RESOLVED: Shareholders request that an independent committee of the Board prepare a report (at reasonable cost and omitting proprietary information) on the environmental damage that would result from the company’s expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these expansions and should be available to investors by November 2010. [ConocoPhillips shareholder resolution May 2010]
Welcome to what is likely to be a very uncomfortable annual general meeting season for the oil companies. Shareholders are concerned about oil companies going after ever riskier and more uncertain forms of oil such tar sands oil.
At its annual general meeting today, ConocoPhillips is facing a shareholder resolution for more information on the environmental risks of tar sands oil investment from the California Teachers Retirement System (CalSTRS), Trillium Asset Management Corporation and 17 other co-filers. A similar proposal received an unprecedented 30% support in 2008 and 2009 and has received the support of the influential proxy advisory firm RiskMetrics Group for 2010. The resolution proponents rightly point out that tar sands is an expensive bet on the long-term viability of consistently high oil prices. Identified environmental threats include First Nations legal challenges, greenhouse gas emissions, air pollution (including acid rain), water pollution and water withdrawals, damage to Boreal forest ecosystems, and threats to human health.
BP is likely glad that it got its AGM behind it before the tragic Gulf oil spill. Just last month, 15% of BP shareholders asked for information about the risks associated with tar sands operations – a high percentage for a British firm. Undoubtedly today, with BP share prices falling and estimates of spill clean-up costs in the billions, the number of votes would have been much higher.
The BP deep oil rig accident in the Gulf Coast is a tragic example of the very high dangers and costs of going after fuels that in the past we considered too difficult, dangerous or expensive to access. The oil rig accident was a dramatic incident and we are still groping to understand the impacts in terms of lives, health, local economies, and wildlife. Yet these types of costs are evident in all of the newer efforts of the fossil fuel industry to go after harder to access sources of fuel. In the United States, companies are exploring how to make transportation fuels from coal with the risks and liabilities associated with mountain-top removal and mining accidents and from oil shale with the risks and liabilities associated with heating the Rockies to liquidify the kerogen locked under the ground in shale. And in Canada, oil companies are treating the tar sands like gold rush territory seemingly without regard for the very real risks and liabilities.
The push to invest in tar sands oil expansion despite its risks and uncertainties stands in stark contrast to the recent U.S. approval of the East Coast’s first big offshore wind farm. It is this type of investment that our government and our companies should be supporting, along with investment in electric cars, environmentally sustainable biofuels, and support for measures that increase fuel efficiency and decrease miles travelled. Instead, over the next 15 years, an anticipated US$379 billion will be invested by energy companies in Alberta’s tar sands – money that a recent WWF-UK report shows would benefit us more if put into clean energy instead.
When investors ask for transparency and accurate assessments of the risks and liabilities associated with tar sands oil, it is very helpful. Only by moving oil companies away from riskier forms of fossil fuels to alternative forms of clean energy can investors trust that their investments will have long-term sustainable returns and help build a better future for us all.