Wall Street Big Money Targets Companies that Frack

Three activist investor groups, all of them anti-drilling, are trying to use the influence of that money to shut down oil and gas drilling. If you have money invested with the members of any of these groups, you should consider removing your money and investing it elsewhere.

The groups are: The North American Investor Network on Climate Risk, the European Institutional Investors Group on Climate Change, and the Australia/New Zealand Investor Group on Climate Change. Collectively they represent over 200 members with total assets under management of $20 trillion.

Their target for now? The discredited concept that oil and gas drilling which uses hydraulic fracturing (just about all oil and gas drilling) leads to an increase in methane in the atmosphere—so called “fugitive emissions.”

Here’s a joint press release from the three groups from a few days ago:

The North American Investor Network on Climate Risk (“INCR”), the European Institutional Investors Group on Climate Change (“IIGCC”) and the Australia/New Zealand Investor Group on Climate Change (“IGCC”) have today issued a joint statement calling on companies and governments to take effective action to minimize methane emissions from rapidly growing unconventional oil and gas production made possible by hydraulic fracturing.

Methane emissions from oil and gas operations have the potential to accelerate climate change significantly and increase long-term economic risk to the financial performance of investor assets for several reasons:

  • Methane is over twenty times more potent than carbon dioxide and accounts for 14 percent of global greenhouse gas emissions.
  • Producing 37 percent of U.S. methane emissions, the oil and gas sector is now the largest source of methane emissions in the U.S., one of the largest globally, and is expected to be the most rapidly growing source of anthropogenic methane emissions in the coming decades.
  • Oil and gas-related methane emissions are projected to increase by 35 percent globally from 2010 to 2020.
  • There are over 480,000 natural gas wells across the nation, making methane emissions from these sites a critical concern.
  • Shale oil development is also expected to grow rapidly. In North Dakota’s Bakken shale region alone, the number of wells is projected to increase from 5,000 to 48,000 over the next 20 years.

As shareholders in oil and gas companies, investors are concerned with the regulatory and reputational risks associated with fugitive methane and the significant climate change concerns methane emissions raise.

With over 200 members with total assets of over $20 trillion, the three investor groups have announced that they are working with industry and experts, in collaboration with the Carbon Disclosure Project, to develop investor framework for disclosure to enable investors to evaluate companies’ progress in tackling methane leakage and reducing methane emissions. Investors are calling for companies to disclose their methane emissions and control plans under this framework and implement best practice control technologies that have been proven to effectively eliminate most methane emissions. Consultation on the draft disclosure framework is currently underway, with a final version due for publication in October 2012.

The investor groups’ statement follows the publication of the International Energy Agency’s “Golden Rules for a Golden Age of Gas” and arrives shortly before the start of Rio+20, the United Nations Conference on Sustainable Development, where fracking is among a host of climate change issues world leaders, policy makers and other organizations are expected to discuss. The statement supports the fracking risk disclosure guidelines recently issued by the Investor Environmental Health Network that call for minimizing the air emissions from fracking operations.

Mindy Lubber, president of Ceres and director of the $10 trillion Investor Network on Climate Risk (INCR), said:

“We cannot declare a ‘golden age of gas’ without taking serious action to curb fugitive methane emissions. Natural gas can play an important role in the transition to a low-carbon energy future, but it would be ill advised to ignore the real and growing emissions impacts of unconventional oil and gas development made possible by hydrofracking. Industry leaders have proven that methane emissions can be managed effectively with technologies and strategies that are available today. That is why investors will continue to work closely with the oil and gas industry and regulators to limit risks, increase efficiency and mitigate environmental impact by reducing emissions of this powerful greenhouse gas.”

Stephanie Pfeifer, Executive Director of the Institutional Investors Group on Climate Change, said:

“Methane is more than twenty times more potent than carbon dioxide as a greenhouse gas and has much greater short-term warming potential. Concerned with the negative economic impacts of methane leakage and its contribution to climate change, investors will be taking a range of measures to promote methane emissions reductions. These include engaging directly with companies to understand their approach to methane control, discussing effective regulatory measures with policy makers and working with industry to develop a framework to enable the monitoring of companies’ progress on methane control. With the technology which would substantially eliminate most methane emissions available, progress on this issue is eminently achievable.”

Craig Mackenzie, Head of Sustainability, Scottish Widows Investment Partnership, said:

“Fugitive methane emissions weaken the climate benefits of switching from coal to gas in the power sector. Eliminating most methane emissions is cheap. As a major shareholder in the oil and gas sector, we think it is in the industry’s interests to take action now to minimize methane emissions. This important global investor initiative aims to encourage all oil and gas companies to achieve the methane control standards being set by the industry leaders.”

About the Investor Network on Climate Risk (INCR)

The Investor Network on Climate Risk (INCR) supports 100 institutional investors with assets exceeding $10 trillion in addressing the financial risks and investment opportunities associated with climate change. INCR works with its members on climate-related investment practices, corporate engagement, corporate disclosure and policy issues.

INCR is coordinated by Ceres, a US-based coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges including climate change and water scarcity.

Launched by 10 investors in 2003 at the first Investor Summit on Climate Risk hosted by Ceres at the United Nations, INCR has grown to include leading North American institutional investors. It works to shape responsible investment practices among state and city treasurers and comptrollers, public and labor pension funds, foundations, other institutional investors and a wide range of asset managers.

For further information visit www.incr.com.

About the Institutional Investors Group on Climate Change (IIGCC)

The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration on climate change for European investors. The group’s objective is to catalyze greater investment in a low carbon economy by bringing investors together to use their collective influence with companies, policymakers and investors. The group currently has 78 members, representing assets of around €7.5trillion.

In detail, the IIGCC’s objectives are to: 1. encourage a pro-active approach amongst asset owners and asset managers on climate change; 2. improve company disclosure/performance on climate change; 3. encourage public policy solutions that ensure a move to a low carbon economy and which are consistent with long-term investment objectives.

For further information visit www.iigcc.org

About the Investor Group on Climate Change (IGCC)

The IGCC represents institutional investors, with total funds under management of approximately $700 billion, and others in the investment community interested in the impact of climate change on investments. IGCC’s 60 members aim to encourage government policies and investment practices that address the risks and opportunities of climate change, for the ultimate benefit of superannuants and unit holders.  We also aim to:

  • Raise awareness of the potential impacts, both positive and negative, resulting from climate change to the investment industry, corporate, government and community sectors;
  • Encourage best practices approaches to facilitate the inclusion of the impacts of climate change in investment analysis by the investment industry; and
  • Provide information to assist the investment industry to understand and incorporate climate change into the investment decision.

For further information visit www.igcc.org.au*

*European Institutional Investors Group on Climate Change (Jun 14, 2012) – Global Investors Call For Action on Methane Emissions from Shale Gas And Oil Fracking

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