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May 27, 2014
Record Support for Stranded Assets Resolution at Anadarko Petroleum
by Robert Kropp
Resolution filed by As You Sow requesting that oil and gas company report on risk of stranded
assets gains support of 30% of shareowners, the highest percentage for such a resolution thus far.
SocialFunds.com --
Since 2011, when Carbon
Tracker first reported that as much as 80% of the fossil fuel reserves counted as assets would
have to stay in the ground if global temperatures are not to exceed two degree Celsius, the concept
of stranded assets has been a rallying point for environmental activists. The growing student
divestment movement was sparked by an article by Bill McKibben of 350.org; the article, which appeared in Rolling Stone in July, 2012, referenced the findings of Carbon Tracker.
Sustainable investors have been
pressuring corporations to report on and reduce their greenhouse gas (GHG) emissions for many
years, and they quickly recognized that the concept of stranded assets makes for a compelling
financial argument. By 2013, As You Sow had
filed the first shareowner resolution addressing the issue, with CONSOL Energy, one of the largest
coal companies in the US. The resolution gained the support of 20% of shareowners, an impressive
number for a first-time resolution.
That percentage was exceeded this week, when another
As You Sow resolution, filed with Anadarko Petroleum, was supported by 30% of shareowners. The
resolution requested that the company “prepare a report analyzing the financial risks of
significantly reduced demand for oil and gas resulting from regulation or other climate-associated
drivers, and how the company is addressing that risk.”
“Climate change is the defining
challenge of our time and investors are increasingly aware of this,” said Danielle Fugere,
President and Chief Counsel of As You Sow. “Either governments will dramatically reduce the amount
of carbon that can be burned, keeping oil and gas reserves in the ground and negatively impacting
the value of unprepared companies, or fossil fuel reserves will be burned, resulting in global
warming of over two degrees Celsius, with catastrophic climate and economic effects. There is no
middle ground. Investors are rightfully asking how companies are addressing these risks.”
Some companies have begun addressing the issue with shareowners, although their communications
thus far have been disappointing. As You Sow withdrew a resolution filed with ExxonMobil when the
company agreed to report on stranded assets. The results of those communications, however, have
thus far been disappointing, as both Exxon and Shell contend that they will burn all the reserves
currently treated as assets on their books. “Any future capping of carbon-based fuels to the levels
of a 'low-carbon scenario' is highly unlikely due to pressing social needs for energy,” Exxon
reported.
But as Andrew Behar, CEO of As You Sow, stated, “The recent UN IPCC AR5 report
on climate describes the impact of business as usual as a human rights tsunami, describing death,
injury, and disrupted livelihoods for large urban populations, breakdown of infrastructure
including electricity, water, and health services, and mortality and morbidity during periods of
extreme heat – and all of this impacting to the highest degree the least developed countries, the
most vulnerable populations.”
As You Sow's shareowner resolutions are part of an
initiative launched last November by Ceres and
Carbon Tracker. A coalition of 70 global institutional investors wr
ote to the 45 largest fossil fuel companies, requesting that they report on the exposure to and
management of risks associated with stranded assets.
According to As You Sow's 2014 Proxy
Preview, “Proponents are placing new or expanded emphasis on climate-related risks, asking 12
companies to explain how they will grapple with lower fossil energy demand scenarios for the
future, and what they will do if fossil fuel reserves become stranded assets.”
©
SRI World Group, Inc. All Rights Reserved.
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