Exxon Shareholders Call for Risk Disclosure on Canadian Oil Sands

Given the current horrifying disaster in the Gulf, it is quickly becoming fashionable to highlight alternative means of extracting oil. As we all know and as President Obama once pointed out “you can put lipstick on a pig, but it’s still a pig.” The same holds true in the oil extraction business as various methods of extraction are coming to the forefront, but the issue remains: dirty oil. While BP searches for ways to plug this leak, pressure from shareholders is mounting, as well.

On a bright and sunny morning in Dallas this past Wednesday morning, executives with Exxon Mobil Corp were confronted with the first-ever shareholder resolution demanding more disclosure about the oil giant’s involvement in Canadian oil sands. This shareholder resolution, led by Boston-based Green Century Capital Management and supported by pension fund California State Teachers Retirement Fund (CalSTRS), received a surprisingly high vote of 26.4% of investors’ support. The resolution called for Exxon to generate a report describing the risks involved with oil sands projects.  

As Congress and the oil industry scratch their heads and question what’s next, Canada is rearing up for heavy demand on its oil sands.  In fact, several requests are now being reviewed by the Obama administration asking to build 2,000-mile pipelines running from Alberta to the Gulf Coast. As Canadian oil sands become the largest importer of oil to the U.S. the means of withdrawing this oil are being questioned.

And here the problem lies. The process by which sand-ridden oil is extracted is extremely labor intensive. How intensive? Well,  two tons of oil sands are needed to produce one barrel of oil (roughly 1/8 of a ton) and three times the amount of greenhouse gases are emitted as compared to traditional drilling (ouch!).  Also, it should be mentioned that the Boreal Forest is being clear cut, water usage is immense, and lawsuits are being filed by Canada’s Aboriginal people, regarding the degradation of their land.

So while the resolution did not receive the majority 50%+ needed to pass, there is reason to celebrate.  In similar resolutions with BP, along with Royal Dutch Shell, the vote tally came in at only 6% support. It seems as if domestic shareholders are taking wind of the negative ramifications of this process even more than international markets.  Exxon’s argument in its proxy statement (on page 68 out of 164) is that Canadian oil sands represent one of the few growth areas outside of the OPEC countries and will contribute to more global energy security. Nowhere does it say that it is cutting down on its extraction of crude oil and switching business models into alternative energy.

Ceres recently released a 96-page report titled Canada’s Oil Sands:  Shrinking Window of Opportunity. It’s worth a read. Stay tuned for more shareholder resolutions based on this issue, as oil spills and land degradation further  continue in this new world.

Dale Wannen

Dale Wannen is President of Sustainvest Asset Management, an investment advisory firm focused on sustainable and responsible investing (SRI). Prior to Sustainvest, Dale was a portfolio manager at Harrington Investments and specialized in ESG investment strategies, securities analysis, and shareholder advocacy. Prior to this position, Dale was a financial advisor with UBS Wealth Management Services in San Francisco. He is often a guest speaker on the topic of ESG investing and shareholder advocacy.Dale has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He earned a B.A. in Economics from Rowan University and currently is a volunteer with Mentor Me Petaluma, Rebuilding Together Petaluma, and the founder of Green Drinks Petaluma.He also currently sits as Board of Director and Treasurer of San Francisco human rights organization, Global Exchange, teaches Economics for the Oakland non-profit Game Theory Academy and is a committee member for the National Resources Defense Council (NRDC) in San Francisco. Previous volunteer work has included Treasurer and Board Member for bird conservation organization, San Francisco Bay Bird Observatory (SFBBO), committee member of the Petaluma Pedestrian and Bicycle Advisory Committee (PBAC), and President of the Social Venture Finance Club at Presidio Graduate School.Dale currently holds the Series 65 FINRA license and has previously held the Series 6, 7, 63, 66 and California Life and Health Insurance Certification. He is a member of National Association of Professional Financial Advisors (NAPFA) and the Financial Planning Association (FPA).Dale lives in Petaluma, CA with his wife Lauri and their Malamute Shadow.