Investors challenge natural gas companies to increase transparency and protect the environment
Shareholder effort launched at Cabot Oil & Gas*, Chesapeake Energy*, ExxonMobil*, EOG Resources*, Hess* and other natural gas companies to ensure drilling is done responsibly
January 26, 2010 — Today investors unveiled a major new shareholder campaign to ensure that development of natural gas is done in a way that does not have unintended consequences for the environment and human health.
Production from traditional reserves of natural gas has been dwindling, and an increasing number of new wells require hydraulic fracturing— a process where water, chemicals and particles such as sand are injected into the ground under extremely high pressure—to unlock vast reserves previously unavailable. It has been estimated that up to 80 percent of new wells will require some form of hydraulic fracturing. But investors are concerned that this process comes with some very serious risks.
As use of this process has increased, a catalogue of harmful environmental and community impacts allegedly linked to fracturing has emerged, with the potential contamination of water resources being a central concern.
Amid mounting concerns about fracturing's impact on water, shareholders of major natural gas drillers, led by Green Century Capital Management and the Investor Environmental Health Network, are asking companies and their service suppliers for greater transparency about the business and environmental risks associated with fracturing. Investors and investor advisors including As You Sow, Green Century Capital Management, Miller/Howard Investments, Catholic Healthcare West, First Affirmative Financial Network, the Mercy Investment Program, the New York State Common Retirement Fund, the Shareholder Association for Research & Education, Pax World Management, the Sisters of St. Francis of Philadelphia, the Sustainability Group, and Trillium Asset Management have begun to engage approximately 20 companies, and have filed shareholder resolutions with 12 companies including Cabot Oil & Gas Corporation (COG)*, Chesapeake Energy (CHK)*, ExxonMobil (XOM)*, Hess Corporation (HES)*, EOG Resources (EOG)*, and Range Resources (RRC)* over these risks. The shareholder proposals ask companies to increase transparency regarding the environmental impact of their operations and encourage companies to mitigate risks by switching to less toxic fracturing fluids and adopting best practices for drilling and managing wastes.
Richard Liroff, Executive Director of the Investor Environmental Health Network explains, "High profile water contamination incidents, new litigation, and public protests that include calls for moratoria on natural gas permitting all suggest sizeable and rising business risks to companies and attendant threats to shareholder value; shareholders need assurance that companies are candidly disclosing these risks and are adopting best management practices to minimize them."
According to Larisa Ruoff, Director of Shareholder Advocacy for Green Century Capital Management, "It is critical that shareholders of natural gas companies understand and address the business risks associated with this type of gas drilling." She continues, "Companies and regulators must ensure this development is done in a way that protects the environment, especially our drinking water, and mitigates potential financial risks."
"Shareholders believe that through the adoption of best practices and policies to phase out the most toxic chemicals used in this process, companies can ensure that they are both protecting the environment and their balance sheets from unnecessary and potentially devastating risks," said Ruoff.
*As of December 31, 2009, neither the Green Century Equity Fund nor the Green Century Balanced Fund was invested in Cabot Oil & Gas, ExxonMobil or Range Resources. As of December 31, 2009, Chesapeake Energy comprised 0.00% of the Green Century Balanced Fund and 0.32% of the Green Century Equity Fund; EOG Resources comprised 0.00% of the Green Century Balanced Fund and 0.47% of the Green Century Equity Fund; Hess Corporation comprised 0.00% of the Green Century Balanced Fund and 0.38% of the Green Century Equity Fund. Portfolio composition will change due to ongoing management of the Funds. Please refer to the Green Century Funds website for current information regarding the Funds' portfolio holdings. These holdings are subject to risk as described in the Funds' prospectus. References to specific investments should not be construed as a recommendation of the securities by the Funds, their administrator, or their distributor.
Green Century Capital Management is an investment advisory firm focused on environmentally responsible investing. Founded by a partnership of non-profit environmental advocacy organizations in 1991, Green Century's mission is to provide people who care about a clean, healthy planet the opportunity to use the clout of their investment dollars to encourage environmentally responsible corporate behavior. Green Century believes that shareholder advocacy is a critical component of responsible investing and actively advocates for greater corporate environmental accountability.
The Investor Environmental Health Network is a collaborative partnership of investment managers, advised by nongovernmental organizations, concerned about the financial and public health risks associated with corporate toxic chemicals policies. IEHN, through dialogue and shareholder resolutions, encourages companies to adopt policies to continually and systematically reduce and eliminate the toxic chemicals in their products.
You should consider the Green Century Funds’ investment objectives, risks, charges, and expenses carefully before investing. For a prospectus that contains this and other information about the Funds, call 1-800-93-GREEN, visit www.greencentury.com or email firstname.lastname@example.org. Please read the prospectus carefully before investing.
The Green Century Funds are distributed by UMB Distribution Services, LLC 1/10
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