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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 co-filers.”

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 votes.

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.

“Exxon to 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.”

“The systemic 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.”

 

 
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