At the ExxonMobil’s annual shareholders meeting on May 26th, the San Francisco-based sustainable investors group As You Sow asked for a vote on forcing the company to assess the risks to drinking water, public health, and shareholder value associated with hydraulic fracturing for natural gas.
Representing the holders of 16,746 ExxonMobil shares valued at more than $1.1 million, As You Sow – as well as the two largest US proxy voting services, RiskMetrics Group and Proxy Governance – want to enforce disclosure of the environmental risks of “fracking” for natural gas, a process that injects high volumes of water, chemicals and particles underground to create fractures through which gas can flow for collection.To make up for the complete absence of SEC filings from ExxonMobil covering environmental or regulatory risk, shareholders took the unusual step of filing their own assessment of these risks with the SEC.
New social proposals usually only receive between 5-7% of the vote. But, demonstrating that mainstream investors are already aware of and concerned about the risks that hydraulic fracturing poses to the nation’s water supplies, it received over 26% support.
Two concepts are essential to investor confidence: disclosure and the mitigation of risks. But two thirds of the 31 states have no regulations covering hydraulic fracturing, none require an accounting of the fracking fluid remaining, and only ten even want to know what chemicals were injected.
The disaster in the Gulf of Mexico teaches us that there is a risk with no oversight. Drowning government in a bathtub risks taking all of us down the drain along with it.
That is one risk. But for shareholders, regulatory risk normally is assessed as well, because it has an economic impact on profits.
In March 2010, the administration had the EPA begin a study of the dangers of fracking, and legislation is now pending in both houses to repeal Dick Cheney’s infamous “Haliburton loophole”, that repealed the right of the EPA to regulate hydraulic fracturing under the Clean Water Act.
Neither risk was included in ExxonMobile’s SEC filing.