October 2, 2013 // Boston, MA: Trillium Asset Management’s (Trillium) Investment Management Committee recently decided to sell all client holdings in the natural gas company Range Resources (NYSE: RRC) and to remove the company from our “Buy List”.
Given the importance of operational efficiency to Range Resources’ profitability, as well as the regulatory, environmental, and social license risks facing the company, Trillium believes that the company’s current level of disclosure related to methane leakage is woefully inadequate.
Leaking methane also represents lost revenue and raises the potential for increased regulatory and legal expense. Better transparency and the use of best practices to mitigate fugitive emissions would benefit Range Resources’ shareholders.
Earlier in 2013, Trillium filed a shareholder resolution with the company requesting that:
“the Board of Directors publish a report (by October 2013, at reasonable cost, and omitting proprietary information) for investors on how Range Resources is measuring, mitigating, setting reduction targets, and disclosing methane emissions.”
21.7% of Range Resources shareholders voted in favor of this resolution.
In response to the proposal, management submitted an inflammatory SEC filing, attacking shareholder rights and falsely claiming a misalignment between Trillium and the company’s “real stockholders”, despite Trillium’s holdings in the company at the time.
The company’s response is in sharp contrast to some industry peers that appear ready to address the issue of fugitive methane emissions and work with its shareholders. The unexpected reaction from management left us with profound reservations about its ability and willingness to address this critical issue or respect shareholder rights.
“We believe that there is a direct correlation between a company’s environmental, social and governance profile and the quality of its management.” said Matthew W. Patsky, CEO of Trillium Asset Management. “Range Resources’ expressed contempt for its shareholders is of great concern to us. Our loss of confidence in management makes it untenable to continue to hold its shares on behalf of our clients.”
Disclosure: The views expressed are those of the authors as of the date written and are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. These views may not be relied upon as investment advice. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the authors on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is for informational purposes and should not be construed as a research report.
For more information, please contact:
Randy Rice, Trillium Asset Management, email@example.com, 617-515-6889