BOSTON - Major investors are no longer willing to sit by idly as energy companies engaged in shale gas fracking face concerns about industry drilling problems, growing regulatory uncertainty, and increasing opposition from concerned shareholders.

Today, Boston Common Asset Management (“Boston Common”), the Investor Environmental Health Network (“IEHN”) and the Interfaith Center on Corporate Responsibility (“ICCR”) announced that 55 major investment organizations and institutional investors with nearly $1 trillion in assets under management (“AUM”) have united to support “best practices” for the fracking of shale gas.  Spearheaded by the trio of sustainable investing and religious investing groups, the growing coalition seeking industry action includes investment organizations focused on Environmental, Social and Governance (“ESG”) factors and those that are not.

The supporting organizations represented in the coalition encompass dozens of institutional investors in the U.S., Europe and Australia, including:  APG All Pensions Group, Australian Council of Superannuation Investors, Dexia Asset Management, Mercy Investment Services, Green Century Capital Management, and Regnan - Governance Research & Engagement Pty Ltd. (See the full list of 55 below.)  

In December 2011, IEHN and ICCR published “Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations.”  (See http://www.iehn.org/documents/frackguidance.pdf  for the full text.)

Steven Heim, managing director and director of ESG Research and Shareholder Engagement, Boston Common, 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.  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.”

Richard Liroff, PhD., executive director, Investor Environmental Health Network, said:  “We’re encouraging a corporate race to the top in adopting best practices.  The best-practices guide backed by major investors offers both currently achievable goals, such as minimizing fresh water use, and more aspirational goals, such as virtually eliminating toxic chemicals from fracturing operations.  The guide cites practices that are already used by 17 companies.  Many companies will save money and lower risks; providing business, environmental, and community benefits.”

Sister Nora Nash, director of corporate social responsibility, Sisters of St. Francis of Philadelphia, and member of the ICCR, said:  “Shale gas companies must earn their ‘social license’ by operating in a more responsible manner.  Companies must address the community and environmental concerns prompting bans and moratoria.  They must listen closely, respond sensitively, and account to both investors and communities for their actions.  Otherwise, this is an uncharted process of unwanted development that deprives communities of their rights and leads to litigation and loss of investor confidence.”

Investors are seeking action from the industry due to the increasing level of uncertainty about fracking.   Examples of the impacts include the following:

·         Spreading moratoria and bans compromise development prospects.  Recent restrictions on the industry include: moratoria in New York State and Delaware River Basin Commission; a moratorium in the Province of Quebec, Canada; and outright bans in France and Bulgaria.  Shell has estimated that two-fifths of its New York State acreage could be off-limits due to pending rules on fracking in that state.  Chevron’s exploration license in Bulgaria has been cancelled.

·         Inconsistent practices making it impossible for investors to make informed choices.  While some companies have voluntarily increased disclosures, particularly around chemicals used in fracking, there is no systematic reporting on risk management and reduction steps, which means investors may lack information critical to fully evaluating energy companies engaged in shale gas extraction.

·         Growing shareholder unrest.  Investor concern is evident in high levels of shareholder votes supporting requests for more fracking disclosure.  In the 2010 and 2011 proxy seasons, 21 shareholder resolutions at 16 companies received strong support, averaging 30 percent votes on six resolutions going to votes in 2010, and an average 40 percent votes on five resolutions voted on in 2011.  Most of the remaining resolutions were withdrawn in the course of discussions with companies, which either took positive action or pledged that they would do so in the near future.

ABOUT THE BEST PRACTICES GUIDELINES

Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations was inspired by energy companies’ requests, in dialogues with investors, for enhanced guidance on disclosure of risk management practices. The guide is organized around 12 core goals and supporting practices and indicators:

·         Manage risks transparently and at board level;

·         Reduce surface footprint;

·         Assure well integrity;

·         Reduce and disclose all toxic chemicals;

·         Protect water quality by rigorous monitoring;

·         Minimize fresh water use;

·         Prevent contamination from waste water;

·         Minimize and disclose air emissions;

·         Prevent contamination from solid waste and sludge residuals;

·         Assure best in class contractor performance;

·         Secure community consent; and

·         Disclose fines, penalties and litigation.

In alphabetical order, the full list of the 55 investors, investment management and institutional investor firms supporting the “best practices” guidelines for fracking are as follows:  Adrian Dominican Sisters (USA); Adveq Real Assets, Adveq Management AG (Switzerland); APG All Pensions Group (Netherlands); As You Sow (USA); Australian Council of Superannuation Investors (Australia); Bon Secours Health System, Inc. (USA); Boston Common Asset Management, LLC (USA); Calvert Investments, Inc. (USA); Catholic Health East (USA); Catholic Health Partners (USA); Catholic Healthcare West (USA); Catholic Super (Australia); Ceres (USA); Christian Brothers Investment Services, Inc. (USA); Christopher Reynolds Foundation (USA); Compton Foundation (USA); Congregation Sisters of St. Agnes General Council (Fond du Lac, WI) (USA); Dexia Asset Management (Belgium); Domini Social Investments LLC (USA); Dominican Sisters of Hope (USA); Dominican Sisters of Mission San Jose (USA); Ethos (Switzerland); Everence Financial (USA); First Affirmative Financial Network (USA); Governance for Owners (United Kingdom); Green Century Capital Management (USA); Local Government Super (Australia); Maryknoll Sisters (USA); Mercy Investment Services (USA); Miller/Howard Investments, Inc. (USA); NEI Investments (Canada); Northwest Coalition for Responsible Investment (USA); Park Foundation (USA); Parnassus Investments (USA); Pax World Funds (USA); Portfolio 21 Investments (USA); Qube Investment Management Inc. (Canada); Regnan - Governance Research & Engagement Pty Ltd (Australia); Religious of the Sacred Heart of Mary, Western American Province (USA); Rose Foundation for Communities and the Environment (USA); Shareholder Association for Research and Education (SHARE) (Canada); Sisters of Charity of Saint Elizabeth (USA); Sisters of St. Dominic, Congregation of the Most Holy Name, San Rafael (USA); Sisters of St. Francis of Penance and Christian Charity, St. Francis Province (USA); Sisters of St. Francis of Philadelphia (USA); Sisters of St. Joseph of Orange (USA); Sisters of St. Louis, California Region (USA); Sisters of the Holy Family (USA); Socially Responsible Investment Coalition (SRIC) (USA); Swift Foundation (USA); The Sustainability Group at Loring, Wolcott & Coolidge Trust, LLC (USA); Trillium Asset Management LLC (USA); Ursuline Sisters of Tildonk, U.S. Province (USA); Walden Asset Management, a division of Boston Trust & Investment Management (USA); and Zevin Asset Management (USA).

ABOUT THE GROUPS

Boston Common Asset Management is an investment manager and a leader in global sustainability initiatives, specializing in long-only International equity, US equity, and US balanced strategies. Boston Common seeks sustainable, long-term capital appreciation by investing in diversified portfolios of what it believes are high-quality companies through rigorous analysis of financial, and environmental, social and governance (ESG) factors. As shareowners, Boston Common urges companies to improve transparency, accountability, and attention to ESG issues. Boston Common is an independent, employee-owned firm and as of March 31, 2012, managed over $1.6 billion, including subadvised assets.

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 and activities

Currently celebrating its 40th year, Interfaith Center on Corporate Responsibility is the pioneer coalition of active shareholders who view the management of their investments as a catalyst for change.  Its 300 member organizations with over $100 billion in assets have an enduring record of corporate engagement that has demonstrated influence on policies promoting justice and sustainability in the world.

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• Exceeding its 2011 goal to reduce operational greenhouse gas emissions by 10 percent from a 2005 baselines
•  As Chair of the Equator Principles Association, leading the Association through an intensive Strategic Review process and commencement of the Equator Principles Update Process; the report includes reporting on Citi's Equator Principles and ESRM Policy implementation
• Committing $6.4 billion toward the $50 Billion Climate Initiative, which directs funding to activities and projects that mitigate climate change. This brings the cumulative total to $36.35 billion halfway through the 10-year initiative.
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• Providing more than $290 million in funding to 32 microfinance institutions across 18 countries in partnership with the U.S. Overseas Private Investment Corporation (OPIC) since 2006; and announcing a $20 million term loan to support microentrepreneurs and small businesses in Indonesia

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Tea Party-backed Richard Mourdock’s recent Indiana primary victory over the more moderate Republican Senator Richard Lugar, and the ongoing trial of erstwhile presidential hopeful John Edwards only serve to underscore that fact.

Although they represent different ends of the trust spectrum, they are the current banners for dogma and deceit, and much that’s wrong with our political system.

In Mourdock’s case it’s dogma.

Any politician or political party that uses the word “never,” as in never raise taxes or never accept anyone else’s views when considering a particular political issue has essentially abdicated his or her ability to govern. 

Politics is the art of compromise.  Mr. Mourdock and his ilk are ideologues pushing personal agendas.  Unlike the Founding Fathers, who made compromises galore to bring this nation together, many in our current crop of politicians are doing just the opposite by digging in their heels and dividing us as a nation.  

According to Mourdock, “the highlight of politics is to inflict my opinion on someone else.”  Quite frankly, it’s hard to trust someone to act on behalf of the common good when their self-righteousness runs to such depths.

John Edwards’ untrustworthiness may be more blatant than Mr. Mourdock's. 

To raise yourself in the political ranks by standing on the shoulders of your family while courting someone else—then fabricating lie after lie to try and hide your misdeeds—is simply unconscionable, unethical and immoral behavior for anyone, let along someone running for the nomination of President of the United States.

Such deceitfulness and lack of personal integrity must have no place in our political arena.  Edwards' nomination would have caused untold hardship to the Democratic party -- and to our entire political system.  Try to imagine the crisis our political system would have endured if by some miracle Edwards had won the Democratic party’s nomination in 2008—to which Edwards must have given little, if any thought. 

Mourdock and Edwards are simply the current standard bearers for distrust in our politics, just the tip of the iceberg.   For whatever reasons, we can’t seem to trust our elected officials to do the right things.

Is there any wonder why the public’s trust in Congress is at an all-time low?

Regardless of whether they are Republicans or Democrats, Americans are tired of it’s-my-way-or-the-highway rhetoric and fork-tongued politicians who tell us they are one thing, but are actually something else entirely.

That’s why so many of us are giving up our brand loyalty to being Democrats or Republicans and voting more and more as Independents—if at all, which should be of even greater concern.

What our elected officials need to understand is that the great majority of Americans are seeking wisdom and integrity, not ideology and blind ambition, in those we seek to lead us.

We’ve had it with dogma and deceit!

Larry Checco

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