ESG USA: US investor groups issue fracking risk recommendations for oil & gas companies

List compiled after lengthy risk engagement with companies.

Two of the largest ESG investor lobby groups in the US have published a report outlining 12 recommendations to oil and gas companies for disclosing risk around the increasingly controversial field of hydraulic fracturing for gas known as ‘fracking’. The report was unveiled today (December 13) at Responsible Investor’s ESG USA conference in New York. The Investor Environmental Health Network (IEHN), a $30bn partnership of investment managers and advisors concerned with corporate environmental and public health risks, and the Interfaith Center on Corporate Responsibility (ICCR), which represents 300 faith investor groups with combined assets of more than $100bn, which published the report, said drilling companies needed to be transparent about managing their environmental and social impacts in order to “earn and maintain” their social license to operate. The release of the report comes at a critical juncture for hydraulic fracking, which is being seen as a game-changer in the sourcing of natural gas but has been heavily criticised for its alleged environmental impacts.
A report released earlier this month by the Environmental Protection Agency (EPA) said contamination near the town of Pavillion, Wyoming had most likely come about as a result of fracked gas wells: Link The EPA is currently carrying out a national study to determine whether fracking presents a risk to water resources. The US Securities and Exchange Commission (SEC) has also been pressing oil and gas companies to provide increased disclosure on the financial risks associated with the environmental impacts of their fracturingoperations. Moratoria or bans on fracking have been enacted in New York State, the Delaware River basin and by local governments in several other states. Outside the US, France has banned fracking and the Province of Quebec, Canada and South Africa have enacted moratoria. Companies that were exploring potential gas wells in these jurisdictions have had to put their plans on hold potentially reducing profits from their drilling activities. The energy industry says that fracking, if done correctly, is environmentally safe and lower in C02 emissions than other fossil fuel extraction and use. The recommendations in the latest report came out of an eighteen-month investor between the IEHN and ICCR and the energy industry. Boston Common Asset Management and Apache Corporation, the oil and gas exploration company, carried out a notable engagement to examine risks, relevant management practices and disclosure. The results were reviewed by a panel of industry experts before the 12 risk indicators in the new report were drawn up.
Among the 12 recommendations, the investors say companies should manage any fracking risks openly and at board level including reducing and disclosing all toxic chemicals used in the process and discussions with local communities on fracking risks. It says companies should rigorously monitor local water quality in the areas where they drill and minimise using freshwater to flush out gas from the drilling wells.
Link to IEHN