Climate Change - Unconventional Fossil Energy

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Proponents are continuing their efforts to persuade companies to pay more attention to methane emissions and control leaks, which is a key concern with natural gas extraction and other unconventional oil development. (See the latest edition of the proponents’ report, Disclosing the Facts, which focuses on methane.) Just one resolution also has been filed about financing oil extraction from Canadian tar sands deposits, at JPMorgan Chase.

Advocacy Position: Managing Methane Will Protect Climate and Reduce Investor Risk

Emissions

Ten resolutions (down from 15 last year at this time) seek more information about how companies are measuring, managing and seeking to cut their methane emissions.

The proposal to Chevron is the only one to mention hydraulic fracturing, but it also is concerned about methane, seeking a report with quantitative indicators “on the company’s actions beyond regulatory requirements to minimize methane emissions, particularly leakage, from the company’s hydraulic fracturing operations.”

At Anadarko Petroleum, DTE Energy and Exelon, the request is for annual reports with “quantitative indicators, the company’s policies and practices beyond regulatory requirements to monitor and minimize methane emissions, particularly leakage, from the company’s operations.” At DTE and Exelon it adds a request for “a quantitative methane intensity reduction target” for company operations.

At Dominion Energy, the resolution wants a report “reviewing the Company’s policies and plans to measure, monitor, mitigate, and set quantitative reduction targets for methane emissions resulting from natural gas storage assets.” (A similar 2017 proposal earned 23.7 percent support at the company, while a narrower 2016 proposal on methane was omitted after the company successfully argued it was moot since it had provided a detailed report. The commission rejected a 2017 challenge that also argued it was moot.) At Kinder Morgan, the proposal is similar to Dominion’s but specifies the report should cover “all operations, including storage and transportation, under the Company’s financial or operational control.” It is a resubmission that earned 40.6 percent in 2017 and 33 percent in 2016.

The most detailed proposal is to Energen, EQT and Range Resources, asking each to report by September 2018 with a review of the “Company’s policies, actions and plans related to methane emissions management, including efforts to: measure, monitor, mitigate, disclose, utilize leak detection and repair (LDAR) technologies (including frequency, scope, and methodology).” At Energy and EQT, it also asks each to “set quantitative reduction targets for methane emissions resulting from all operations under the Company’s financial or operational control.”

Withdrawals:
As You Sow withdrew at DTE Energy, saying the company had agreed to describe its methane leak detection efforts and related risk management in more detail, beyond regulatory requirements, as well as steps to resolve problems. As You Sow also noted the company had agreed to develop quantitative methane emission intensity reduction targets. Miller/Howard also withdrew at Energen after company commitments.

SEC action:
So far there have been just two challenges:

  • Chevron is arguing it concerns ordinary business since it deals with issues currently pending in litigation against it; as discussed above, the company is making the same argument with regard to a 2-degree scenario proposal. The SEC has yet to respond.
  • DTE had argued the proponents were not eligible to submit the resolution and that the proposal concerned ordinary business since it was too prescriptive. The challenge invoked SEC Staff Legal Bulletin 14I, discussed above, but the withdrawal came before any response from the SEC.

Tar Sands

A new resolution this year is a detailed proposition from Proxy Impact at JPMorgan Chase. It asks for a report by September

on the reputational, financial and climate risks associated with project and corporate lending, underwriting, advising and investing for tar sands production and transportation. This report should include assessments of:

  • Short- and medium-term risk of portfolio devaluation due to stranding of high cost tar sand assets.
  • Whether JPMC’s tar sands financing is consistent with the Paris Agreement’s goal of limiting global temperature increase to “well below 2 degrees Celsius”.
  • How tar sands financing aligns with our company’s support for Indigenous People’s rights.
  • Reducing risk by establishing a specific policy, similar to that of other banks, restricting financing for tar sands projects and companies.

The proposal reasons that a detailed report is needed because of public opposition to tar sands development and its potential for becoming stranded assets, and contends that the bank’s support for the Paris Climate Agreement and renewable energy, and its statements on indigenous peoples’ rights, is not consistent with its other position as the largest U.S. lender for tar sands producers and pipelines. Further, it cites examples of other leading banks that eschew such business given their climate commitments. Last year, proponents asked about coal financing at Bank of America but withdrew after discussions.

Advocacy Position: JPMorgan Chase Commits to World's Dirtiest Fuel: Investors Ask Why?