if climate change is to be
addressed, and As You Sow requests that the coal producer report on the risks of stranded reserve
and infrastructure assets.
If enough of them acknowledge the long-term implications of climate change, shareowners at CONSOL
Energy can become part of history today at the coal and natural gas company's annual general
meeting in Pittsburgh.
A resolution submitted by As You Sow requests that CONSOL report to shareowners on
"various scenarios the company deems likely, or reasonably possible, in which a portion of its
reserves or infrastructure become stranded due to carbon regulation," according to a proxy memo
prepared by the investor organization.
"CONSOL is the nation's largest producer of coal
from underground mines, with 4.5 billion tons of proven and recoverable coal reserves, the most
among US coal companies," the resolution states.
As You Sow bases its request upon the
findings of recent reports by the International Energy Agency (IEA) and Carbon Tracker, both of which conclude that up
to 80% of all fossil fuel reserves accounted for at present must remain unburned if the effects of
climate change are to mitigated in a meaningful way.
"Governments and global markets are
currently treating as assets, reserves equivalent to nearly five times the carbon budget for the
next 40 years," Carbon Tracker stated in its report.
"If laws and regulations are adjusted
to recognize this limitation, the vast majority of fossil fuel companies will be left with stranded
assets in the form of unburnable reserves and underused infrastructure," As You Sow states.
Citing financial as well as potential regulatory risks to the company, As You Sow states in its
proxy memo, "Companies and shareholders need to be fully informed of the risk of stranded reserve
and infrastructure assets and how, or if, the company is planning for a carbon constrained future."
"This valuable information will enable investors to analyze how the company is positioned
to address climate change and carbon restrictions and to make reasonable judgments about the
benefits or risks associated with investing in this company," the memo continues.
against a vote in favor of the resolution, CONSOL has stated that it produces a corporate social
responsibility report disclosing "its plans to address concerns regarding climate change and
related risks." However, As You Sow replied, "The company has failed to disclose and analyze the
potential that it may be unable to utilize 2/3 or more of its coal and/or natural gas assets and
has further failed to describe how the company is preparing for this risk."
for severe limits on carbon creates real risk for investors who need to be fully informed of how,
or if, the company is planning for a carbon constrained future," said Danielle Fugere, President
and Chief Counsel of As You Sow.
"Overvalued fossil fuel reserves, if not acknowledged,
could wreak far greater worldwide harm than the US housing bubble did," Fugere continued. "Energy
companies must acknowledge this issue and give investors a chance to adjust their behavior
Arguing against a vote in favor of the resolution, CONSOL has stated that it
produces a corporate social responsibility
A second shareowner resolution addressing
stranded assets has been filed at Alpha Natural Resources by the Unitarian Universalist Association (UUA). With 2.3 billion tons of proven coal reserves,
Alpha is the nation's third-largest coal producer.
"It is of concern to investors that a
portion of Alpha's coal reserves and/or related infrastructure may become unusable, unmarketable,
or otherwise not economically viable as a result of greenhouse gas restrictions," the UUA
resolution states. "Given the increasing likelihood of material impact, shareholders need
additional disclosure of the company's action plans, and risk scenarios, associated with likely
greenhouse gas regulation."