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Investors expected to take a larger role in reducing environmental risk
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Shareholders in U.S. energy companies have taken a renewed interest in their organizations’ environmental policies and disaster-readiness due to recent catastrophes.
The BP oil spill in the Gulf of Mexico and Massey Energy’s coal mining disaster in West Virginia have spurred investors to call on companies to disclose more information to the public regarding the environmental and safety risks of certain operations, MarketWatch reports.
One reason investors have become particularly interested can be explained by the large amount of money they could stand to lose because of such catastrophes. For example, the effects of the oil spill were so large that BP’s payouts will significantly affect investors’ financial returns.
"Whether with the Massey energy disaster or the BP spill, extracting fossil fuels is becoming increasingly risky and that is a financial risk for them," said Larisa Ruoff, director of shareholder advocacy at Green Century Capital Management. "The latest spate of environment crises is pushing investors to become more interested in how environmental risk translates into financial risk."
The Securities and Exchange Commission has issued new guidelines that will make it easier for investors to introduce proposals aimed at reducing environmental risks – something that companies in the past have tried to ignore.
According to MarketWatch, investors will be able to begin making waves starting in 2011 – building on the past year in which shareholders put to vote a record number of measures for consideration. Issues expected to draw attention include the environmental risks associated with coal ash, extracting oil from shale and how to reduce carbon emissions.
Most recently, Michigan experienced an oil spill that is predicted to cost Enbridge Energy Partners between $300 and $400 million – before adding in insurance reimbursements – to cleanup, the Toronto Star writes.
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