Green investing and big corporations are not mutually exclusive, but it is impossible to make an informed investment decision when corporations fail to answer key questions about their operations. The environmentally responsible advisory firm Green Century Capital Management has translated this dilemma into a common ground for all investors, green or not, by characterizing disclosure as a risk-related obligation. This approach has been resonating with the Securities and Exchange Commission. According to an April 5 press release from Green Century, the SEC has ruled that ExxonMobil and Southern Company did not provide enough information to address the concerns expressed in shareholder proposals regarding the risks of certain environmentally destructive practices.
Oil Sands and Coal Ash
Given the vast scale of destruction from accidents or routine activity, the increasingly strict regulatory climate, and the threat of litigation, fossil fuels are imposing what appears to be a rising degree of risk upon investors. Green Century had filed a proposal asking ExxonMobile to disclose more information on its involvement in the notorious Canadian oil sands (also known as tar sands). In the case of Southern Company, Green Century had asked for information on the company’s risk reduction efforts regarding coal ash disposal. You may recall that just a few months before two other high profile fossil fuel catastrophes — the lethal Massey coal mine disaster and BP’s Gulf oil spill — a giant coal ash containment dam burst in Tennessee, causing long term, widespread damage.
Beyond Oil Sands and Coal Ash
In another action, Green Century has also filed shareholder resolutions asking a longer list of companies for disclosure on the risks of fracking, which is a method of extracting natural gas from shale deposits. The practice has been linked to drinking water contamination, wastewater disposal issues, and local issues related to heavy truck traffic. The Maryland legislature has just voted to ban fracking, New Jersey is considering similar legislation, and lawmakers in New York are concerned over the potential impacts on reservoirs supplying New York City. Meanwhile, the nuclear power industry enjoys a broad exemption from accident liability under the terms of a 1950’s-era federal law designed to encourage investment in nuclear power. Should the legislative framework change, the nuclear industry will also find itself vulnerable.
Leveling the Field
Aside from relying on green investment firms, green-minded investors have a growing number of information resources at hand, as publishers and business watchers have responded to the growing interest in corporate sustainability. However, there are still pitfalls. For example, Corporate Responsibility Magazine has become a standard resource known for it “100 Best” list for corporate transparency, but when concerns arose last year that PR departments were manipulating information, the magazine started up a “Black List” of least-transparent companies.
Image: SEC building by jsmjr on flickr.com.