Fifty-five investment organizations and institutional investors with nearly $1 trillion in assets under management are pushing for implementation of "best practices" for hydraulic fracturing (fracking), according to a trio of shareholder groups -- Boston Common Asset Management, the Investor Environmental Health Network (IEHN) and the Interfaith Center on Corporate Responsibility (ICCR) -- which are spearheading the effort.
IEHN and ICCR, which are "committed to social and environmental justice," have called for more transparency by natural gas operators that use fracking (see Shale Daily, Dec. 15, 2011). In December the two U.S. shareholder groups issued Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations, which they said was in response to "growing public concern" and mounting fracking moratoriums in some municipalities. The guide offered a "road map for companies to respond to the heightened concerns around fracking and articulates industry best practices that will reduce the risks, and consequently, the impacts."
Now they and Boston Common say dozens of other investors focused on environmental, social and governance factors from around the world, including Australian Council of Superannuation Investors, Dexia Asset Management, Mercy Investment Services and Green Century Capital Management, are uniting to clean up fracking operations.
"In the 2010 and 2011 proxy seasons, 21 shareholder resolutions at 16 companies received strong support, averaging 30% votes on six resolutions going to votes in 2010 and an average 40% votes on five resolutions voted on in 2011." Other resolutions were withdrawn after companies either took "positive action" or pledged to do so in the near future, they said.
"Assuming that hydraulic fracturing is going to continue to be used in some form, investors need to have greater certainty in the marketplace as to industry practices and government regulation," said Steven Heim of Boston Common. "Currently there is no such certainty and that is really why investors are speaking up. The marketplace has spoken: the best course here for investors, the environment and human health will be if all shale gas extractors wake up, get the message, and use these tools to do it right."
In an attempt to bring uniformity to the exploration and production of oil and natural gas in the shale plays of the Appalachian Basin, a consortium of 11 producers recently released recommended standards and practices on everything from the preparation of a regional spill and emergency response plan to the use of fracking fluids, as well as for local relations and well site selection (see Shale Daily, May 2). The consortium, known as the Appalachian Shale Recommended Practices Group (ASRPG), said its recommendations were consistent with those made in the Secretary of Energy Advisory Board's final report, which was released last November, and a National Petroleum Council report issued last September (see Shale Daily, Nov. 11, 2011; Sept. 16, 2011).
The ASRPG's recommendations followed the Marcellus Shale Coalition's release of its first recommended practices report, which focused on drill site planning, as well as developing and restoring the landscape once operations are complete (see Shale Daily, April 30).