Institutional Investors of the World Unite on 'Fracking'
(May 18, 2012) — A group of institutional investors representing $1 trillion in assets under management have united to push for higher standards for hydraulic fracturing, a process energy companies use to extract natural gas.
The process — known as “fracking” — involves shooting chemicals and millions of gallons of water into wells to release natural gas in shale rock, which has been controversial and blamed for a variety of environmental damage.
Boston Common Asset Management, the Investor Environmental Health Network, and the Interfaith Center on Corporate Responsibility (ICCR) announced that 55 major investment organizations and institutional investors concerned about environmental, social and governance issues (ESG) have joined forces to support “best practices” for shale gas franking. The group is supporting a number of core goals and practices that they believe companies that use fracking should abide by, including the following:
1) Manage risks transparently and at board level.
2) Reduce surface footprint.
3) Assure well integrity.
4) Reduce and disclose all toxic chemicals.
5) Protect water quality by rigorous monitoring.
6) Minimize fresh water use.
Steven Heim, Managing Director and Director of ESG Research and Shareholder Engagement, Boston Common, said: “Assuming that hydraulic fracturing is going to continue to be used in some form, investors need to have greater certainty in the marketplace as to industry practices and government regulation. Currently there is no such certainty and that is really why investors are speaking up. The marketplace has spoken: The best course here for investors, the environment and human health will be if all shale gas extractors wake up, get the message, and use these tools to do it right.”
Sister Nora Nash, Director of Corporate Social Responsibility, Sisters of St. Francis of Philadelphia, and member of the ICCR, noted that shale gas companies must earn their ‘social license’ by operating in a more responsible manner.
“Companies must address the community and environmental concerns prompting bans and moratoria. They must listen closely, respond sensitively, and account to both investors and communities for their actions. Otherwise, this is an uncharted process of unwanted development that deprives communities of their rights and leads to litigation and loss of investor confidence,” according to Nash.
The supporting organizations represented in the coalition encompass dozens of institutional investors in the US, Europe, and Australia, including: APG All Pensions Group, Australian Council of Superannuation Investors, Dexia Asset Management, Mercy Investment Services, Green Century Capital Management, and Regnan – Governance Research & Engagement Pty Ltd.