Hydraulic fracturing in natural gas drilling has become highly controversial.  The resolution proponents are concerned about regulatory, legal, reputational and financial risks associated with the environmental, health, and social impacts of fracturing operations.

Concern about water sources, toxic chemicals and wastewater has led to new regulations in several states and proposed federal legislation. Explosions, contamination incidents, and millions of dollars in fines demonstrate that things can and do go wrong.  For example, in Pennsylvania, officials have cited energy companies for 2,500+ violations associated with fracturing practices and collected $25.7 million in fines since 2008.

More than 250 health care professionals and medical societies warned New York Governor Cuomo that the state failed to analyze public health impacts of hydraulic fracturing in its rush to approve permits for drilling. They cited evidence in Texas, Wyoming, Louisiana, North Dakota and Pennsylvania that found worsening health metrics among neighbors of gas wells and related infrastructure. The onset of symptoms and drilling frequently coincided.

Negative local impacts are straining community resources and generating opposition to fracturing operations.  According to the investor research and advisory firm MSCI, “the expansion of oil gas activities into areas previously untouched by the industry will continue to face fierce opposition …unless companies adequately manage environmental impacts and community health concerns through communication and adoption of best environmental practice.” 

In this climate, companies risk increased regulatory and legal risks or bans on fracturing operations outright.  Pittsburgh banned natural gas drilling within city limits. New York State and Maryland imposed moratoriums. France completely banned the practice.

Resolved: Shareholders request that the Board of Directors prepare a report to investors by September 2012, at reasonable cost and excluding confidential or legally prejudicial data, on the short-term and long-term risks to the company’s operations, finances and gas exploration associated with community concerns, known regulatory impacts, moratoriums, and public opposition to hydraulic fracturing and related natural gas development.

Supporting statement: Such report should, at a minimum, summarize for the prior two fiscal years, with regard to hydraulic fracturing and related infrastructure:

• Any substantial community opposition to the company’s maintenance or expansion of particular operations, such as permitting and drilling;
• Government enforcement actions, including allegations of violations;  
• Total aggregate government fines on an annual basis; 

Related posts

• Sustainable Palm Oil Policy – YUM! Brands, Inc. (2012) (0)
• Sexual Orientation Non-Discrimination Policy – ExxonMobil (2012) (0)
• Report On Safer Flame Retardants – Newell Rubbermaid (2012) (0)
• Report on Domestic Partner Benefits for Senior Executives – Aflac (2012) (0)
• Report on BPA Use – Coca-Cola Company (2012) (0)

The environmental and social impacts of palm oil, an ingredient in our Company’s supply chain, make it highly controversial. Accordingly, we believe the Company’s failure to procure certified sustainable palm oil is a brand risk, to both our Company’s reputation and long-term to the security of supply.

Approximately 85% of palm oil is grown in Indonesia and Malaysia, much of it on industrial plantations. According to the Union of Concerned Scientists, palm oil plantations are a large source of greenhouse gas emissions (GHGs) because they are often established on land converted from swamp forests (“The Root of the Problem: What’s Driving Deforestation Today, Ucsusa.org, June 2011).

Due to high levels of continuing deforestation and the burning of peatlands in land clearance, Indonesia is now the 3^rd largest emitter of GHGs globally. A 2010 report commissioned by Indonesia’s National Development Planning Agency found that the conversion of peatlands alone accounts for 50 percent of Indonesia’s GHG emissions but only 1% of GDP. (“Indonesian Government Report Recommends Moratorium on Peatlands Conversion,” Mongabay, January 19, 2010) Agricultural expansion, much of it for palm oil production, can be better managed by using other land types than standing forest.

Palm oil plantations that are not sustainably managed have been shown to destroy habitats of endangered species, such as the orangutan (UNEP-WCMC.org). Consumers have demonstrated concern for orangutan welfare by campaigning against companies that have failed to source sustainable palm oil. Failure to manage the reputational risk of deforestation in supply chains has been disruptive for a number of high profile brands including Mattel and Nestle.

The Roundtable for Sustainable Palm Oil was formed in 2004 to address the social and environmental concerns associated with palm oil production and promote sustainable palm oil products. Leading companies have committed to source only certified sustainable palm oil by 2015, including SC Johnson, Wal-Mart, General Mills, McDonalds, Mars, Nestle and Unilever. Our company has not made such a commitment and we believe has not addressed the risks described above.

RESOLVED: Shareholders request that the board of directors adopt and implement a comprehensive sustainable palm oil policy.

Supporting Statement: We believe that in order to effectively address this issue, the Company should adopt a policy that includes:

• a target date for sourcing 100% Certified Sustainable Palm Oil or for purchasing GreenPalm certificates covering 100% of sourced palm oil,
• plans to verify suppliers’ compliance with the policy,
• supporting a moratorium on palm oil expansion in rainforests and peatlands, and
• a commitment to disclose the company’s progress on this issue.

Related posts

• Canadian Oil Sands – ExxonMobil (2012) (0)
• Sexual Orientation Non-Discrimination Policy – ExxonMobil (2012) (0)
• Report On Safer Flame Retardants – Newell Rubbermaid (2012) (0)
• Report on Domestic Partner Benefits for Senior Executives – Aflac (2012) (0)
• Report on BPA Use – Coca-Cola Company (2012) (0)

ExxonMobil has significant investments in the Canadian oil sands. 

ExxonMobil owns 69.6 percent of Imperial Oil, one of Canada’s largest oil companies. Imperial is 100 percent owner of the Cold Lake oil sands project and is the operator and 25 percent owner of Syncrude. ExxonMobil and Imperial jointly own and operate 100 percent of the Kearl oil sands project.

According to ExxonMobil’s 2010 10-K, oil sands represent approximately 11 percent of proved reserves, demonstrating our company’s significant reliance on Canada’s oil sands for long term growth.

There are significant environmental, social and economic risks associated with oil sands.

The resource-intensive and environmentally damaging nature of oil sands development have introduced regulatory, operational, liability and reputational risks to oil sands companies.  

The persistence of tailing ponds, which can leak toxic pollutants into groundwater, may present risks along with significant reclamation costs not currently carried on our balance sheet.  While companies are required to provide reclamation costs to the Alberta government, investors still have very limited information on the full costs associated with the reclamation liabilities companies carry.

Lawsuits filed by Aboriginal peoples against the Canadian government challenge oil sands and pipeline projects even after approval. One thousand five hundred project components related to ExxonMobil are included in the Beaver Lake Cree case, one of the high-profile cases which could potentially shut down oil sands operations.

Developing the oil sands’ tar-like bitumen is expensive, with multi-decade payback horizons. Volatile oil prices and changing demand can impact the viability of these projects.

In its 2010 10-K, Nexen, another company in the oil sands, states, “[o]ur oil sands projects face additional risks compared to conventional oil and gas production,”  and references risks related to “Aboriginal claims” and “Public perception of oil sands development.”

Shareholders believe ExxonMobil has not adequately reported on how possible risks associated with oil sands projects may impact our company’s long term financial performance, given our company’s significant investments in this area.

RESOLVED:

Shareholders request that the Board prepare a report discussing possible short and long term risks to the company’s finances and operations posed by the environmental, social and economic challenges associated with the oil sands. The report should be prepared at reasonable cost, omit proprietary and legal strategy information, address risks other than those associated with or attributable to climate change, and be available to investors by August 2012.

SUPPORTING STATEMENT:

The Board shall determine the scope of the report. Proponents believe risk information of interest to shareholders could include, among other things, assessing the impact of worst-case along with reasonably likely scenarios regarding:

• Environmentally-related restrictions and requirements that might hinder or penalize operations, including those associated with water, land, non-carbon air emissions, reclamation and tailings; 
• Aboriginal lawsuits against the Canadian government; and
• Public opposition throughout the lifecycle of oil sands operations –from exploration, to extraction, to transportation of the extracted bitumen.

Related posts

• Sexual Orientation Non-Discrimination Policy – ExxonMobil (2012) (0)
• Sustainable Palm Oil Policy – YUM! Brands, Inc. (2012) (0)
• Tar Sands Shareholder Proposals Pick Up Steam in 2010 (0)
• Report On Safer Flame Retardants – Newell Rubbermaid (2012) (0)
• Report on Domestic Partner Benefits for Senior Executives – Aflac (2012) (0)

“A good portion of our dialogues and resolutions resulted in agreements with companies to improve policies and provide more transparency,” said Matthew Patsky, CEO of Trillium. “Both are helpful in assessing the environmental, social and governance risks and their financial impact on shareholders.”

Trillium’s ESG program addressed a wide range of concerns in 2011, including climate change and fossil fuel dependency, indigenous peoples’ rights, discrimination in the workplace, community-level impacts of industrial and energy production, and a free and open Internet.

Environmental Advocacy

Roughly half of Trillium’s engagements in 2011 focused on the environment or environmental health matters.

Concerned with the risks associated with the controversial practice of hydraulic fracturing, Trillium filed a shareholder proposal at energy company Anadarko Corporation (APC), which has a large interest in the Marcellus Shale.  “Following a productive dialogue, we withdrew a shareholder proposal when the company agreed to expand and improve its public reporting on hydraulic fracturing. There’s more to be done and we’ll continue to advocate at Anadarko and other companies for increased transparency and the safest practices,” said Shelley Alpern, Director of ESG Research and Shareholder Advocacy.

Dialogue with Costco (COST), the warehouse-style consumer products retailer, produced another constructive outcome. The company produced and released to Trillium and Green Century Funds a substantially improved seafood sustainability policy. “Costco will discontinue selling twelve wild species identified as ‘at great risk’ by the Marine Stewardship Council, up from seven,” said Susan Baker, Senior Research Analyst at Trillium. “The company is also partnering with reputable nongovernmental organizations to come into compliance with best practice standards for shrimp and salmon aquaculture.”

We were able to withdraw a shareholder proposal that we filed with food distribution company   Sysco Corporation (SYY) after the company agreed to participate in the Carbon Disclosure Project, the Carbon Disclosure Project Water Survey, and to fully develop its sustainability strategy to include areas such as water scarcity and sustainable agriculture. “We look forward to the ongoing dialogue with the company as we continue to meet with its senior executives in the months to come,” commented Jonas Kron, Director of ESG Research and Shareholder Advocacy.

Trillium also took steps to help ward off the construction of the proposed Pebble Mine in Bristol Bay Alaska. Proposed by the U.K.-based Anglo-American (AAM.SW), Pebble Mine, if built, will be the largest open pit mineral mine in North America. It would generate billions of tons of mining waste to be held behind a system of dams (equivalent to the Three Gorges dams in China) in a highly earthquake-prone area – and one that serves as the breeding grounds for the largest sockeye salmon run in the world. Currently the Environmental Protecting Agency (EPA) is reviewing the proposed mine to determine whether it should veto the project under its Clean Water Act authority. In April Trillium organized a group of shareholders representing $170 billion of assets under management to publicly issue a joint statement calling for the agency to protect this vitally important national resource.  “Within 48 hours of publication, EPA staffers in charge of the review requested a meeting with Trillium. At that meeting we had ample time to express our concerns and were pleased at how seriously they were taken,” Kron said.

 
Corporate Political Spending

In 2011, shareholders expressed their deep discomfort with corporate political spending more strongly than ever before. In the spring, forty-six percent (46%) of votes cast by Halliburton (HAL) shareholders supported our proposal for greater transparency and oversight at the energy services company, as did 44% of the vote at State Street (STT). And for the first time, a resolution of this type filed at mobile phone company Sprint Nextel (by the New York Employees Retirement System) received a majority vote.

These votes were a fitting cap to a proxy season that started early last August, when Trillium was part of a shareholder group that responded promptly to the revelation that a number of Minnesota-based companies had given substantial contributions, via a business front group, to a gubernatorial candidate with extreme anti-gay views. As protestors demonstrated at its stores, Target Corporation (TGT) became the focus of a nationwide boycott that received generous media attention during a slow news month. Within days of the initial revelations, Trillium filed shareholder resolutions at Target, Pentair (PNR), Best Buy (BBY) and 3M (MMM) calling for a review of existing political donations policies and tighter oversight of the reputation and other risks incurring from them.

“These ill-considered donations represented a betrayal of these companies’ commitment to valuing diversity, and illustrated the widening reach of corporations in the wake of Cititzens United,” said Alpern, referring to the 2010 Supreme Court decision that removed significant barriers to corporate political involvement. With the exception of 3M (where our resolution gained 31% of the vote), the resolutions were eventually withdrawn at all of the companies after they demonstrated that they had reviewed and improved their oversight of political contributions and the procedures in place for vetting potential recipients. A multiyear national shareholder campaign coordinated by the Center for Political Accountability has resulted in the adoption of best practices in politicaldisclosure by 85 companies, of which 50 are in the S&P 100.

 
Conflict Minerals

Trillium took part in a meeting with the Securities and Exchange Commission (SEC) to discuss proposed rules on conflict minerals mandated by the passage of the Dodd-Frank Financial Reform Act.  Conflict minerals are those whose proceeds finance fighting by armed groups in war-torn regions, particularly the Democratic Republic of the Congo (DRC). “We were gratified to see several of our recommendations included in the SEC’s recently proposed new rules,” said Susan Baker. In February, Trillium was part of an investor coalition representing nearly $200 billion assets that released a statement calling on companies to condemn the use of minerals whose trade promotes the conflict in the DRC and take immediate steps to ensure that these minerals are not used in their products.

With other socially responsible and faith-based investors, Trillium also lobbied for the passage of landmark legislation in California (SB 861) that will forbid companies that do not comply with disclosure requirements under the SEC’s conflict mineral rules from bidding on state contracts for goods and services. The legislation passed the Senate on June 1 and is currently pending in committee.   

 
Internet Privacy and Freedom of Expression

CenturyLink (CTL), the nation’s third largest telecommunications company, finally owned up to its responsibilities regarding Internet privacy and freedom of expression. Trillium’s well-supported 2009 and 2010 shareholders proposals (both received about 30% of the vote) had asked the company to report on how it would avoid violating Internet users’ privacy, after it was revealed to be in business with an online advertising company that secretly monitored Internet users’ browsing activities. In exchange for the withdrawal of our resolution this year, CenturyLink agreed to incorporate privacy and freedom of expression responsibilities into its governing documents.

Trillium’s 2011 shareholder proposals on what is called “net neutrality” at AT&T (T), Verizon (VZ) and Comcast (CMCSA) were excluded from the companies’ ballots with permission from at the Securities and Exchange Commission, on the grounds that they focused on a matter of “ordinary business.”   We were pleased, however, that the SEC’s decision was roundly criticized by U.S. Senators Al Franken (D-MN) and Ron Wyden (D-OR). In March, they wrote to SEC Chairman Shapiro to object to the decision, asserting “Whether the government will preserve and protect today’s free and open Internet is the telecommunications and free speech issue of our time.”

 
LGBT Workplace Policies

In 2010, we worked with the Equity Foundation to file a shareholder proposal at Gardner Denver (GDI), asking the manufacturer to recognize sexual orientation and gender identity expression in its nondiscrimination policy; it garnered the support of 49% of shareholder votes. “To our surprise, it was necessary to re-file the proposal in 2011; the resubmission was successful in spurring the company to adopt our policy recommendation and we subsequently withdrew the proposal,” said Jonas Kron. “In contrast, Lowes Corporation (LOW) responded very positively and quickly to our request, and now its 200,000 employees are protected by an up-to-date policy that includes gender expression.”

#          #          #          #

About Trillium Asset Management, LLC

Boston-based Trillium Asset Management, LLC is the oldest independent investment advisor devoted exclusively to sustainable and responsible investing. We believe examining environmental, social, and governance factors as an integrated part of the investment process can lower portfolio risk and help identify the best managed companies. With close to $1 billion in assets under management, we have been managing equity and fixed income investments for high net worth individuals, foundations, endowments, religious institutions, and other non-profits since 1982. A leader in shareholder advocacy and public policy work, our goal is to deliver both impact and performance to our investors.

 2011 Shareholder Proposals

Bolded items indicate a “lead filing,” where Trillium Asset Management, LLC leads a coalition of shareholder advocates; all others are where we have co-filed in collaboration with other lead filers.  

Related posts

• ‘Say on Pay’ Gathers Steam Heading Into 2009 (0)
• Turn Down the Heat – It’s Getting Warmer (0)
• Trillium Spearheads Effort to Protect and Enhance Shareholder Rights (0)
• Trillium joins ProxyDemocracy’s list of “Respected Shareholder Activists” (0)
• The Thanksgiving Column (0)

As communities around the globe strive to meet ever-increasing energy demand and produce sustainable jobs and investments, we are at a crossroads where we must either aggressively adopt non-fossil fuel energy sources or risk exceeding the 2°C temperature rise already expected from the cumulative buildup of greenhouse gases in the atmosphere. Mainstream conventional wisdom holds that nuclear power must be embraced in the transition to a post fossil fuel future, and that solar and wind’s high costs and lack of scalability will consign their contributions to the margins. But as we discuss in this article, for reasons inextricably linked to their environmental profiles, nuclear power is still an unattractive financial investment, while solar and wind look increasingly attractive. Most compelling, the costs of providing nuclear power are rising while those of wind and solar are making their way down the cost curve.

According to researchers at the Lawrence Berkeley National Laboratory, photovoltaic (PV) systems costs have dropped 50 percent over the last 12 years, much of it due to module cost reductions that accelerated in just the past two years. According to another report, prepared by Dr. John O. Blackburn and Sam Cunningham of Duke University, these cost reductions have brought solar power to parity with nuclear. The Duke report draws on the work of Mark Cooper of Vermont Law School’s Institute for Energy and the Environment, concluding that third generation nuclear will cost 16 cents per kWh on average. The investment bank Lazard Ltd. estimates nuclear slightly lower at 12.3 cents per kWh and solar at 15.6 cents. But whether it is 12 or 16 cents one can expect the nuclear cost curve to start climbing, due to increased regulatory, safety, and permitting costs post-Fukushima. Meanwhile, solar’s cost curve is headed south and expected to be cost-competitive without subsidies by the end of the decade.

The Rocky Mountain Institute (RMI) sees great efficiencies ahead for solar beyond reductions in module costs. Its recent report, Achieving Low Cost Solar PV, asserts that installation costs alone, known as “balance of system” costs, represent half the cost of a solar system and can be reduced by 50 percent over current best practices. RMI’s Amory Lovins points to private equity as a gauge of where the smart money is flowing. In 2010, $151 billion in private dollars underwrote 50 gigawatts of renewable energy, while nuclear received no inflow at all. Lovins goes further to highlight wind energy’s inherent cost advantage over nuclear: “they [nuclear plants] cost two to three times as much as new wind power, and by the time you could build a reactor, it couldn’t even beat solar power.”

This last point is especially relevant, given the urgency of making the transition to clean energy sources in the midst of climate change. Although nuclear has been championed in some quarters as the “no carbon” solution, the time required to build a nuclear plant disadvantages it relative to solar and wind. New nuclear plant construction requires a 60-month timeline and is growing, versus 18 months for wind installations. While nuclear plants are stuck in the planning and construction phase, renewable energy installations can be quickly deployed. Further, with the cost of renewables continuing to decline over time, nuclear begins to look less and less competitive.

It is also important to consider whether estimates of nuclear energy’s potential contribution to slowing global warming are misleading. According to a Carnegie Endowment report, many estimates unrealistically assume nuclear would replace carbon intensive coal-fired energy generation alone. A more likely scenario is that nuclear capacity will displace natural gas, wind, solar, and other forms of lower-carbon energy as well. The all-coal assumption leads to artificially high emission reduction projections.

Nuclear generation is also burdened by high upfront costs. In fact, nuclear plants do not generate profits in their first decade, which is why financing, which can range from 25 to 80 percent of total costs, has been such a challenge. As taxpayers and investors, we should question the total costs, including waste disposal, disaster preparedness, healthcare, terrorist threats, and loan defaults. Cost overruns have been the norm for the industry. The Congressional Budget Office reported in 2008 that historic cost overruns were 207 percent prior to the Three Mile Island disaster and 250 percent following the event. Even the highly touted AREVA, a French nuclear conglomerate with third generation technologies, was one and a half years behind schedule and $1 billion over budget in building its Olkiluoto, Finland plant.

Solar is not the only alternative power source journeying down the cost curve. Many alternatives boast competitive cost structures. Wind costs 8.5 cents/kWh, geothermal 7.5 cents, and energy efficiency 2.5 cents, by far the cheapest with the least technology risk. These solutions are poised to transform the energy infrastructure globally, from a centralized generation model to a distributed, more efficient power system. Layer on “smart grid” technologies that enhance the efficient delivery of energy to consumers, and we will be able to effectively harvest solar and wind power from the center of the country and transmit it to higher density population centers.

But cost breakthroughs alone will only go so far to hasten the adoption of wind, solar and other clean technologies when government incentives reward nuclear and fossil fuel development. Public policies must practice a “reverse discrimination” in favor of subsidizing non-nuclear renewables. A forthcoming report by the Intergovernmental Panel on Climate Change will argue renewables could provide up to 77 percent of the world’s energy needs by 2050, but only if the government and private sector were willing to invest up to $5.1 trillion through 2020, and $7.2 trillion in the decade following.

Despite the sunny outlook [pun intended – Ed.], the critical question is how to achieve reliable baseload power when the sun is not shining and the wind is not blowing, as intermittent energy sources only produce power about 30 percent of the time.

Natural gas is currently the most viable alternative given its lower carbon profile, but the bulk of the U.S.’s abundant gas beds must be extracted with hydraulic fracturing (or “hydrofracking”), a technique linked to highly publicized instances of groundwater contamination and well blowouts. It remains to be seen whether drillers will rise to the occasion to mitigate the risks to public health and the environment, or whether far reaching legislation will be necessary.

Projected technological advances hold the promise that solar may one day contribute to baseload needs. The World Resources Institute report Juice From Concentrate: Reducing Emissions with Concentrating Solar Thermal Power, promotes Concentrating Solar Thermal (CST) power as a base load solution. CST combines solar power and thermal storage to power steam turbines around the clock.

As ESG investors, we look for the most viable, cost competitive technologies that also deliver the least environmental, social, and governance risk. Representative Ed Markey (D-MA) articulates the importance of the investor’s perspective:

Wall Street is what did in the nuclear industry after Three Mile Island and Chernobyl…It is Wall Street again today that is going to believe that nuclear power has become an increasingly risky financial investment.

As ESG investors, the onus is on us to determine risk in the context of cost curves, climate change, and viability. Given the trend lines, it’s clear for the foreseeable future that solar and wind are truly clean, safe and renewable, while there is little evidence to support the inclusion of nuclear power in an ESG-screened portfolio.

—

Related posts

• Nuclear Power Finds Some Acceptance Within the SRI Community (0)
• Adam Seitchik authors report: Climate Change From the Investor’s Perspective (0)
• Trillium Subadvised Green Century Balanced Fund is First U.S. Mutual Fund to Report its Carbon Footprint (0)
• Trillium Spearheads Effort to Protect and Enhance Shareholder Rights (0)
• Trillium Lobbies Berkshire Hathaway Shareholders in Support of Sustainability Reporting Proposal (0)

Product packaging is a significant consumer of natural resources and energy, and a major source of waste and greenhouse gas (GHG) emissions.   More than half of U.S. product packaging –37 million tons – is discarded in landfills or burned rather than recycled.

Packaging comprises nearly one-third of all U.S. landfill waste.  Nestle Waters North America says plastic bottles are the largest contributor to its carbon foot print; Coca-Cola Co. reports packaging is the largest part of the carbon footprint of several products.   A recent analysis of U.S. Environmental Protection Agency data estimates that the energy needed to produce and dispose of products and packaging accounts for 44% of total U.S. GHG emissions. Decaying paper packaging in landfills forms methane, whose greenhouse warming potential is 72 times more potent than C02. Metal and plastic packaging has large embodied energy and emissions profiles because of the high costs of producing those packages from mining/smelting and petroleum respectively.

Extended Producer Responsibility (EPR) is a corporate and public policy that shifts accountability for collection and recycling from consumers and governments to producers.  For instance, Coca-Cola, PepsiCo and Nestle Waters North America have each made public commitments to recycle a majority of beverage containers sold over the next six to eight years.

In many other countries, consumer packaged goods companies are responsible for post-consumer packaging.  Companies operating in Europe and Canada are required to pay some or all costs for packaging collection and recycling.  More than half of Organization for Economic Cooperation and Development member countries have EPR packaging systems in place.  In Ontario, Canada, producers pay half of packaging collection and recycling costs. EPR programs in Austria, Belgium and Germany recover far higher rates of packaging than the U.S.  EPR laws in 24 U.S. states already mandate producer responsibility for collection and recycling of consumer electronics.

Producers control design and marketing decisions, and so are best positioned to reduce the overall environmental impact of product packaging and internalize costs.  Increased recycling of packaging can yield strong environmental benefits, leading to more efficient use of materials, reduced extraction of natural resources, and fewer GHG and toxic emissions.  EPR mandates can create new economic markets for packaging.  Increased economic incentives to recycle more types of packaging will keep it from flowing into waterways and oceans where it imperils marine life.

RESOLVED

Shareowners of Procter & Gamble request that the board of directors issue a report at reasonable cost, omitting confidential information, by February 1, 2012 assessing the feasibility of adopting a policy of Extended Producer Responsibility for post-consumer product packaging as a means of reducing carbon emissions and air and water pollution resulting from the company’s business practices, and describing efforts by the company to implement this strategy.

SUPPORTING STATEMENT

Proponents believe policy options reviewed in the report should include taking responsibility for post-consumer package recycling, and participating in development of producer financed and managed EPR systems.

Related posts

• Verizon – Free and Open Internet (0)
• UnitedHealth Group – Say on Pay (0)
• Trillium Lobbies Berkshire Hathaway Shareholders in Support of Sustainability Reporting Proposal (0)
• Sysco – Climate Change Related Water Risk (0)
• Strong Support from Chevron Shareholders for Proposal Co-Filed by Trillium (0)

The coffee business is critically important for our company by providing approximately 40% of our company’s revenue. It is equally important to the well-being of 25 million coffee farm families worldwide.

Climate change may present a number of important risks and opportunities for our company and these communities, as it impacts temperature, rainfall patterns, and disease vectors in the world’s coffee growing regions. According to the Intergovernmental Panel on Climate Change, physical risks from climate change may include changes and variability in precipitation and in the intensity and frequency of extreme weather events.

The director of research at Kenya’s Coffee Research Foundation publicly stated, “We have seen climate change in intermittent rainfall patterns, extended drought and very high temperatures.” He goes on to point out that “Coffee operates within a very narrow temperature range of 19-25 degrees (Celsius). When you start getting temperatures above that, it affects photosynthesis and in some cases, trees wilt and dry up.”

Peter Baker, coffee expert at the nonprofit CABI Bioscience, publicly stated “I often call coffee a Goldilocks plant. It likes it not too hot, not too cold. It likes it not too wet, not too dry. It doesn’t like too much sun, it doesn’t like too much shade.”

Our [c]ompany’s competitors in the coffee business – Nestle, Kraft Foods, and Sara Lee Corporation – are making public efforts to address coffee sustainability and to provide for a consistent and reliable supply chain of quality coffee. All three have made public commitments to sourcing coffee in a more sustainable fashion.

While the company’s 2010 10-K identifies climate change as a risk factor, it does not provide any discussion of what the company will do to address those risks and the role of corporate responsibility in its coffee business. It also does not discuss the opportunities for the company to become a leader in environmentally and socially sustainable coffee farming.

RESOLVED
Shareholders request that within six months of the 2011 annual meeting, the Board of Directors provide a report to shareholders (at reasonable cost and excluding confidential and proprietary information) describing how the company will manage the social and environmental risks and opportunities connected to the company’s coffee business and supply chain. We recommend the Board include in the report a concise discussion of how it will address temperature changes, changes in rainfall patterns, and the company’s responsibility for its impact on the coffee farming families in its supply chain.

Related posts

• Trillium Lobbies Berkshire Hathaway Shareholders in Support of Sustainability Reporting Proposal (0)
• Chevron – Environmental Oversight (0)
• Verizon – Free and Open Internet (0)
• UnitedHealth Group – Say on Pay (0)
• Trillium Spearheads Effort to Protect and Enhance Shareholder Rights (0)

Shareholders request that by April 2012, the Board of Directors provide a report to shareholders (at reasonable cost and excluding confidential and proprietary information) on how Sysco is assessing water risk to its agricultural supply chain and action it intends to take to mitigate the impact on long-term shareholder value.

SUPPORTING STATEMENT

Water management is an emerging strategic business issue. The Securities and Exchange Commission states in its 2010 “Guidance Regarding Disclosure Related to Climate Change”, that climate change and water may challenge companies “dependent on suppliers that are impacted by climate change, such as companies that purchase agricultural products from farms adversely affected by droughts or floods.” http://www.sec.gov/rules/interp/2010/33-9106.pdf

Our company acknowledges the business risk of climate change and water shortages in section 1A of its 2010 Annual Report. However, additional information on its efforts to mitigate the risk of water management is limited to a brief mention in its 2010 Sustainability Report, where Sysco states that in 2009 it began tracking irrigation water used in its integrated pest management program (a relatively small proportion of its agricultural supply chain).

The United States Department of Agriculture (USDA) reported in 2009 that “No matter the region, weather and climate factors such as temperature, precipitation, CO₂ concentrations, and water availability directly impact the health and well-being of plants, pasture, rangeland, and livestock.” Specifically, climate change affects average temperatures and temperature extremes; timing and geographical patterns of precipitation; snowmelt, runoff, evaporation, and soil moisture; the frequency of disturbances, such as drought, insect and disease outbreaks, severe storms, and forest fires; atmospheric composition and air quality; and patterns of human settlement and land use change, which directly impact crop yields and meat production. http://www.usda.gov/img/content/EffectsofClimateChangeonUSEcosystem.pdf

A JPMorgan Global Equity Research report on water entitled “Watching Water – A Guide to Evaluating Corporate Risks in a Thirsty World” states that an inadequate supply of water in a food company’s agricultural supply chain presents several serious risks. Specifically it argues, “water-related disruptions in the agricultural supply chain may have a dramatic impact on the industry’s economic performance.”

Sysco was invited to participate in both Carbon Disclosure Project (CDP) and its companion survey, CDP Water Disclosure. CDP is an independent not-for-profit organization that holds the largest database of primary corporate climate change information in the world. The company has declined to participate in either survey, even though 95% and 65% (respectively) of companies in the same sector responded.

Leading food companies such as Unilever, General Mills, and Sodexo evaluate their agricultural supply chain and incorporate water scarcity and climate risks into their sustainability strategy and business planning. For investors in corporations with extensive agricultural supply chains, information about their exposure to and management of water risk is essential to the evaluative process. We believe the adoption of a sound water risk management plan will offer Sysco competitive advantage and enhance opportunities for long-term sustainability for the company and its shareholders.

Related posts

• Chevron – Global Environmental Standards Report (0)
• Verizon – Free and Open Internet (0)
• UnitedHealth Group – Say on Pay (0)
• Trillium Subadvised Green Century Balanced Fund is First U.S. Mutual Fund to Report its Carbon Footprint (0)
• Trillium Lobbies Berkshire Hathaway Shareholders in Support of Sustainability Reporting Proposal (0)

In a press release, New York State Comptroller Thomas P. DiNapoli, trustee of the $140.6 billion New York State Common Retirement Fund (Fund), which owns 7.5 million Chevron shares worth an estimated $780 million stated, “It’s time for Chevron to face reality.  The effects of this horrific, uncontrolled pollution of the Amazon rainforest are still being felt today. Investors don’t derive any benefit from this never-ending courtroom drama.

“The entire case is looming like a hammer over shareholders’ heads.  Chevron should start fresh with a new approach that embraces environmental responsibility and risk management as part of its corporate culture. More legal proceedings will only delay the inevitable.”  

For nearly 25 years, beginning in 1964, Texaco and its joint venture partner Petroecuador dumped nearly 16 billion gallons of oil waste products into the Amazon rainforest.  The two companies also spilled nearly 17 million gallons of oil from their trans-Ecuadorian pipeline operation between 1971 and 1991 —50 percent more oil than was spilled by the Exxon Valdez crash.

The statement follows just days after Trillium submitted a complaint to the Securities and Exchange Commission requesting that staff examine whether Chevron Corp. has appropriately disclosed to its shareholders the scope and magnitude of financial and operational risk from a recent adverse legal judgment in Ecuador. In its letter, Trillium states its belief that the issues raised may have “the potential to rise to the level of materiality under the securities laws.”

In a letter sent in November 2008, DiNapoli called on Chevron’s board of directors to come to an equitable settlement in order to avoid substantial penalties in an Ecuadorian court. Chevron refused to negotiate the case, and in February 2011 the Ecuadorian Provincial Court awarded plaintiffs nearly $18 billion in compensatory and punitive damages. The Ecuadorian court judgment is the second-largest of its kind, topped only by BP’s $20 billion fund established to settle claims stemming from the 2010 Gulf of Mexico oil spill. DiNapoli is co-lead plaintiff in an ongoing class action lawsuit filed against BP last year.

Shareholder Proposal Support Remains Steady

The shareholder proposal jointly filed by Trillium and the New York State Office of the Comptroller that referred to the Ecuador litigation received about 25 percent of the vote, the company announced at the meeting. The proposal, in its second year, called for the company to appoint an independent director with environmental expertise.

Related posts

• Trillium Asks Securities and Exchange Commission to Investigate Chevron Corporation’s Disclosures Re Historic Ecuadorian Judgment (0)

BOSTON///April 12, 2011///Nearly 30 investor organizations representing over $170 billion in assets are urging the U.S. Environmental Protection Agency (EPA) to initiate a review process under the Clean Water Act to evaluate the mine waste impacts of the proposed Pebble Mine on Alaska’s Bristol Bay watershed, which produces roughly half of the world’s commercial supply of wild sockeye salmon.

Led by Trillium Asset Management Corp. (Trillium) and Calvert Investments (Calvert), the organizations hold over 13 million shares in Anglo American plc, the UK-based mining company behind the proposed mine.

“This proposed mine has potentially devastating consequences for the people and the ecosystem of Bristol Bay,” said Jonas Kron, vice president at Trillium. “The potential impact of this project and the national importance of Bristol Bay means review under Section 404(c) of the Clean Water Act is warranted.”

“Ecosystem degradation is of serious concern to investors,” said Stu Dalheim, director of shareholder advocacy at Calvert. “A recent United Nations report showed environmental costs from global human activity equate to an estimated US$ 6.6 trillion – approximately 11% of global GDP in 2008. Responsible resource development is critical to all economic, environmental and cultural stakeholders.”

The Bristol Bay region of Alaska is the site of the largest remaining runs of wild sockeye salmon and is the home of Alaska Native people who continue the subsistence fishing and hunting traditions of their ancestors. Bristol Bay is an important economic driver for the commercial fishing, sport hunting and sport fishing industries of North America, generating $450 million in annual revenue and providing some 10,000 jobs.

Pebble Mine is a copper, gold and molybdenum mine proposed at the headwaters of the Bristol Bay Fishery Reserve by U.K.-based Anglo-American and Northern Dynasty Minerals Ltd of Canada.  The combined impact and risks associated with a proposed mine in this region are unprecedented. Under current plans, the project would involve the largest open pit mine in North America, enormous toxic tailing ponds and a significant infrastructure footprint in critically important habitat. A peer reviewed 2010 risk assessment by The Nature Conservancy studied the impacts of such large-scale mining in the Bristol Bay region, and concluded that the risks to wild salmon populations are “very high,” and that it is cause for significant concern regarding the long-term abundance and sustainability of salmon in the region.

This investor statement comes on the heels of the EPA’s announcement in February in response to petitions by Bristol Bay native tribes and corporations, commercial fishermen, businesses, and others that the Agency would conduct a scientific assessment of the Bristol Bay watershed to evaluate the suitability of large-scale development in the region. Many observers see the assessment as a precursor to a full EPA 404(c) review.

Section 404(c) authorizes EPA to “prohibit, restrict, or deny the discharge of dredged or fill material at defined sites in waters of the United States (including wetlands) whenever it determines, after notice and opportunity for public hearing, that use of such sites for disposal would have an unacceptable adverse impact on one or more of various resources, including fisheries, wildlife, municipal water supplies, or recreational areas.”

For the full text of the statement go to: http://trilliuminvest.com/wp-content/uploads/2011/04/Investor-Statement-on-the-Proposed-Pebble-Mine.pdf

The signatories to the statement include:

Advanced Investment Partners

As You Sow

Boston Common Asset Management, LLC

Calvert Investments

Catholic Health East

Christian Brothers Investment Services

Clean Yield Asset Management

Congregation of St. Basil

Domini Social Investments

Everence Financial

First Affirmative Financial Network

Goodfunds Wealth Management

Green Century Capital Management

Local Authority Pension Fund Forum

Maryknoll Sisters

Midwest Coalition for Responsible Investment

New Outlook Financial, LLC

Northwest Coalition for Responsible Investment

Pax World Management Corp.

Portfolio 21 Investments

Region VI Coalition for Responsible Investment

Sisters of Charity of Cincinnati

The Sustainability Group at Loring, Wolcott & Coolidge

Three Sisters Sustainable Investments

Tri-State Coalition for Responsible Investment

Trillium Asset Management

Unitarian Universalist Association

Walden Asset Management, a division of Boston Trust & Investment Management

Zevin Asset Management, LLC

ABOUT TRILLIUM AND CALVERT

Trillium Asset Management Corporation is the oldest and largest independent advisor devoted exclusively to sustainable and responsible investing.

Calvert Investments has been a leader in the field of sustainable and responsible investing (SRI) for over 25 years, demonstrating that investors may manage risk and enhance long-term portfolio performance by investing in well-governed, sustainable and responsible companies.

CONTACTS: Jonas Kron of Trillium at (503) 592-0864 or jkron@trilliuminvest.com or Stu Dalheim of Calvert at (301) 961-4762, Stu.Dalheim@Calvert.com or Patrick Mitchell for Calvert at (703) 276-3266 or pmitchell@hastingsgroup.com.

In October, as the first snow of autumn begins to fall near Alaska’s Bristol Bay, I found myself visiting with a group of locals. Among them was Robin Samuelsen, a Yupik Eskimo and board member of the Bristol Bay Economic Development Corporation. The conversation began light and jovial as he fondly recalled fishing adventures with his father and grandchild. Then his voice grew anxious: “I’ve never seen the people of Bristol Bay so scared. If there ever is a mining accident our people are finished. Our way of life will be gone.”

At issue is the controversial Pebble Mine Project, envisioned to be one of the world’s largest open pit copper and gold mines in the headwaters of Bristol Bay, already one of the world’s richest salmon fisheries. Commercial fishing is a $300 million a year industry in Bristol Bay, which produces half the global supply of wild sockeye salmon. An astonishing 30 million salmon spawn in its rivers, creeks and lakes each year, feeding humans, bears and birds. Local support for the mine is scant, given the deep cultural roots to salmon fishing. For generations the Yupik people, a majority in the region, have depended on wild salmon as a staple in subsistence diets.

Despite the fishing industry’s size, it financially pales to the $300 billion of gold and copper wealth buried in the Pebble deposit. The project backers, British mining company Anglo American and Canada’s Northern Dynasty, promote the economic benefits to community including roads, power plants, and about a thousand jobs for the duration of the mine’s life.

Contrary to developers’ assurances, developing Pebble would carry huge environmental risks. For example, 10 billion tons of toxic mining waste would sit behind earthen dams in the seismically active area. Catastrophic releases do happen. The Nature Conservancy found 147 cases since 1960 of disastrous dam failures of mining waste. One occurred in Hungary just last year.

Even more likely to emerge is the slow developing threat of drainage and leaching from sulfuric acid, cyanide, arsenic and cooper. Once in waterways, the contamination risks to salmon speak for themselves. Wayne Nastri, a former highly ranked EPA official, told us, “in my experience I don’t know of a major hard rock mine near a water body that hasn’t had significant leaching.”

For concerned environmental and indigenous rights advocates there is hope Pebble Mine can be halted. One promising avenue is the U.S. Environmental Protection Agency’s (EPA’s) authority under the Clean Water Act to protect Aquatic Resources of National Importance. The EPA has begun the process necessary to assess Bristol Bay’s “national importance” and mining’s potential impacts on the watershed.

At Trillium we strongly believe the Bristol Bay fishery is of national importance and is inappropriate for extensive hard rock mining. The Bay’s national importance extends to anyone who wishes to continue enjoying fish for dinner. Trillium is writing directly to the EPA, making inquiries at Goldman Sachs (due to our expectation that they will be approached to underwrite the project), and preparing for potential engagement with Anglo American should the need arise.

Ted Stevens, the late Republican senator from Alaska, may have said it best: “I am not opposed to mining, but [Pebble] is the wrong mine for the wrong place.”

For electric power companies, continued reliance on coal is increasingly problematic in the face of declining reserves of high quality central Appalachian coal, unprecedented price increases and coal price volatility, and the high cost of carbon capture and storage for coal plants. By comparison, natural gas prices have reached record lows and supplies are increasingly abundant in the U.S., and costs for wind and solar are declining.

Coal combustion for electricity is a major contributor to air pollution, accounting for one third of the nitrous oxides (NO_x), 50% of the mercury, a hazardous air pollutant, and over 36% of the carbon dioxide (CO₂) emitted in the U.S.  Older coal plants emit substantially more of these pollutants per megawatt hour (MWh) than newer plants.

The U.S. Environmental Protection Agency (EPA) is moving, in some cases pursuant to court order, to tighten regulation of the air, water and waste impacts of coal plants. Industry analysts (Bernstein Research, Jeffries & Company, Standard & Poor’s, Wood Mackenzie) have concluded that the cost of additional environmental control equipment for NO_x, particulates and mercury may make it uneconomic to retrofit small, older coal plants.  Pending EPA regulations governing storage and disposal of coal combustion wastes will likely increase operating costs for coal plants.

EPA is also developing regulations for CO₂ and other greenhouse gas emissions.  However, the lack of national climate policy to reduce CO₂ emissions further adds to economic uncertainty for coal plants. Commercial deployment of carbon capture and storage technology for coal plants is 10 to 15 years away and “would increase electricity costs by about 30 – 80%,” the U.S. Government Accountability Office reports.

This unprecedented combination of forces has led a number of utility companies to announce coal plant retirements. Dominion has stated that it expects to close two aging coal plants in Massachusetts and Indiana within 5-7 years if environmental regulations occur as expected, as it would become uneconomic to run them. Nevertheless, with 41% of its 2009 electric generation originating from coal-fired units, Dominion will remain heavily reliant on coal. Coal combustion contributes more than 90% to the company’s total NO_x, SO_2, CO₂ and mercury emissions, according to a data extrapolated from the report Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States (Natural Resources Defense Council, 2010).

RESOLVED

Shareowners request that Dominion’s Board of Directors, at reasonable cost and omitting proprietary information, issue a report by September 2011 on the financial risks of continued reliance on coal contrasted with increased investments in efficiency and cleaner energy, including assessment of the cumulative costs of environmental compliance for coal plants compared to alternative generating sources.

Related posts

• Dominion Resources – Financial Risks of Continued Reliance on Coal (0)
• Verizon – Network Neutrality (0)
• Trillium Joins Investors in Challenging Nine Oil and Gas Companies on Hydraulic Fracturing Practices (0)
• Trillium Files Resolutions on Sudan Genocide (0)
• Transparency on Direct and Indirect Political Contributions and Expenditures – 3M (0)

Trillium Files Resolution with Anadarko Petroleum to Spur More Responsible “Fracking” Practices

BOSTON – Leading U.S. investors today announced they have filed shareholder resolutions with nine oil and gas companies, pressing them to disclose their plans for managing water pollution, litigation and regulatory risks that are increasingly associated with ever-expanding natural gas hydraulic fracturing operations (also known as “fracking”) in the United States.

Resolutions were filed with many of the natural gas industry’s significant players, including ExxonMobil, Chevron, Ultra Petroleum, El Paso, Cabot Oil & Gas, Southwestern Energy, Energen, Anadarko and Carrizo Oil & Gas.

“Oil and gas firms are being too vague about how they will manage the environmental challenges resulting from fracking,” said New York State Comptroller Thomas DiNapoli, whose office filed a resolution with Cabot Oil & Gas asking for a specific plan to reduce or eliminate the hazards. “The risks associated with unconventional shale gas extraction have the potential to negatively impact shareholder value. I urge companies working in this field to share their risk mitigation and management strategies with investors and the public.”

The shareholder proposals ask companies to disclose their policies and strategies for reducing environmental and financial risks from chemicals use, water impacts and a host of other issues. The resolutions also request adoption of best management practices, such as:

* recycling and reusing waste waters;

* reducing the volumes and toxicity of chemicals;

* disclosing the chemicals used in fracturing operations; and

* assuring the integrity of well cementing through pressure testing and other methods.

Use of hydraulic fracturing, which involves high-pressure injection of water, chemicals and particles deep underground to break up shale formations and release trapped natural gas, has escalated in recent years. Oil and gas companies are increasingly turning to hydraulic fracturing, or “fracking” to unlock vast, yet previously unavailable reserves as conventional natural gas supplies have dwindled. ExxonMobil, for example recently spent $36 billion to buy shale-gas company XTO Energy while Chevron purchased Atlas Energy in a $4 billion deal.

The Energy Department recently more than doubled estimates of recoverable shale reserves to 827 trillion cubic feet, the energy equivalent of 140 billion barrels of oil. The American Petroleum Institute estimates that 60 to 80 percent of natural gas wells drilled in the next decade will require hydraulic fracturing.

Environmental risks stem largely from poor well-construction practices, which can lead to drinking water contamination, well blowouts and gas leaks, and from inadequate wastewater recycling and management practices. Concerns about water contamination incidents are growing as operations expand, creating reputational and litigation liabilities for companies.

Lawsuits have been filed against four companies over alleged water contamination in Pennsylvania.  New York State adopted a temporary moratorium on new permits for fracking. Philadelphia’s city council has urged a ban on fracking in the Delaware River Basin until environmental studies have been completed, and Pittsburgh, which sits atop gas deposits, has banned fracking within city limits.

“High profile water contamination incidents, new litigation, and public protests that include calls for moratoria on natural gas permitting all suggest sizeable and rising business risks to companies and attendant threats to shareholder value,” said Richard Liroff, executive director of the Investor Environmental Health Network (IEHN), which helped coordinate the resolutions. “Shareholders need assurance that companies are candidly disclosing these risks and are adopting best management practices to minimize them.”

Investors filing the resolutions include the New York State Comptroller (Cabot Oil & Gas, Carrizo Oil & Gas), Domini Social Investments (Southwestern Energy), As You Sow (ExxonMobil and Ultra Petroleum), Trillium Asset Management (Anadarko), Miller/Howard Investments (El Paso and Energen), and The Sisters of St. Francis of Philadelphia (Chevron). Cabot Oil & Gas, Carrizo Oil & Gas, El Paso, Southwestern and Ultra Petroleum are headquartered in Houston; Energen is based in Birmingham, Alabama; Anadarko in The Woodlands, Texas; Exxon Mobil in Irving Texas, and Chevron in San Ramon, California.

According to Kristina Curtis, senior vice president at Green Century Capital Management (GCCM), which coordinated the resolutions with IEHN, “It is critical that shareholders of natural gas companies understand and address the business risks associated with this type of gas drilling. Companies and regulators must ensure this development is done in a way that protects the environment, especially our drinking water, and mitigates potential financial risks”

Though investors are concerned about the bottom line impacts of hydraulic fracturing, many also contend that cleaner-burning natural gas has a critical role to play in both increasing domestic energy supplies and reducing greenhouse gas emissions, and that unconventional methods like fracking make it possible for natural gas to fill that role.

“Natural gas can play a major role in meeting our nation’s near-term climate and energy challenges, but hydraulic fracturing must be done in a way that protects the environment and public health,” said Mindy S. Lubber, president of Ceres and director of the $9 trillion Investor Network on Climate Risk.  “Investors believe that companies can profitably minimize fracking’s water contamination, gas leaks and other material risks by adopting best management practices and by phasing out the most toxic chemicals.”

In the 2010 proxy season investors filed resolutions with a dozen oil and gas companies and, among those receiving resolutions, Williams began disclosing the measures it takes to ensure well integrity, described its recycling practices, and discussed “green completions” that reduce greenhouse gas emissions and enhance profitability. Range Resources reported its recycling measures in the Marcellus Shale that have saved approximately $200,000 per well and Hess stated it is working with its suppliers to reduce the amount and toxicity of fracking fluids used.

Trillium is currently in dialogue with Anadarko concerning the details of their proposal.

To  read the resolution Trillium filed at Anadarko, click here.

Related posts

• ExxonMobil – Greenhouse Gas Emissions Reduction (0)
• Verizon – Network Neutrality (0)
• Trillium Files Resolutions on Sudan Genocide (0)
• Transparency on Direct and Indirect Political Contributions and Expenditures – 3M (0)
• Transparency and Board Oversight for Political Contributions – Southern Company (0)

ExxonMobil has significant investments in the Canadian oil sands.

ExxonMobil owns 69.6% of Imperial Oil, one of Canada’s largest oil companies. Imperial is 100% owner of the Cold Lake oil sands project and also owns 25% of Syncrude. ExxonMobil and Imperial jointly own and operate 100% of the Kearl oil sands project.

According to ExxonMobil’s 2009 10-K, the oil sands represent approximately 11% of proved reserves, demonstrating our company’s dependence on Canada’s oil sands for long term growth.

There are significant environmental, social and economic challenges associated with the oil sands.

The resource-intensive and environmentally damaging nature of oil sands development may introduce regulatory, operational, liability and reputational risks to oil sands companies.

The persistence of tailing ponds, which can leak toxic pollutants into groundwater, may present risks along with significant reclamation costs not currently carried on our balance sheet.

Lawsuits filed by Aboriginal peoples against the Canadian government challenge oil sands and pipeline projects even after approval. 1500 project components related to ExxonMobil are included in the Beaver Lake Cree case, one of the most high-profile cases which could potentially shut down oil sands operations.

Mining the oil sands’ tar-like bitumen is expensive, with multi-decade payback horizons. Volatile oil prices and changing demand can impact the viability of these projects. Between oil’s price drop in July 2008 and June 2009, 85% of deferred or cancelled non-OPEC production capacity was located in the oil sands. According to Ernst & Young’s 2009 Business Risk Report: Oil and Gas, “[c]ompanies that invest in long term oil projects with a high marginal cost of production, such as… oil sands, are likely to be the most vulnerable.”

Nexen, another company in the oil sands, dedicates over three pages of its 2009 10-K to risks associated specifically with its oil sands projects, including risks related to “Aboriginal claims” and “Public perception of oil sands development.”

Shareholders believe ExxonMobil has not adequately reported on how possible risks associated with oil sands projects may impact our company’s long term financial performance, given our company’s significant investments in this area.

RESOLVED

Shareholders request that the Board prepare a report discussing possible long term risks to the company’s finances and operations posed by the environmental, social and economic challenges associated with the oil sands. The report should be prepared at reasonable cost, omit proprietary and legal strategy information, address risks other than those associated with or attributable to climate change, and be available to investors by August 2010.

SUPPORTING STATEMENT

The Board shall determine the scope of the report. Proponents believe risk information of interest to shareholders could include, among other things, assessing the impact of worst-case along with reasonably likely scenarios regarding:

• Environmentally-related restrictions that might hinder or penalize operations, including those associated with water, land and tailings;
• Potential effects of Aboriginal lawsuits against the Canadian government;
• Vulnerabilities to market forces that might lead to oil sands project cancellations.

Related posts

• Tar Sands Shareholder Proposals Pick Up Steam in 2010 (0)
• ExxonMobil – Environmental Impacts of Oil Sands (0)
• ConocoPhillips – Environmental Impact of Oil Sands (0)
• Canadian Oil Sands – ExxonMobil (2012) (0)
• Verizon – Network Neutrality (0)

Environmental expertise is critical to the success of companies in the energy industry because of the significant environmental issues associated with their operations. Shareholders, lenders, host country governments and regulators, and affected communities are focused on these impacts. A company’s inability to demonstrate that its environmental policies and practices are in line with internationally accepted standards can lead to difficulties in raising new capital and obtaining the necessary licences from regulators.

Chevron has repeatedly been cited for allegedly harmful environmental practices:

• Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources by Texaco in the 1970s. Plaintiffs suing Chevron are challenging the adequacy ofa remediation effort completed in 1998. A court-appointed expert in the Ecuadorian litigation has recommended that Chevron be held liable for up to $27.3 billion in damages.
• Chevron is accused of polluting land and water resources by its Niger Delta operations, and damaging the local fishing economy through dredging of waterways.  These practices have fueled civil unrest, protests, and a related lawsuit alleging Chevron’s complicity in security forces’ killing of two protesters.
• Chevron faces allegations of environmental and health damages to local communities from its operations in Kazakhstan. In 2007, a consortium in which Chevron has a 50% interest was fined approximately $609 million for illegally storing sulphur.

We believe that these controversies have the potential to damage shareholder value and that the company must respond to environmental challenges in an effective, strategic and transparent manner in order to restore trust and minimize the adverse impact of its operations.

Environmental management is critical to the future success of the company. We believe it would benefit the company to address the environmental impact of its business at the most strategic level- by appointing a specialist to the board. An authoritative figure with acknowledged environmental expertise and standing could perform a valuable and strategic role for the company by enabling Chevron to more effectively address the environmental issues inherent in its business. It would also help ensure that the highest levels of attention focus on the development of environmental standards for new projects. Such a board role would strengthen the company’s ability to demonstrate the seriousness with which it is addressing environmental issues.

RESOLVED

Shareholders request that, as the terms in office of elected board directors expire, at least one candidate be recommended who:

• has a high level of expertise and experience in environmental matters relevant to hydrocarbon exploration and production and is widely recognized in the business and environmental communities as an authority in such field, in each case as reasonably determined by the company’s board, and

• will qualify, subject to limited exceptions in extraordinary circumstances explicitly specified by the board, as an independent director under the standards applicable to the company as an NYSE listed company,

in order that the board includes at least one director satisfying the foregoing criteria, which director shall have designated responsibility on the board for environmental matters.

Related posts

• Chevron – Environmental Oversight (0)
• Verizon – Network Neutrality (0)
• Trillium Joins Investors in Challenging Nine Oil and Gas Companies on Hydraulic Fracturing Practices (0)
• Trillium Files Resolutions on Sudan Genocide (0)
• Transparency on Direct and Indirect Political Contributions and Expenditures – 3M (0)

Onshore “unconventional” natural gas production often requires hydraulic fracturing, which typically injects a mix of millions of gallons of water, thousands of gallons of chemicals, and particles deep underground to create fractures through which gas can flow for collection.    According to the American Petroleum Institute, “up to 80 percent of natural gas wells drilled in the next decade will require hydraulic fracturing.”

The potential impacts of those fracturing operations stem from activities above and below the earth’s surface — including actions that are necessarily part of the life cycle of fracturing and extraction, such as assuring the integrity of well construction, and moving, storing, and disposing of significant quantities of water and toxic chemicals.

High profile contamination incidents, especially in Pennsylvania, have fueled public controversy. Pennsylvania’s Times-Shamrock Newspapers report “many of the largest operators in the Marcellus Shale have been issued violations for spills that reached waterways, leaking pits that harmed drinking water, or failed pipes that drained into farmers’ fields, killing shrubs and trees.”

Anadarko has substantial investments in the Marcellus Shale, where it plans to drill more than 4,500 wells in future years.

Public officials in Pittsburgh, Philadelphia and New York City have called for delays or bans on fracturing. Pennsylvania, West Virginia, Colorado, Wyoming and New York State all tightened or are considering tightening regulations and permitting requirements, though state regulations remain uneven. The federal Environmental Protection Agency is studying the potential adverse impact that hydraulic fracturing may have on water quality and public health.

A multi-sectoral assessment for investors, “Water Disclosure 2010 Global Report,” noted the existence of reputational risks from water management for the oil and gas sector.

Proponents believe these potential environmental impacts and increasing regulatory scrutiny could pose threats to Anadarko’s license to operate and enhance vulnerability to litigation. Proponents believe our company is not providing sufficient information on key business risks associated with hydraulic fracturing operations.  Proponents believe Anadarko should protect its long-term financial interests by taking measures beyond the existing, inconsistent regulatory requirements to reduce environmental hazards and associated business risks.

RESOLVED

Shareholders request that the Board of Directors prepare a report by October 2011, at reasonable cost and omitting confidential information such as proprietary or legally prejudicial data, summarizing:  1)  Known and potential environmental impacts of Anadarko’s fracturing operations;  and,  2) Policy options for our company to adopt, above and beyond regulatory requirements and our company’s existing efforts, to reduce or eliminate hazards to air, water, and soil quality from fracturing operations.

Related posts

• Anadarko – Greenhouse Gas Emissions Reduction (0)
• Verizon – Network Neutrality (0)
• Trillium Joins Investors in Challenging Nine Oil and Gas Companies on Hydraulic Fracturing Practices (0)
• Trillium Files Resolutions on Sudan Genocide (0)
• Transparency on Direct and Indirect Political Contributions and Expenditures – 3M (0)

ConocoPhillips has extensive interests in oil sands operations (11% of proved reserves as of 12/31/09) in the Canadian boreal forest region. Our company is the operating partner of the Surmont oil sands venture and is a partner in the FCCL Oil Sands Partnership, in addition to having interests in other properties.

Oil sands extraction requires heavy water use, land disturbance, toxic waste storage, and emission of air pollutants. These environmental impacts, along with their implications for local populations and wildlife, can introduce legal, regulatory and reputational problems to oil sands companies.

Industrial logging and oil sands have reduced the boreal to less than 40% of its original size; the remaining forest is fragmented, with harmful impacts on many species.  According to the Canadian Parks and Wildness Association, it will take over 300 years before reclaimed areas become functioning forest again.

The persistence of tailing ponds, which can leak toxic pollutants into groundwater, may present risks along with significant reclamation costs not currently carried on our balance sheet.

Oil sands have made Alberta the largest emitter of industrial pollutants in Canada.

Shareholders believe ConocoPhillips has not adequately reported on how possible risks associated with oil sands projects may impact our company’s long term financial performance, given our company’s significant investments in this area. Compliance with local, regional and national regulations may not be enough to protect our company from adverse consequences.

RESOLVED

Shareholders request that the Board prepare a report discussing possible long term risks to the company’s finances and operations posed by the environmental and societal challenges associated with the oil sands. The report should be prepared at reasonable cost, omit proprietary and legal strategy information, address risks other than those associated with or attributable to climate change, and be available to investors by August 2011.

Related posts

• Tar Sands Shareholder Proposals Pick Up Steam in 2010 (0)
• Tar Sands Development Stickier Than Anticipated (0)
• Investors Decry BP’s Entry Into Tar Sands (0)
• ExxonMobil – Environmental Impact of Oil Sands (0)
• ConocoPhillips Shareholders Show Strong Support for Tar Sands Proposal (0)

Electric utility companies that rely on coal face numerous challenges and uncertainty regarding environmental compliance costs, and the cost of carbon capture and storage for coal plants. Declining reserves of high quality central Appalachian coal, unprecedented price increases and coal price-volatility, versus abundant supplies and record low-prices for cleaner burning natural gas, and declining costs for wind and solar energy, make continued reliance on coal increasingly problematic.

Coal combustion for electricity is a major contributor to air pollution, accounting for one third of nitrous oxides (NOx), 50% of mercury, a hazardous air pollutant, and over 36% of carbon dioxide (CO₂) emitted in the U.S.  The U.S. Environmental Protection Agency (EPA) is moving, in some cases pursuant to court order, to tighten regulation of the air, water and waste impacts of coal plants.  Pending EPA regulations governing storage and disposal of coal combustion wastes will likely increase operating costs for coal plants.  Industry analysts (Bernstein Research, Jeffries & Company, Standard & Poor’s, Wood Mackenzie) have concluded that the cost of environmental control equipment may make it uneconomic to retrofit some coal plants.

This unprecedented combination of forces has led Duke Energy, which relies on coal for 62% of its electricity production, to replace some of its older coal plants. The $1.8 billion, 825-megawatt (MW) unit Duke is building in Cliffside, NC, will help replace about 1,000 MW of older, higher-emitting coal units.  Nevertheless, even with these and other coal plant closures, by 2030 Duke will still depend on coal for 28% of its energy.

EPA is also developing regulations for CO₂ and other greenhouse gas emissions.  However, the lack of national climate policy setting limits on CO₂ emissions further adds to the economic uncertainty for coal plants.

Duke’s 630-MW coal gasification plant under construction in Edwardsport, IN, could capture 18 percent of its CO₂ within four or five years. Capturing the CO₂ created when coal is turned into a fuel gas, could add 5 percent to 15 percent to the pant’s initial $2.35 billion cost and Duke has sought regulatory approval to study a second step that could capture an additional 40% of the CO₂ at a later stage.

According to some experts, however, “before new methods can be commercialized, projects need three to five years of planning and construction, followed by eight to 10 years of actual pumping of carbon dioxide into the ground.” (http://www.nytimes.com/2009/03/17/business/energy-environment/17coal.html?_r=1&scp=4&sq=edwardsport&st=cse) A recent report from the U.S. Government Accountability Office, states that commercial deployment of carbon capture and storage technology for coal plants, is 10 to 15 years away and “would increase electricity costs by about 30 to 80 percent.”

RESOLVED

Shareowners request that Duke Energy’s Board of Directors, at reasonable cost and omitting proprietary information, issue a report by November 2011 on the financial risks of continued reliance on coal contrasted with increased investments in efficiency and cleaner energy, including assessment of the cumulative costs of environmental compliance for coal plants compared to alternative generating sources.

Related posts

• Dominion Resources – Financial Risks of Continued Reliance on Coal (0)
• Verizon – Network Neutrality (0)
• Turn Down the Heat – It’s Getting Warmer (0)
• Trillium Joins Investors in Challenging Nine Oil and Gas Companies on Hydraulic Fracturing Practices (0)
• Trillium Files Resolutions on Sudan Genocide (0)

Internationally recognized index leader Dow Jones defines sustainable business as “encouraging long lasting social well being in communities where [companies] operate, interacting with different stakeholders (e.g. clients, suppliers, employees, government, local communities, and non-governmental organizations), and responding to their specific and evolving needs, thereby securing a long-term ‘license to operate,’ superior customer and employee loyalty, and ultimately superior financial returns.”

We believe reporting on significant environmental, social and governance (ESG) factors makes a company more responsive to the global business environment, characterized by finite natural resources, changing legislation, and heightened public expectations for corporate accountability. Reporting helps companies better integrate and gain strategic value from existing sustainability efforts, identify gaps and opportunities in products and processes, develop company-wide communications, publicize innovative practices, and receive constructive feedback.

Companies such as Bloomberg provide information on ESG performance that others including Goldman Sachs and Morgan Stanley utilize to assist in investment decisions. The Carbon Disclosure Project (CDP), representing 534 institutional investors globally with $64 trillion in assets, requests greater disclosure from companies on their climate change management programs. The 2010 company response rate to the CDP for the S&P 500 was more than 70% and at least 82% for the FTSE Global Equity Index Series.

Furthermore, disclosure of ESG-related factors is on the rise. According to a 2008 KPMG report on sustainability reporting, 79% of the 250 Global Fortune companies produce reports compared to 52% in 2005. Of the 100 top U.S. companies by revenue, 73% produced reports compared to 32% in 2005.

Industry peers like Baxter International, Medtronic, Johnson & Johnson and Boston Scientific have identified relevant ESG factors and address them through sustainability reports.

In contrast, St. Jude Medical (St. Jude) does not report details on its sustainability efforts and declined to participate in the CDP. Transparency on climate change abatement goals is one of the most financially significant environmental issues currently facing investors.

Moreover, last year this resolution received a shareholder vote of 44%, indicating strong support for sustainability reporting.

Occupational safety and health, vendor standards, and product-related environmental impacts are particularly important ESG considerations for St. Jude and can pose significant regulatory, legal, reputational and financial risks. Investors currently have no way to assess performance in these areas. Already, large healthcare providers such as Kaiser Permanente require suppliers to provide environmental data on medical equipment and products purchased.

RESOLVED

Shareholders request that St. Jude Medical issue a sustainability report describing the company’s ESG performance including GHG reduction targets and goals. The report should be prepared at reasonable cost, omitting proprietary information, by September 1, 2011.

SUPPORTING STATEMENT

We recommend that the report include a company-wide review of policies, practices, and metrics related to ESG performance and that St. Jude commit to continuous improvement in reporting. We encourage using the Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines (G3). The GRI (www.globalreporting.org) is a globally accepted reporting framework considered the gold standard of reporting. The G3 provide a flexible reporting system that promotes incremental improvement over time.

Related posts

• Verizon – Network Neutrality (0)
• Trillium Joins Investors in Challenging Nine Oil and Gas Companies on Hydraulic Fracturing Practices (0)
• Trillium Files Resolutions on Sudan Genocide (0)
• Transparency on Direct and Indirect Political Contributions and Expenditures – 3M (0)
• Transparency and Board Oversight for Political Contributions – Southern Company (0)

RBC’s 2009 Environmental Blueprint believes that “preservation of the environment is fundamental to the sustainability of our communities, our clients and our company.”

This document recognizes that “it is of vital importance that we all contribute to efforts to reduce greenhouse gas emissions” and that “the identity, cultural beliefs and economies of some indigenous peoples are intrinsically tied to their region’s history, biodiversity and natural landscapes” and that “financial institutions should play a role in supporting efforts to address global water issues.”

Notwithstanding these policy commitments, RBC is among the largest financiers of companies engaged in oil sands operations in the Canadian boreal forest region. Oil sands extraction presents a unique set of resource-intensive environmental challenges, including heavy water use, land disturbance, toxic waste storage, and emission of air pollutants. These impacts, along with their implications for local residents and wildlife, can introduce market risks and legal, regulatory and reputational problems to bank clients.

These impacts and risks include:

• Alberta’s oil sands are Canada’s fastest growing contributor to global warming emissions, and the largest emitter of industrial pollutants. Cumulative greenhouse gas emissions (GHGs) from Alberta’s oil sands are increasing fast. They more than doubled between 1990 and 2008, and if growth proceeds as planned, will triple from 2008 levels by 2020.

• Volatile oil prices and changing oil demand can impact operational costs, income and overall financial health.

• Industrial logging and oil sands have reduced the boreal to less than 40% of its original size; the remaining forest is fragmented, with harmful impacts on many species. According to the Canadian Parks and Wildness Association, it will take more than 300 years before reclaimed areas become functioning forest again.

• The industry has not proven that full reclamation of toxic tailing ponds is possible. The long-term presence of these ponds, which have been shown to leak toxic pollutants into local water sources, presents additional challenges.

• Extracting one barrel of bitumen requires 2-5 barrels of fresh water and enough natural gas to heat a Canadian home for 1.5-5.5 days; four tons of earth are removed. While processed sand must be replaced and the site reclaimed, in 40+ years of oil sands operations, just one acre has received a reclamation certificate from the Canadian government.

• Litigation from First Nations presents possible problems to clients engaged in oil sands extraction and related infrastructure, which may result in increased costs and restrictions on development. Even after approved, a project can be subject to lawsuits.

RESOLVED

Shareholders request that an independent committee of the Board prepare a report (at reasonable cost and omitting proprietary information) on the financial risks associated with RBC’s financial exposure to expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these relationships and should be available to investors by October 1, 2011.

Related posts

• Verizon – Network Neutrality (0)
• Trillium Joins Investors in Challenging Nine Oil and Gas Companies on Hydraulic Fracturing Practices (0)
• Trillium Files Resolutions on Sudan Genocide (0)
• Transparency on Direct and Indirect Political Contributions and Expenditures – 3M (0)
• Transparency and Board Oversight for Political Contributions – Southern Company (0)