April 03, 2014
Dare We Celebrate Exxon Agreeing to Report on Fracking Risks?
by Robert Kropp
As You Sow and the New York City Pension Funds withdraw resolution when Exxon agrees to increased
transparency days after the oil and gas company issues disappointing report on stranded assets.
According to a recent report from the
Principles for Responsible Investment (PRI), “Most firms do not provide a clear picture of
their fracking activities and impacts, even within markets where there is a high level of
production and servicing activity. “The average score across all four indicators was only 21%,
leaving significant scope for improvement in disclosure and reporting practices.”
Thus it would seem like good news when As You Sow announced this
week that ExxonMobil, the largest and often most intransigent oil and gas company of them all,
“has agreed to provide increased transparency about the environmental and community risks
associated with its hydraulic fracturing and production practices for shale gas in response to a
shareholder proposal filed by the New York City Pension Funds, non-profit As You Sow, and 12
As a result of the agreement, the shareowners decided to withdraw their
resolution. A similar proposal filed with the company last year gained just over 30% of shareowner
A report entitled Disclosing the Facts, published last November by a
coalition of sustainable investment groups,benchmarked 24 companies against investor requirements
for disclosure, and found that “no firm succeeded in disclosing information on even half of the
selected 32 indicators related to management of toxic chemicals, water and waste, air emissions,
community impacts, and governance.”
“In the report,” As You Sow observed, “Exxon Mobil
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.” As part of the
agreement this year, Exxon will report on fracking risks based on the criteria identified in
Disclosing the Facts.
As previously stated, the agreement would seem to come as good news,
and perhaps it will turn out to be so. But in an even more widely
heralded recent agreement, Exxon agreed to report on stranded assets, becoming the first oil
and gas company to report on the impacts of unburnable carbon assets on its business model.
As You Sow and the wealth management firm Arjuna Capital withdrew their resolution, and a few
days later—on the same day, ironically enough, that the Intergovernmental Panel on Climate Change (IPCC)
released its Fifth Assessment report on climate change impacts, adaptation, and vulnerability—Exxon
released its report on stranded assets.
“Any future capping of carbon-based fuels to the
levels of a 'low-carbon scenario' is highly unlikely due to pressing social needs for energy,”
Exxon reported. In other words, the company persists in believing that it will continue to have the
social license to burn all the fossil fuel reserves counted as assets on its books, despite the
grave implications for a world already being transformed by climate change.
World: Drop Dead,” Oil Change International stated
in response to Exxon's report.
Following the release of the IPCC report, Christiana
Figueres, Executive Secretary of the United
Nations Framework Convention on Climate Change, summed up the findings of the IPCC report.
“If we are to stay within 2 degree maximum temperature rise, and with the release of the new
IPCC report this week, there is no doubt that we must, we have to, stay within a finite, cumulative
amount of GHG emissions in the atmosphere,” Figueres said. “We have already used more than half of
that budget. This means that three quarters of the fossil fuel reserves need to stay in the ground,
and the fossil fuels we do use must be utilized sparingly and responsibly.”
risks of unabated climate change are potentially so unmanageable that the world has no other option
but to address the challenge,” she continued. “I suggest the oil and gas industry become the
leaders that take us to the new, sustainable energy mix.”