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December 13, 2014

Energy Companies Fail to Disclose Impacts of Fracking Operations
    by Robert Kropp

The third edition of Disclosing the Facts, published by a coalition of sustainable investment organizations, reveals that companies engaged in hydraulic fracturing continue to prioritize empty assurances over meaningful data. -- Last year's edition of Disclosing the Facts: Transparency and Risk in Hydraulic Fracturing Operations ranked ExxonMobil “as one of the lowest scoring among 24 companies on transparency and risk in hydraulic fracturing operations, with adequate disclosures in just 2 out of 32 indicators,” according to As You Sow, one of four sustainable investment organizations involved in the report's annual publication.

The other members of the coalition are Boston Common Asset Management, Green Century Capital Management, and the Investor Environmental Health Network (IEHN).

In response to As You Sow's engagement, Exxon agreed to report on fracking risks based on the criteria identified in Disclosing the Facts. Danielle Fugere, president of As You Sow, said of Exxon's subsequent report, “Exxon continues to discuss generalized practices…but provides no concrete data on whether it is actually reducing risks and impacts at each of the plays in which it is conducting fracking.”

The 2014 edition of Disclosing the Facts has just been published; “ExxonMobil, Chevron, and WPX Energy continue to rank among the worst fracking companies,” the report found. Out of a possible 35 points, Exxon scored just five; while the company's score represented a minimal improvement over its 2013 score of two, the number of possible points in 2014 increased by three as well.

All the news from the report is not so dispiriting, however. “BHP Billiton emerged as the highest scoring company and the first to score points on more than half the report’s indicators; it rose from near the bottom of 2013’s rankings to the top this year,” the report found. “Hess, the second-highest scorer, more than doubled its score from 2013 and EQT, the third-highest scorer, more than tripled its score following a shareholder proposal from Green Century last fall.”

On the other hand, the Australia-based BHP Billiton remains one of the world's largest coal mining companies; in response to recent shareowner concerns about risks associated with stranded assets, a company spokesperson said, “Energy coal makes up 25% of the energy mix and in many regions is the source of affordable energy that offers security of supply. This is likely to remain the case for some time.”

“Failure to quantitatively disclose key performance metrics remains the industry-wide standard,” Disclosing the Facts stated. “Across the industry, companies are failing to provide investors and other key stakeholders with quantitative, play-by-play disclosure of operational impacts and best management practices.”

Also, “Companies continue to score worst on their disclosed policies and practices for addressing the community impacts of their operations.”

“Many energy companies are still largely failing to rigorously disclose the impacts of their hydraulic fracturing operations on communities and the environment,” said Richard Liroff, executive director of IEHN. “We are encouraged by a handful of companies that have clearly risen to our challenge with the DTF scorecard, but data on key metrics remain largely absent for most companies, making it difficult for investors and the public to assess and compare companies’ performance.”

“The oil and gas industry’s hydraulic fracturing operations are under intense scrutiny for potential harm to neighboring communities and the environment,” Fugere of As You Sow said. “It’s difficult to show investors, regulators, or the public that the problems are being avoided or resolved when companies are not transparent about the operational practices they have in place.”

“Companies across the industry are relying on sweeping statements and empty assurances that fracking is safe, while still failing to provide data to demonstrate improved practices,” stated Lucia von Reusner, Shareholder Advocate at Green Century. “Public controversy about fracking will continue unless companies can prove that they are actively working to reduce toxic chemicals, water contamination, methane leakage, and the other negative impacts of fracking that damage our environment and local communities.”

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