Appleseed Fund (APPLX, APPIX) has filed a shareholder resolution calling for Nabors Industries (NBR), a major land-based natural gas driller, to begin publishing an annual sustainability report that will outline the various environmental, social and governance-related risks that the company faces, as well as the processes that the company is employing to mitigate these risks.

“Unlike many of their peers in the oil and gas industry, Nabors has left shareholders largely in the dark regarding the many potential risks that the company encounters in its daily business,” said Matthew Blume, Manager of Shareholder Advocacy of the Appleseed Fund’s investment advisor.

“Nabors’ shareholders and other stakeholders have a right to be fully informed about the ways in which Nabors is managing the significant safety and environmental risks of horizontal fracturing and other potentially hazardous processes in which the company engages,” said Blume.

The shareholder resolution calls for Nabors to disclose its management of environmental, social and governance (ESG) related issues such as greenhouse gas emissions, water usage and adverse environmental impacts of operations. The resolution further requests that the company discloses the linkage between executive compensation and the company’s financial, environmental and social performance. The use of the Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines is strongly encouraged in the construction of the report.

“Given management’s history of failing to align its interests with those of shareholders, we believe that the transparency provided by this report will send a strong message to the market about management’s renewed commitment to shareholders,” Blume continued.

In the company’s proxy statement opposing the Resolution, Nabors asserts that producing such a report would be a misallocation of the company’s resources and that it would be largely redundant, owing to the fact that Nabors has posted sustainability-related information on its website. The company contends that publication of the report would “provide no meaningful additional safety, health, environmental or social benefits beyond our current practices and no meaningful additional benefit to shareholders.”

Blume disagrees, noting that the company’s limited website disclosures fall well short of providing the type of comprehensive, comparable, and standardized sustainability reporting that shareholders, analysts, and data aggregators require.

“Standardized sustainability reporting, with its detailed disclosure of ESG-related risks, goals, and opportunities, is a value-added process that informs shareholders with meaningful information about some of the most important issues facing a company,” Blume said. “The market recognizes these efforts and often rewards companies who are proactive in disclosing and managing the risks they face by ascribing greater valuations to those companies.”

Greater than 90% of the Global Fortune 250 companies produce sustainability reports; four out of five of these reports are based on the GRI Guidelines. Of the top 100 U.S. companies by revenue, approximately 85% produce sustainability reports. Increasingly, companies are identifying environmental, social and governance factors relevant to their business and addressing them strategically through sustainability programs and reports.

“The tide is clearly turning with regard to sustainability reporting. Whether through increased valuation due to better-informed market participants or through increased social license to operate, more and more companies are seeing the value that sustainability reporting can provide,” Blume concluded.

Appleseed Fund is a mutual fund with more than $300 million under management that seeks to generate market-beating returns by making prudent, disciplined, and sustainable investments in a variety of asset classes around the world. The Fund is managed by Pekin Singer Strauss, a Chicago-based, value-oriented investment firm established in 1990. For more information, visit www.appleseedfund.com.

Disclosure
As of March 31, 2014, Nabors Industries comprised 1.94% of Appleseed Fund’s investment portfolio. The holdings of Appleseed Fund may change due to ongoing management of the Appleseed Fund investment portfolio. References to specific investments should not be construed as a recommendation of a security by the Fund, its advisor, administrator, or distributor.

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The Appleseed Fund

The Appleseed Fund

Appleseed Fund (APPLX, APPIX) employs a go-anywhere value strategy that integrates environmental, social, and governance (ESG) into its stock selection process. We seek to generate market-beating returns over the long-term by making prudent, disciplined, and sustainable investments by investing in a range of asset classes from markets around the world.

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