By Laura Gosset, Senior Shareholder Engagement and Policy Analyst
The oil and gas sector faces serious water challenges. Many companies find themselves increasingly vying for strained water resources to use in water-intense extraction processes such as hydraulic fracturing (fracking) and oil sands mining. The wastewater produced in extraction and refining processes requires safe management and disposal, and in some regions the growing volumes of wastewater are posing increasing costs and logistical challenges, threatening the quality of available resources.
Responsible water management is important not only for the value of our investments in these companies, but more broadly for sustaining the basic functions of our planet, our society and of our economy. The United Nations Sustainable Development Goals, adopted in 2015, call for substantial increases in water use efficiency across all sectors to ensure sufficient supplies of clean water.
That’s why this quarter, we expanded our work at SHARE to engage the oil and gas sector on its water use. We partnered with other investors globally to launch a campaign that promotes sustainable water resource management in the oil & gas sector. Collectively we asked over 30 North American oil and gas companies to disclose key information about their water-related risks by responding to the CDP Water Questionnaire.
We are requesting increased transparency from these companies on their governance, strategy, risk assessment, risk management and targets related to water. Improved disclosure across the sector will allow investors to better assess how well companies are managing their water-related risks. Companies that treat water risks as a current strategic challenge and manage water resources sustainably will be better positioned in the future.
This sector-wide engagement builds upon the work SHARE has done to engage Canada’s Imperial Oil on its water use over the past year. When we put forward a shareholder proposal on behalf of the Fonds de Solidarité des Travailleurs du Québec (FTQ) at Imperial’s AGM in April 2018, 44 percent of independent shareholders at Imperial voted in favour of improved water disclosure. This sent a strong message to the company that shareholders want the company to do more, and we expect to see some expanded disclosure in 2019.
In the coming year, SHARE will continue to engage with Imperial and other oil and gas companies through the larger campaign to ensure these companies are addressing water challenges and managing exposure to risks.
The CDP is a global organization that requests annual environmental data disclosure from companies and is backed by 639 investors globally with over US$69 trillion in assets.
