Methane emissions focus of shareholder resolutions

There tends to be an annual theme to shareholder resolutions, and this year’s theme for the oil and gas crowd is methane emissions.

According to Ceres, a Boston nonprofit that promotes and keeps tabs on environmental causes taken up by stockholders in the form of company proposals, methane emissions are the subject of more than half a dozen resolutions so far this year.

Virginia-based Dominion Resources, Texas-based Range Resources, Texas-based Marathon Oil Corp. and Colorado-based SM Energy Corp. all have methane-related proposals awaiting shareholder votes at the companies’ upcoming annual meetings.

If prior years are any indication, the resolutions likely won’t garner overwhelming support from stockholders, but that’s not entirely the point. Often, the proposals serve as awareness boosters and a way to force the conversation with company managers. 

Last month, in what was considered a major win, Exxon Mobil agreed to issue a carbon asset risk management report. Massachusetts-based Arjuna Capital, which had introduced the resolution prompting the disclosure, withdrew it before the matter could come up for a vote at Exxon's annual meeting.

The new report will show how Exxon evaluates the potential of carbon curbing initiatives, such as international treaties or national legislation, to impact its capital projects.

"That the largest American oil and gas company is the first to come to the table on this issue says a lot about the direction that energy markets are taking," said Danielle Fugere, president of As You Sow, an environmental activist group that co-sponsored the resolution.

In total, 41 energy companies — ranging from oil and gas firms to utilities  — faced environment-related resolutions this proxy season. 

About a third of resolutions introduced each year typically get withdrawn after dialogue with companies.

"That's indicative of, number 1, the issues being raised are very legitimate and, 2, the companies — once we engage with them — are seeing the wisdom" of what's being asked in the resolutions, said Peyton Fleming, a spokesman for Ceres.

"We are seeing companies showing more willingness to look at the issues and analyze them, and ultimately we’re getting more and more commitments from companies that aren't just about disclosure but [about] setting goals," he said.

In January, Ohio-based FirstEnergy Corp. came to an agreement with As You Sow, New York State and Connecticut about a shareholder resolution asking the company to report its greenhouse gas reduction targets and how they stack up against President Barack Obama’s 80 percent reduction goal by 2050.

FirstEnergy, the largest utility company in the U.S. and owner of Greensburg-based West Penn Power, also agreed to discuss climate change and incorporating more renewables into its mix.

The resolution was part of a bigger shareholder initiative started in September 2013 asking 45 coal, oil and gas, and utility companies to disclose how they evaluate and make fiscal decisions about carbon-related risk.

Where the proposals are introduced, companies typically advise shareholders to vote against them.

Consol Energy Inc., for example, a natural gas and coal producer in Cecil, advised its shareholders that As You Sow’s demands about methane emission disclosures are already being satisfied by various mandatory and voluntary reporting requirements placed on the company. The company cited its annual sustainability report and its participation in the Center for Sustainable Shale Development as evidence that Consol already is thinking about sustainability issues and trying to reduce its carbon footprint.

As You Sow disagrees.

Consol also questioned the organization’s motives, noting that As You Sow advocates for shareholders to divest all their fossil fuel assets.

Range Resources, known for writing sharply worded rebukes of such shareholder proposals, said this year that the stockholder who wants Range to further elaborate on its methane emissions holds only 50 shares, "valued at $4,215.50 as of Dec. 31, 2013."

“Despite Range’s past efforts to explain the very limited nature of the potential sources of methane emissions from its operations, in re-submitting the proposal apparently the proponent of the proposal does not recognize that the company’s operations are such that they are not associated with potentially significant methane emissions.”

Few resolutions that come up for a vote make it even close to a majority in favor. In 2011, shareholders of Missouri utility Ameren Corp. voted almost 53 percent to compel the company to report the risk that coal ash poses to its operations and the environment.

That same year, almost 50 percent of voting shares wanted Energy Corp., an oil and gas company, to disclose fracking impacts. Shareholder proposals are non-binding, even if they pass.

But, the average support that such resolutions have garnered over the past three years is 23 percent.

“It’s hard to say what the true impacts have been,” said Aaron Boyd, a director of governance research at San Francisco executive data firm Equilar.

“There’s been an emphasis on environmental policies by shareholders and we’ve seen companies make changes and try to adopt policies,” he said.

But whether it inspires a different approach to business is hard to measure, he said.

Anya Litvak: anyalitvak@post-gazette, 412-263-1455

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