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Trillium Portfolio Manager and Energy Analyst Will Lana Interviewed on Fox Business NewsWill Lana, Trillium portfolio manager and energy analyst, appeared on Fox Business News on June 17, 2010. Will discussed Trillium’s decision to sell BP in early May. Click here to watch the interview. “Green Investors Pull Out of BP”Trillium CEO Matt Patsky was quoted in Forbes.com on June 4, 2010, in an article about money managers divesting their holdings of BP after the oil spill. “This has turned into something that is much worse than we ever could have imagined, ” Patsky said. “Our fears were that this would turn into a bigger tragedy than the market originally thought.” Click here to read the full article. Tar Sands Shareholder Proposals Pick Up Steam in 2010In a show of how seriously investors, environmentalists and advocates are looking at the environmental costs and financial uncertainties associated with tar sands, support has grown dramatically for shareholder resolutions filed at major oil companies. This movement parallels increased activity on the part of more than 50 nongovernmental organizations working to slow down the expansion of tar sands projects. Extracting oil from tar sands, also known as oil sands, is an energy-intensive and damaging process, whereby oil that is mixed with sand, clay, other mineral sediments and water is separated often using hot or warm water. The oil is either extracted using strip mining or using deep wells that often require high pressure steam to encourage oil flow. The processing has outsized impacts on air, land and water systems, and contributes higher lifecycle greenhouse gas emissions than conventional oil. Trillium Asset Management Corporation (“Trillium”) has filed resolutions at ExxonMobil and ConocoPhilips, and signed letters of support for two resolutions at Shell and BP. ConocoPhilips In 2008 and 2009, Trillium acted as the “lead filer”* of a resolution calling for a report on the environmental and social impacts of the company’s oil sands extraction. In both years, support reached about 30%, which is quite high for a shareholder resolution addressing an environmental issue. Last year, there were nine co-filers; this year, the California State Teachers Retirement System (CalSTRS) has stepped up to act as lead filer, and additional 10 co-filers have signed on. ExxonMobil Trillium has signed on as a co-filer on this first-year resolution, sponsored by Green Century Capital Management, along with 8 additional co-filers. The proposal calls for 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 resolution can be found here. Shell Trillium has signed a letter of support for a resolution co-filed by two British shareholders, The Ecumenical Committee for Corporate Responsibility and FairPensions UK, asking Shell to produce a report detailing how a decision on oil sands projects took into account “future carbon prices, oil price volatility, demand for oil, anticipated regulation of greenhouse gas emissions and legal and reputational risks arising from local environmental damage and impairment of traditional livelihoods.” BP Trillium supports a resolution filed at BP that calls for a report detailing BPs decisions to press forward with tar sands development, specifically the Sunrise project. Trillium has been pressuring BP for years, as one of a group of signatories of a letter presented at the 2008 annual stockholder’s meeting expressing disappointment in the companies move into tar sands. Investor briefings in support of the resolutions can be found at http://incr.com/resolutions. Related Material: “Tar Sands Development Stickier Than Anticipated,” Investing For A Better World, Spring 2008. “ConocoPhillips Shareholders Show Strong Support for Tar Sands Proposal,” May 2009. “Investors Decry BP’s Entry Into Tar Sands,” April 2008. * “Lead filers,” as the phrase implies, take a leadership role in drafting shareholder proposals and negotiating dialogue with company management to identify conditions that might lead to a withdrawal. Co-filing shareholders typically take a less active role in the process. Investors Decry BP’s Entry Into Tar SandsINVESTORS DECRY BP’S ENTRY INTO TAR SANDS Statement to be submitted at BP annual meeting today in London
Contacts: Shelley Alpern, Trillium Asset Management Corporation Lauren Compere, Boston Common Asset Management April 17, 2008 (Boston) – A group of American and British investors released a statement today expressing disappointment at BP’s (NYSE: BP) investment in the Canadian tar sands, calling the move a “disturbing step backwards.” A representative from the Ecumenical Council for Corporate Responsibility intends the statement at BP’s annual stockholder meeting, which is taking place today at ExCeL London in London Docklands at 11:30 a.m. GMT. The investor group includes Trillium Asset Management Corporation (“Trillium”), Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, the Ecumenical Council for Corporate Responsibility, Rathbone Greenbank Investments, Newground Investments, Pax World, Northstar Asset Management, Sierra Club Funds and Green Century Capital Management. In December 2007, BP announced its entry into the tar sands business via two joint ventures with Husky Energy of Canada (Toronto: HSE.TO) with a total joint investment of $3 billion. Husky brings its “Sunrise” oil sand project to an upstream partnership, and BP will contribute a refinery based in Toledo, OH. The first output is expected to commence in 2012, and build to 200,000 barrels per day within a decade. Citing the heavy environmental footprint of the tar sands, which have caused Canada to fall behind in meeting its Kyoto Protocol commitments, the statement also raises questions about BP’s long term business strategy. “We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long term shift away from high-carbon fuel sources, and question whether this may undermine [BP's] future competitiveness…..We do not wish to see the benefits of BP’s leadership as a renewable energy innovator and market leader to be offset by the harsh environmental impacts unleashed by tar sands development.” The life-cycle environmental impacts of tar sands-derived oil, or bitumen, compare poorly to that of conventionally derived fossil fuel. Extracting and refining bitumen produces nearly triple the greenhouse gas emissions (GHGs) of traditional oil extraction and requires 2-5 barrels of fresh water for every barrel extracted. The reliance on the Athabasca River as a source of fresh water, along with the fragmentation of natural habitats, is endangering numerous species of bird and mammal. In addition, the province of Alberta is struggling to cope with the stresses that rapid development has placed on its social and physical infrastructure. The statement also notes the investors’ skepticism that today’s “best practices” methodologies for extracting tar sands will be adequate enough to protect the environment. “We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign.” It quotes a report from Canada’s independent Pembina Institute that concludes, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” * Using SAGD does not lower carbon emissions. ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX) are facing shareholder proposals this spring calling for public reporting on the environmental and social impacts of the companies’ tar sands development. Those proposals have been filed by Trillium and Green Century Capital Management, respectively. “We had understood from BP that the company would not participate in the tar sands due to their high carbon footprint, and therefore this came as a big surprise and disappointment,” said Shelley Alpern, vice president of Trillium, a Boston-based investment firm. “This should simply be a no-go area for BP. We expect better the company that aspires to go beyond petroleum.” The growing backlash against tar sands is spreading beyond Canadian environmental groups to include and other international non-governmental organizations and even the US government. Last year’s US energy bill included a provision that banned the federal government from purchasing any fuels whose life-cycle GHG emissions exceed those of conventional fossil fuels. “For over 12 years, we have held BP up as a ‘best-in-class’ integrated oil company when we were not able to invest in their U.S. counterparts due to poor environmental and human rights records. In recent years though given the range of concerns that we have had to raise with BP from safety management to corporate governance, it has been much more difficult to back up this claim. Their involvement in tar sands is just the last in a series of disappointments on their sustainability approach,” stated Lauren Compere, Director of Shareholder Advocacy at Boston Common Asset Management. At the stockholder meeting, a representative of the shareholder group intends to question BP’s leadership on its plans to reduce or offset greenhouse gas emissions from the Sunrise project; what assurances the company can provide that best practices will be applied to the project; how BP will engage in public-private efforts to protect the Canadian boreal forest; and how the company is assessing the risks to reputation, health and safety posed by the tar sands. # # # # Joint Statement on BP’s Entry into the Canadian Tar Sands April 17, 2008
The following investors wish to go on record at this shareholder meeting concerning BP’s entry into the Alberta tar sands: Trillium, Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, Green Century Capital Management….. We are long-term investors in BP. From our perspective, BP has been an attractive investment in no small part because of its pursuit of environmental and social sustainability, its robust stakeholder engagement programs, and its development of solar, wind and biofuels businesses. For this reason, we are deeply disappointed by BP’s entry into the Canadian oil sands. On a comparative basis, oil sands development offers some of the worst life-cycle environmental impacts of any fossil fuel, emitting emits nearly triple the GHG emissions of traditional oil extraction; using 2-5 barrels of fresh water for every barrel of oil extracted; and endangering numerous species of birds and mammals. Canada has fallen behind in its Kyoto commitments due to oil sands development. Even if managed superbly, the oversized environmental footprint of the tar sands is unavoidable. We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign. According to Canada’s independent Pembina Institute, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” * We believe that this is a disturbing step backwards for BP, whose very logo and tag line, “Beyond Petroleum” communicate the highest aspirations. Prior to BP’s announcement in December, we had understood that our company would not pursue tar sands development due to the heavy carbon footprint of both the operations and the end-product. We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long term shift away from high-carbon fuel sources, and we question whether this may undermine our future competitiveness. We do not wish to see the benefits of BP’s leadership as a renewable energy innovator and market leader being offset by the harsh environmental impacts unleashed by tar sands development. We respectfully request answers to the following questions: Ø How will BP reduce or offset the greenhouse gas emissions from the Sunrise project? Ø What assurances can BP provide that best practices will be applied to the project? Ø How will BP engage in public-private efforts to protect the Canadian boreal forest in the aggregate? Ø And what risks to reputation, health and safety does BP anticipate if it fails to address these issues related to the tar sands? We have found BP to be quite responsive to our concerns in the past and invite you to dialogue with us on these issues. Thank you. * Death By A Thousand Cuts: Impacts of In Situ Oil Sands Development on Alberta’s Boreal Forest, August 2006, p. viii (www.cpaws-sask.org/common/pdfs/Death_by_thousand_cuts.pdf)* Death By A Thousand Cuts: Impacts of In Situ Oil Sands Development on Alberta’s Boreal Forest, August 2006, p. viii. Tar Sands Development Stickier Than AnticipatedIn a rational global economy not entirely driven by short-term profit maximization, the collective body politic of all nations would have applied the precautionary principal to the threat of climate change twenty years ago. We’d now be celebrating the fruits of two decades of aggressive efficiency measures, phased down fossil fuel use, and the mass distribution of renewable energy technologies. Instead, we have the tar sands. Record oil prices and declining access to the oil and gas resources of nations such as Russia, Saudi Arabia, Sudan and Venezuela has led to a rush to develop Canada’s tar sands deposits. CIBC World Markets chief economist Jeffrey Rubin estimates that of the world’s oil properties, the Alberta oil sands represent 60% of the resources where energy companies can invest.1 Every major Western oil and gas producer is either in the game already or is making plans to be – Chevron, ConocoPhillips, Imperial Oil (ExxonMobil‘s Canadian subsidiary), Suncor, Shell, BP, Statoil, Marathon, Devon, Murphy Oil, TotalFina, and PetroCanada. Tar sands are just what the moniker evokes (which is probably why the industry prefers the less gooey-sounding “oil sands”) – an oil known as bitumen embedded in earth and sand, most of it deeply buried. As one might imagine, it takes a lot of resources to squeeze out and refine bitumen into usable product. Bitumen from oil sands is “one of the most environmentally costly sources of transport fuel in the world”2 – as the mining, upgrading, and refining process requires the draining of wetlands, diversion of rivers, and the removal of trees and vegetation. Tailing ponds from mining operations cover almost 20 square miles of forest and bogs, and their pollutants are acutely toxic to aquatic life and known to contaminate the groundwater, surrounding soil, and surface water. Extracting one barrel of bitumen requires up to five barrels of fresh water, most of which is drawn from Alberta’s Athabasca River. Less than 10% of the water is returned to the river, which is threatening the long term survival of numerous fish, songbird, and waterfowl species. Oil sands development consumes twice the water used annually by the population of Calgary. Bad enough? There’s more. Refining bitumen emits 3-4 times more greenhouse gas emissions (GHGs) than refining conventional oil, and the finished product releases more GHG per barrel when burned. Yet oil and gas companies are using less GHG-intensive natural gas to power the extraction. Even nuclear power developers see an opportunity; the Canadian company Bruce Power (a partnership that includes Cameco and TransCanada) recently announced a plan to build four nuclear power plants in Alberta to respond to the surge in demand created by the oil sands industry. Tar sands extraction was recently deemed “the most destructive project on Earth” in a February 2008 report of the same name.3 The tar sands are also the world’s largest industrial project, with the amount of oil reserves second only to Saudi Arabia’s. Companies plan to spend as much as $125 billion to expand operations threefold over the next 10 to 15 years, and a typical oil sands project has a lifespan of over 50 years.” Nearly all oil from the tar sands is exported to the United States and turned into transportation fuel. Canada currently exports over 2 million barrels per day (bpd) to the US, which it plans to increase to 3 million bpd by 2015. Houston-based ConocoPhillips is hitching its ride to that vision. The company’s worldwide production totals 2.3 million bpd today, and over the next 20 years, it aims to pump out an eventual one million bpd from the tar sands. In February, ConocoPhillips Canada said that if other companies were successful in using nuclear energy to power Canadian oil-sands operations, the company would be a “fast follower.”4 ConocoPhillips announced its first investment in renewables, a relatively paltry $150 million, just last spring. Our doubts about ConocoPhillips’s strategic direction led Trillium Asset Management Corporation (“Trillium”) to file the first shareholder resolution addressing tar sands at the company. Our proposal asks for a report on the environmental damage that would result from the company’s expanding oil sands operations, including the implications of discontinuing its expansion plans. Shareholders will vote on the proposal in April. You Never Write The intent behind the proposal is to obtain information on how ConocoPhillips is anticipating the massive environmental risks associated with tar sands development and planning to mitigate them. Other companies heavily invested in the oil sands are starting to report publicly about their impacts, including Suncor, Shell, Encana, PetroCanada, and Imperial Oil. We believe investors are owed a better understanding of how ConocoPhillips is managing its risks in the tar sands. The company’s latest sustainability report contained just one vague paragraph about its environmental responsibility in the tar sands. It discloses virtually nothing about one of the company’s main tar sands projects (known as Surmont), or about the implications of its $11 billion FCCL Oil Sands Partnership with EnCana, or its $5 billion pipeline partnership with TransCanada Corp. Syncrude, the tar sands joint venture in which ConocoPhillips holds a 9 percent interest, has issued a report, but the project’s environmental profile is disheartening. Canada’s Pembina Institute told Trillium that Syncrude lacks accredited management systems such as ISO 14001, and has yet to set voluntary GHG targets or participate in the Alberta Biodiversity Monitoring Initiative. It also has the weakest compliance record of all the operating mines. Syncrude received the lowest score (18 percent) of ten projects studied in Pembina’s Oil Sands Report Card published last year, and it was the only project that refused to provide information for the survey. (Syncrude’s competitors are not exactly standouts – the highest score was 56 percent.) The Report Card observed that overall, “Information about the actual and proposed environmental performance of individual oil sands operations is not easily accessible…. There is little comparative information about the actual and proposed environmental performance of individual oil sands operations and far too little discussion of best practices available to oil sands developers.” No slam dunk While it’s indisputable that demand for fossil fuels is currently as strong as ever, the days when oil companies can escape payment for the carbon emissions of their operations and product are increasingly numbered. Existing and impending regulations at the international, federal, and provincial level are placing a price on GHG emissions. The Kyoto Protocol obliges industrialized countries to reduce national GHG emissions below 1990 levels by 2012, and the December 2007 follow up meeting in Bali reaffirmed its cap-and-trade approach as the path going forward. Most of the 15 countries in which ConocoPhillips produces or explores for oil and natural gas have ratified Kyoto. All too aware that the tar sands are preventing them from meeting their Kyoto obligations, in March, the Canadian federal government released a GHG reduction plan that would force new oil sands projects and coal-fired electricity plants to capture and store the bulk of their greenhouse gases. The plan imposes industry-wide 18 percent intensity reductions, followed by 2 percent reductions every year after until 2020 (although the regime would be reviewed in 2012). Companies that fail to meet their targets would face prosecution under the Criminal Code. Oil sands projects yet to be built would have to capture and store their emissions. In a spring 2007 survey commissioned by the Pembina Institute, 71 percent of Albertans agreed that the Alberta provincial government should suspend new oil sands approvals until infrastructure and environmental management issues are addressed, and 70 percent favored total over intensity-based GHG reduction targets, “even if it costs industry more.” Oil companies are also facing lawsuits from Canada’s indigenous tribes and environmental groups that threaten to delay projects. Even pressure from the U.S. is growing. A provision in last year’s energy bill bars government contracts for unconventional petroleum sources whose lifecycle GHG emissions exceed those of equivalent conventional fuels. We could go on and on – and we do, in a letter to institutional investors soliciting their support for the ConocoPhillips resolution that you can find on our web site at www.trilliuminvest.com. Last year, a ConocoPhillips official admitted the industry has an image problem, noting that the oil industry ranks last in surveys – “last in credibility even behind tobacco.”5 Is it any wonder why? With so much cash on hand, it’s time for the oil and gas companies to begin the transition into energy companies that recognize that if we’re to have a future at all, it will need to be powered by renewable sources. Notes 1. “Oil Sands Key Target for Global Energy Players,” Globe & Mail, December 11, 2006. 2. The Oil Sands Report Card (2007), Pembina Institute and World Wildlife Canada, p. vii. 3. Environmental Defence, Canada’s Toxic Tar Sands: The Most Destructive Project on Earth, February 2008, available at http://www.environmentaldefence.ca/reports/tarsands.htm. 4. http://www.heavyoilinfo.com/newsitems/conocophillips-seeks-oil-sands-cost-cutting. 5. “Experts Outline Energy of Fugure,” Topeka Capital Journal, October 5, 2007. |
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