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US investor groups want companies to disclose deepwater drill risks

By Gary Gentil
Platts
A coalition of US state pension funds and other institutional investors said Tuesday they want the Securities and Exchange Commission to force companies that explore for oil and gas in deepwater to disclose how they are addressing the risks and weaknesses identified in the wake of April's Deepwater Horizon disaster. Ceres, a network of investor and environmental groups, along with the Investor Network on Climate Risk, has sent a letter to the National Oil Spill Commission, asking members to include an SEC disclosure requirement in their final report, which is due in January.

WASHINGTON – A coalition of US state pension funds and other institutional investors said Tuesday they want the Securities and Exchange Commission to force companies that explore for oil and gas in deepwater to disclose how they are addressing the risks and weaknesses identified in the wake of April's Deepwater Horizon disaster.

Ceres, a network of investor and environmental groups, along with the Investor Network on Climate Risk, has sent a letter to the National Oil Spill Commission, asking members to include an SEC disclosure requirement in their final report, which is due in January.

"As illustrated by the BP Gulf disaster, offshore drilling accidents can result in significant destruction of company and shareholder value, directly and materially impacting investor interests," Ceres President Mindy Lubber wrote.

"SEC action is especially important because news reports following the Macondo disaster highlighted that inadequate risk management practices -- such as inadequate oil spill response plans -- are widespread within this growing industry and therefore pose continuing threats to investors," Lubber wrote.

Ceres and INCR represent 90 institutional investors managing approximately $9 trillion in assets. The group has previously pushed for companies to disclose the risks they face from climate change.

The groups want companies to disclose their investments in accident and spill prevention technologies as well as spill response capabilities; plans to contain and clean spills resulting from deepwater blowouts; systems for managing and evaluating the performance of contractors; and management systems in place to oversee and control offshore drilling risks.

The groups say they sent letters to exploration companies in August requesting voluntary disclosure, but were not satisfied with the response.

"Our initial reviews of responses to the letters indicate that voluntary disclosure, while helpful, cannot produce the type of consistent disclosure of material risks that investors need; only SEC action can do this," the letter to the Oil Spill Commission stated.

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