US sustainable fund firm Trillium Asset Management has decided to exit New York-listed oil and gas producer Range Resources because of “woefully inadequate” levels of disclosure about methane leakage, compounded by what it calls the company’s “contempt” for its shareholders.
“Given the importance of operational efficiency to Range Resources’ profitability, as well as the regulatory, environmental, and social license risks facing the company, Trillium believes that the company’s current level of disclosure related to methane leakage is woefully inadequate,” Trillium said.
It follows 21.7% support for Trillium’s proposal at Range’s annual meeting in May that called for a report from the company on how it is “measuring, mitigating, setting reduction targets, and disclosing methane emissions”.
Among the investors who voted for the motion were the AFSCME Employees Pension Plan, Calvert, Christian Brothers Investment Services, the Florida State Board of Administration and Dutch pension management giant PGGM. The latter said: “Shareholders would benefit from additional information on how the company is managing its methane emissions.” Some major funds, such as California giant CalSTRS, though, voted against.
The proposal had earlier led to what Trillium terms an “inflammatory” response from Range where it questioned both Trillium’s motives and the voting recommendations of advisory firm Institutional Shareholder Services (ISS). Range had argued that ISS’s recommendation in support of the proposal was a violation of its own policy.
In a letter to shareholders ahead of the AGM, Range said Trillium sought the “destruction of shareholder value” in natural gas companies and that the resolution was a “fishing expedition” to gather data against Range and the industry.And it said ISS’s support “raises the question as whose interest is ISS looking out for – their clients who in many cases have substantial positions in companies like Range or the activist groups who submit GHG [greenhouse gas] proxy proposals?”
Range argued that its website contains “one of the most complete discussions of potential GHG emissions by any energy company”.
But Trillium, which has more than $1.2bn in assets under management, says Fort Worth, Texas-based Range’s response is in sharp contrast to some industry peers and that it was left with “profound reservations” about Range’s ability and willingness to address the issue.
Trillium CEO Matt Patsky said: “Range Resources’ expressed contempt for its shareholders is of great concern to us. Our loss of confidence in management makes it untenable to continue to hold its shares on behalf of our clients.”
Trillium had pointed out that the CDP [Carbon Disclosure Project] 2013 Oil and Gas Supplement will include a questionnaire on methane emissions. The campaign was headed up at Trillium by its then Vice President of Shareholder Advocacy, Natasha Lamb, who has since joined ESG start-up firm Arjuna Capital.
Range’s operations are focused in Appalachia and the southwest US; in 2010 it was dubbed “King of the Marcellus Shale” field by Forbes. Range’s three largest shareholders are T. Rowe Price Associates with 14.7%, Vanguard (6.3%) and Neuberger Berman (4.8%), according to its website.
The issue of fugitive methane resulting from the US natural gas boom has risen up the investor agenda with a joint investor statement in 2012.