Shareholders expressed strong support for a methane emissions proposal filed by sustainable wealth manager, Arjuna Capital, and presented Friday at Occidental Petroleum’s annual meeting in Houston, TX. The proposal was supported by over 30% of shareholders, representing a high vote on an environmental issue. Arjuna Capital has three similar proposals coming to a vote this month at Southwestern Energy, Range Resources and Targa Resources.

Natasha Lamb, Arjuna Capital’s Director of Equity Research and Shareholder Engagement, who worked to file the first shareholder proposals on methane management last year, was not surprised by the strength of the vote:

“The proposal is clearly in the interest of protecting shareholder value. Leaked and flared gas has a direct economic impact on the company and there is a strong business case for reduction targets and controls. Lost gas is lost revenue.”

Methane leakage has been called “Fracking’s Achilles’ Heel” in The New York Times for fear it will “moot the advantage of natural gas as a cleaner fuel than coal.” While natural gas burns more efficiently, leaked methane carries 84x the Global Warming Potential (GPW) of carbon dioxide over a 20-year timeframe and is released across the value chain from the time a well is drilled to the time the fuel is delivered for combustion.

The National Resource Defense Council estimates that capturing currently wasted gas for sale could generate $2 billion in annual revenues for the industry and reduce methane pollution by roughly 80%.

Recent studies indicate the EPA and industry may have drastically underestimated methane leakage, identifying leakage rates up to 9%. The short-term climate benefit of natural gas over coal is negated if more than 3.2% is leaking. The most recent study, published in the Proceedings of the National Academy of Sciences in April, found 100-1000 times greater leakage during the drilling phase than EPA estimates.

“If natural gas is going to stand as a ‘bridge’ to a more sustainable energy future, we need to know how much is actually leaking” said Lamb. “Once we understand the scope of the problem, we can proactively address it to protect both investor capital and our climate. It’s a win-win strategy.”

Flaring, or burning off natural gas, has also drawn significant attention as an economically wasteful practice, the light from which can be seen from space. Gas is flared as a bi-product of oil production in the absence of proper infrastructure to capture and pipe the gas. Occidental has substantial assets in North Dakota where it’s reported about $100 million in natural gas is being burned off monthly. In the Bakken region roughly 30% of all gas produced is flared, which represented an economic loss of approximately $1 billion in 2012.

Ongoing concerns have spurred increasing public debate and regulatory and legal action. In March, the White House released a “Strategy to Reduce Methane Emissions” empowering the EPA to develop methane regulations, as a key element of the President’s Climate Action Plan. Three states have adopted their own stricter methane standards, and seven others have sued the EPA for failing to regulate methane.

ISS, a leading advisory firm, recommended a vote in favor of the proposal, noting: “additional information regarding the company's methane emissions, and its methane emissions reduction practices and policies, would allow shareholders to better understand the company's management of this issue and any related risks.”

In a letter to shareholders, Arjuna Capital states:

“A report adequate for investors to assess the Company’s strategy, as referenced in the Proposal, would include the Company’s methane leakage rate as a percentage of production, the percentage of flared and vented hydrocarbons, how the Company is measuring and mitigating emissions, and discuss quantitative reduction targets and methods to track progress over time. Best practice strategy would utilize real-time measurement and monitoring technologies.”

ABOUT ARJUNA CAPITAL
Arjuna Capital is the sustainable wealth management platform of Baldwin Brothers Inc., an SEC-registered independent financial advisory firm established in 1974. For more information visit www.arjuna-capital.com.

Arjuna Capital

Arjuna Capital

Arjuna Capital is a sustainable wealth management platform of Baldwin Brothers, Inc.

Our mission is to partner with our clients to achieve their financial goals through enlightened engagement in the capital markets – evolving the financial ecosystem to become more socially just and environmentally sustainable. We strive to develop long-term relationships with clients through active listening, over time forming a deep understanding of a client's values, beliefs and objectives.

In combination with our own investment capabilities, Arjuna Capital partners with other investment professionals to bring sustainable investment opportunities to our clients from areas beyond our expertise, including fair trade, micro-lending, green real estate and sustainable fixed income.

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