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May 08, 2013

Resolution Calls on CONSOL Energy to Report on Stranded Assets
    by Robert Kropp

Up to 80% of known fossil fuel reserves will have to stay in the ground if climate change is to be addressed, and As You Sow requests that the coal producer report on the risks of stranded reserve and infrastructure assets.

SocialFunds.com -- If enough of them acknowledge the long-term implications of climate change, shareowners at CONSOL Energy can become part of history today at the coal and natural gas company's annual general meeting in Pittsburgh.

A resolution submitted by As You Sow requests that CONSOL report to shareowners on "various scenarios the company deems likely, or reasonably possible, in which a portion of its reserves or infrastructure become stranded due to carbon regulation," according to a proxy memo prepared by the investor organization.

"CONSOL is the nation's largest producer of coal from underground mines, with 4.5 billion tons of proven and recoverable coal reserves, the most among US coal companies," the resolution states.

As You Sow bases its request upon the findings of recent reports by the International Energy Agency (IEA) and Carbon Tracker, both of which conclude that up to 80% of all fossil fuel reserves accounted for at present must remain unburned if the effects of climate change are to mitigated in a meaningful way.

"Governments and global markets are currently treating as assets, reserves equivalent to nearly five times the carbon budget for the next 40 years," Carbon Tracker stated in its report.

"If laws and regulations are adjusted to recognize this limitation, the vast majority of fossil fuel companies will be left with stranded assets in the form of unburnable reserves and underused infrastructure," As You Sow states.

Citing financial as well as potential regulatory risks to the company, As You Sow states in its proxy memo, "Companies and shareholders need to be fully informed of the risk of stranded reserve and infrastructure assets and how, or if, the company is planning for a carbon constrained future."

"This valuable information will enable investors to analyze how the company is positioned to address climate change and carbon restrictions and to make reasonable judgments about the benefits or risks associated with investing in this company," the memo continues.

Arguing against a vote in favor of the resolution, CONSOL has stated that it produces a corporate social responsibility report disclosing "its plans to address concerns regarding climate change and related risks." However, As You Sow replied, "The company has failed to disclose and analyze the potential that it may be unable to utilize 2/3 or more of its coal and/or natural gas assets and has further failed to describe how the company is preparing for this risk."

"The potential for severe limits on carbon creates real risk for investors who need to be fully informed of how, or if, the company is planning for a carbon constrained future," said Danielle Fugere, President and Chief Counsel of As You Sow.

"Overvalued fossil fuel reserves, if not acknowledged, could wreak far greater worldwide harm than the US housing bubble did," Fugere continued. "Energy companies must acknowledge this issue and give investors a chance to adjust their behavior accordingly."

Arguing against a vote in favor of the resolution, CONSOL has stated that it produces a corporate social responsibility

A second shareowner resolution addressing stranded assets has been filed at Alpha Natural Resources by the Unitarian Universalist Association (UUA). With 2.3 billion tons of proven coal reserves, Alpha is the nation's third-largest coal producer.

"It is of concern to investors that a portion of Alpha's coal reserves and/or related infrastructure may become unusable, unmarketable, or otherwise not economically viable as a result of greenhouse gas restrictions," the UUA resolution states. "Given the increasing likelihood of material impact, shareholders need additional disclosure of the company's action plans, and risk scenarios, associated with likely greenhouse gas regulation."

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