ExxonMobil – Environmental Impact of Oil Sands
WHEREAS
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.
Chevron – Environmental Oversight
WHEREAS
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.
Anadarko – Environmental Impacts of Hydrofracturing
WHEREAS
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.
ConocoPhillips – Environmental Impact of Oil Sands
WHEREAS
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.
AT&T – Network Neutrality
WHEREAS
A free and open Internet is critical to our nation’s economy and society.
To maintain these benefits, broad non-discrimination principles must be vigorously applied to the fastest-growing segment of the Internet – wireless broadband networks.
These non-discrimination principles are commonly referred to as “network neutrality.” According to the Congressional Research Service, network neutrality seeks “to ensure equal access and non-discriminatory treatment” for all content.
Network neutrality rules are needed to “facilitate the growth of the Internet and give private companies the correct incentives to continue investing in this significantly valuable good,” according to a January 2010 report by the Institute for Policy Integrity at New York University. The report finds that an open Internet accounts for billions of dollars of economic value for Americans.
The principle of non-discrimination on Internet networks has been an engine for economic growth, empowering millions of America’s small and medium-sized businesses through direct access to the Internet. America’s musicians and creative artists rely on open Internet principles, especially on wireless networks, for access to their audiences.
Federal Communication Commission (FCC) Chairman Genachowski has said that a free and open Internet must play a critical role in solving the “great challenges [we face] as a nation right now, including health care, education, energy, and public safety.”
Widespread interest and support of network neutrality is demonstrated by letters to the FCC from thousands of organizations including the American Library Association, Writers Guild of America (West), National Gay and Lesbian Task Force, and Consumer Federation of America.
Open Internet policies on wireless networks have particular importance for minority and economically disadvantaged communities. People of color access the Internet via cell phones at a much greater rate than their white counterparts, according to a report by the Pew Internet & American Life Project. In 2010, the report found, only 33% of whites accessed the Internet on cell phones compared to 51% of Latinos and 46% of African Americans; 30% of whites sent or received e-mail on cell phones compared to 47% of Latinos and 41% of African-Americans.
“The digital freedoms at stake are a 21st century civil rights issue,” according to Colorofchange.org, an organization representing black Americans. Network neutrality on wireless networks is essential “to avoid unintentionally treating communities of color, people living in rural areas, and the poor as second-class digital citizens,” according to a filing with the FCC by Latinos for Internet Freedom and a coalition of over 150 organizations representing the poor and communities of color.
Network neutrality on wireless networks is a significant public policy issue; failure to fully address this issue poses potential competitive, legal and reputational harm to our Company
RESOLVED
Shareholders request the company publicly commit to operate its wireless broadband network consistent with Internet network neutrality principles – i.e., operate a neutral network with neutral routing along the company’s wireless infrastructure such that the company does not privilege, degrade or prioritize any packet transmitted over its wireless infrastructure based on its source, ownership or destination.
Pentair – Political Contributions
SUPPORTING STATEMENT
The Supreme Court’s Citizens United decision in January 2010 legalized the use corporate funds to pay for ads supporting or opposing candidates directly and to contribute to state or local elections.
In July 2010 Pentair donated $100,000 to MN Forward, a group created in the wake of the Supreme Court decision to collect donations by corporations (Wall Street Journal (8/7/10) to influence the outcome of 2010 state races. MN Forward focuses on economic policies and appears to ignore a candidate’s other positions in making endorsements and contributions. MN Forward has made campaign contributions to a Minnesota gubernatorial candidate who is a vocal opponent of same-sex marriage and full parenting rights for same-sex households. This triggered demonstrations, petitions, boycotts and considerable negative publicity for Target and Best Buy, which also made significant contributions to MN Forward.
The shareholders believe this example illustrates the risks posed by corporate political expenditures, whether made directly or indirectly, and the serious reputational consequences that could negatively affect the company and shareholder value.
Corporate political spending is of increasing concern to investors and corporations. Over 75 S&P 500 companies now disclose political expenditures on their website, including half of the S&P 100. Shareholder resolutions urging such disclosure averaged more than 30% in favor of the resolution in 2010, indicating strong investor concern.
In the aftermath of Citizens United, we believe the Board should review Pentair’s policies and practices regarding political spending and report results to shareowners, with particular attention to the potential risk of such contributions to our company’s reputation and competitiveness. As long-term shareholders of Pentair, we support transparency and accountability regarding direct and indirect political contributions to candidates, political parties, political organizations or ballot referenda; independent expenditures; and electioneering communications on behalf of a federal, state or local candidate.
RESOLVED
The shareholders request that the independent members of the Board of Directors provide a comprehensive report on Pentair’s:
- Policies and procedures for political contributions and expenditures (direct and indirect) made with corporate funds, and the process for assessing their potential impacts on the company’s public image, sales and profitability;
- Monetary and non-monetary contributions and expenditures (direct and indirect) used to participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, and used in any attempt to influence the general public, or segments thereof, with respect to elections or referenda. The report shall include the following:
- An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above; and
- The title of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure.
The report shall be disclosed to shareholders by Sept 2011.
Gardner Denver – Sexual Orientation Non-Discrimination
WHEREAS
Gardner Denver, Inc. does not explicitly prohibit discrimination based on sexual orientation and gender identity (or gender expression) in its written employment policy;
Over 89% of the Fortune 500 companies have adopted written non-discrimination policies prohibiting discrimination on the basis of sexual orientation, as have 95% of Fortune 100 companies, according to the Human Rights Campaign. Nearly 70% of the Fortune 100 and 43% of the Fortune 500 now prohibit discrimination based on gender identity or expression;
We believe that corporations that prohibit discrimination on the basis of sexual orientation and gender identity or expression have a competitive advantage in recruiting and retaining employees from the widest talent pool;
According to a June 2008 survey by Harris Interactive and Witeck-Combs, 65% of gay and lesbian workers in the United States reported facing some form of job discrimination related to sexual orientation. An earlier survey found that almost one out of every 10 gay or lesbian adults also reported that they had been fired or dismissed unfairly from a previous job, or pressured to quit a job, because of their sexual orientation;
Twenty-one states, the District of Columbia, and more than 190 cities and counties, have laws prohibiting employment discrimination based on sexual orientation; 16 states, the District of Columbia, and more than 114 cities and counties have laws prohibiting employment discrimination based on sexual orientation and gender identity or expression;
Minneapolis, San Francisco, Seattle and Los Angeles have adopted legislation restricting business with companies that do not guarantee equal treatment for gay and lesbian employees;
Our company is based in Illinois where at least 192 major employers have sexual orientation nondiscrimination policies and at least 57 include gender identity or expression in their nondiscrimination policies.
Our company has operations in and makes sales to institutions in states and cities that prohibit discrimination on the basis of sexual orientation;
National public opinion polls consistently find more than three quarters of the American people support equal rights in the workplace for gay men, lesbians and bisexuals. In a Gallup poll conducted in May 2007, 89% of respondents favored equal opportunity in employment for gays and lesbians.
This shareholder proposal received a 49% vote at Gardner Denver’s 2010 annual meeting.
RESOLVED
The Shareholders request that Gardner Denver amend its written equal employment opportunity policy to explicitly prohibit discrimination based on sexual orientation and gender identity or expression and substantially implement the policy.
SUPPORTING STATEMENT
Employment discrimination on the basis of sexual orientation and gender identity diminishes employee morale and productivity. Because state and local laws are inconsistent with respect to employment discrimination, our company would benefit from a consistent, corporate-wide policy to enhance efforts to prevent discrimination, resolve complaints internally, access employees from the broadest talent pool, and ensure a respectful and supportive atmosphere for all employees. Gardner Denver will enhance its competitive edge by joining the growing ranks of companies guaranteeing equal opportunity for all employees.
PPG – Community Accountability
RESOLVED
Shareholders request the Board of Directors to report to shareholders, within six months, on how the corporation ensures that it responsibly discloses its environmental impacts in all of the communities where it operates. The report should be prepared at reasonable cost; omit proprietary information; and go above and beyond existing legal obligations and legal compliance systems. The report should contain the following:
- How the corporation makes available reports regarding its emissions and environmental impacts on land, water, and soil—both within its permits and emergency emissions—to members of the communities where it operates;
- How the corporation integrates community environmental accountability into its current code of conduct and business practices; and
- The extent to which the corporation’s activities have negative health effects on individuals living in economically poor communities.
WHEREAS
PPG is a global supplier of coatings, chemicals, with over 140 facilities worldwide.
PPG is committed to “operating in a manner that is protective of people and the environment” and “is focused on stewardship and conservation, which not only helps protect the environment, but also gives PPG a competitive advantage in the marketplace.” (2008 Corporate Sustainability Report).
Yet, a recent analysis by Riskmetrics ranks PPG “worst in sector for Toxics Release Inventory emissions normalized by US sales.”
A report by noted scientist Wilma Subra links PPG’s Lake Charles facility’s emissions to documented medical conditions afflicting residents of neighboring Mossville, LA. (Chemical and Industrial Sources of the Chemicals Associated with the Medical Symptoms and Health Conditions of Mossville Residents, 5/25/09.) PPG is named as a source for over 60% of the chemicals identified and associated with medical ailments, the highest correlation rate of the five industrial plants analyzed in the study.
PPG was named as one of the top 100 U.S. corporate air polluters in 2006, according to researchers at the University of Massachusetts. (http://www.peri.umass.edu/ej/)
SUPPORTING STATEMENT
We believe that corporations have a moral responsibility to be accountable for their environmental impacts. No corporation can operate without the resources that local communities provide, but often these communities bear the brunt of corporate activities.
The proponents are also concerned about the effects of corporate activities on low-income areas and communities of color. Many communities bordering industrial facilities, including those owned by PPG, are majority African American. One study has found that industrial facilities operating in more heavily African-American counties “seem to pose greater risk of accident and injury than those in counties with fewer African-Americans.” (“Environmental Justice: Frequency and Severity of U.S. Chemical Industry Accidents and the Socio-economic Status of Surrounding Communities,” Journal of Epidemiology and Community Health, (2004)). We believe that all communities have a right to clean air, water, and soil.
Stakeholder engagement is featured prominently in PPG’s 2008 CR report, but no formal stakeholder engagement policy is in effect. The requested report would do much to assure shareholders and other stakeholders that the corporation takes seriously its ethical responsibilities to all of the communities that host its facilities.
Coca-Cola Company – BPA
WHEREAS
Coca-Cola is the world’s largest beverage company, selling 1.6 billion servings of beverages per day. A significant part of Coca-Cola’s business includes selling beverages in aluminum cans. Our company has developed a valuable premium brand based on the trust of consumers and our company’s market leadership.
Coca-Cola’s Product Safety Policy states that Coke uses “the highest standards and processes for ensuring consistent product safety and quality.” Yet, Coca-Cola’s canned beverages use linings containing Bisphenol A (BPA), a potentially hazardous chemical.
BPA has received media attention for its use in polycarbonate plastic bottles, which Coca-Cola does not use. However, BPA is also used in the epoxy lining of canned foods and beverages. BPA can leach out of these containers and into food and beverages, resulting in human exposures. BPA is known to mimic estrogen in the body; numerous animal studies link BPA, even at very low doses, to potential changes in brain structure, immune system, male and female reproductive systems, and changes in tissue associated with increased rates of breast cancer. Exposure to BPA by the very young, as well as pregnant women, are among the greatest concerns to experts.
A study published in the Journal of the American Medical Association associated BPA with increased risk for human heart disease and diabetes. In January 2010, the US Food and Drug Administration reversed its stance on the safety of BPA, concluding that the agency has “some concern” about the potential effects of BPA on the brain, behavior, and prostate gland in fetuses, infants, and young children, and supports additional research. Most recently, Canada’s health and environmental agencies added BPA to its list of toxic chemicals.
Several food companies, including Hain Celestial, ConAgra, and H.J. Heinz are using BPA-free can linings for certain products, and have developed timelines to transition to BPA-free packaging across all products. In contrast, the Washington Post reported in May 2009 that Coca-Cola was involved in meetings to “devise a public relations and lobbying strategy to block government bans” of BPA in can linings.
The US Congress, as well as some US states and cities, have proposed legislation banning BPA in certain food and beverage packages. In addition to potential bans, proponents believe our company faces liability or reputational risks from defending and continuing to use BPA in cans. For instance, class action lawsuits against other companies already contend that manufacturers and retailers of BPA-containing products failed to adequately disclose BPA’s risks.
RESOLVED
Shareholders request the Board of Directors to publish a report by September 1, 2011, at reasonable cost and excluding confidential information, updating investors on how the company is responding to the public policy challenges associated with BPA, including summarizing what the company is doing to maintain its position of leadership and public trust on this issue, the company’s role in adopting or encouraging development of alternatives to BPA in can linings, and any material risks to the company’s market share or reputation in staying the course with continued use of BPA.
State Street – Political Contributions
RESOLVED
The shareholders of State Street (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:
- Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds.
- Monetary and non-monetary contributions and expenditures (direct and indirect) used to participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, and used in any attempt to influence the general public, or segments thereof, with respect to elections or referenda. The report shall include:
- An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above; and
- The title(s) of the person(s) in the Company who participated in making the decisions to make the political contribution or expenditure.
The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the Company’s website.
SUPPORTING STATEMENT
As long-term shareholders of State Street, we support transparency and accountability in corporate spending on political activities. These include any activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect political contributions to candidates, political parties, or political organizations; independent expenditures; or electioneering communications on behalf of federal, state or local candidates.
Disclosure is consistent with public policy, in the best interest of the company and its shareholders, and critical for compliance with federal ethics laws. Moreover, the Supreme Court’s Citizens United decision recognized the importance of political spending disclosure for shareholders when it said “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.
State Street contributed at least $160,600 in corporate funds since the 2002 election cycle.
However, relying on publicly available data does not provide a complete picture of the Company’s political expenditures. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax-exempt organizations for political purposes. This would bring our Company in line with a growing number of leading companies, including Prudential, US Bancorp and Capital One that support political disclosure and accountability and present this information on their websites.
This past year the Company reviewed its policies and we commend them for seriously considering these issues. However, the Company has not changed its policies and its Board and shareholders still need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.
