In 2003, when Boston Common Asset Management began its interactions with Apache Corporation, the typical company-shareholder engagement was brief: a shareholder filed a proposal for the proxy statement without notice or prior discussion, setting a confrontational tone, and companies were given only weeks or months to respond.
Not surprisingly, many of the “victories” this cycle yielded were limited to small improvements in company disclosure, not substantial changes in actions.
Boston Common broke this mould by creating an actionfocused, relationship-based, long-term collaboration with one company. Working alongside the PRI Fracking Steering Committee and Working Group, the co-creators of Extracting/Disclosing the Facts and fellow ESG-focused shareholders, Boston Common worked with Apache to make significant changes, measured by clear multi-year goals, in the company’s and the industry’s water, chemical, air emissions and community impact practices.
Importantly, these changes became industry-wide ones, not just company-specific ones. Boston Common’s and Apache’s collaboration on the use of chemicals provides one example of the substantive results of this long-term, action-focused engagement.
In a few short years this collaboration has:
- started the process that led to the creation of the fracking chemical disclosure registry FracFocus, to which Apache now reports;
- led to the company’s staffing up its internal chemical expertise; encouraged and helped shape Apache’s programme to:
- reduce the company’s use of the toxic chemical components of greatest concerns;
- manage volatile organic compound emissions;
- move to greater use of chemicals that pose less risk of bio-accumulation and that are more biodegradable;
- reduce truck transport of chemicals;
- reduce the volume of toxic chemicals used per hydraulically fractured well by 60%; between 2014 and 2015 in Apache’s North American regions; and
- increase the percentage of its chemicals that are listed on the US Environmental Protection Agency’s Safer Choices Program.
- made the introductions that have led to Apache collaborating with the American Chemical Society’s Green Chemistry Institute Roundtable on greener chemicals in hydraulic fracturing.
The collaboration between Boston Common and Apache is still going strong today. The three to four personal visits that Boston Common organises each year allow an opportunity for Apache’s executives and technical experts to host meetings with other companies and investors, focusing on an individual environmental or social issue. Separate from those meetings are the two annual multi-hour, unrestricted discussions held on ESG issues by Apache fs CEO with Boston Common one-on-one and later with a group of many of Apache fs active shareholders. We believe all of these opportunities have helped Apache and the investor community better understand each other and the challenges facing each industry.
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Case study: Shareholder interaction on fracking