ExxonMobil Corp. has agreed to disclose for the first time more details about the risks of drilling unconventional wells that use hydraulic fracturing (fracking) stimulation, complying with minority shareholder demands for the second time in two weeks.
Shareholder demands at other companies over the past year have led to CEOs resigning, assets being sold and boards being upended.
The shift by ExxonMobil is unique in that it is complying with a minority of its shareholders, who for the past four years have asked for the information through proxy votes at the annual meeting. None of the votes ever has garnered more than half of the shareholders' support; last year the resolution was approved by only 30%.
The shift reverses ExxonMobil's resistance to disclosing detailed information about much of its drilling operations in the United States. Similar shareholder-led proposals have been defeated every year since 2010 (see Daily GPI, June 3, 2013; May 27, 2011). The fracking resolution first came about when ExxonMobil acquired mega shale producer XTO Energy Inc., becoming the largest U.S. gas operator.
The decision Thursday to disclose drilling risks came in response to the same shareholder proposal brought since 2010 by the New York City Comptroller and groups that include As You Sow.
Last year, in response to the fracking impact proposal, ExxonMobil CEO Rex Tillerson and the board asked for it to be voted down because "the minimal environmental impacts of hydraulic fracturing have been well documented" and there was no need to provide more disclosure.
Under the agreement on fracking risks, ExxonMobil plans to issue its first disclosure report in September, detailing its management of impacts to air quality, water and chemical use. The impacts to roads to drilling sites also are to be included.
ExxonMobil's forthcoming report on fracking risks would not include data on methane emissions from wells, but it agreed to explore some of those issues in the future.
Just two weeks ago, ExxonMobil acquiesced to minority shareholders to publish a carbon asset report describing how it assesses the risks of stranded assets from climate change (see Daily GPI, March 20). The first report, issued a few days ago, is to be published on the producer's website.
Attitudes are changing in how the executive suite obliges shareholders, said As You Sow President Danielle Fugere.
"It does feel like Exxon is changing the way it's doing business," she said. However, if the disclosure reports don't meet expectations, "we did reserve our right to bring a resolution next year."