• New report faults companies' disclosure about the potent gas
  • Administration regulating methane emissions from oil sector

At least 21 U.S. oil and gas companies already face shareholder resolutions on environmental and social policies this year as investors raise concerns about how businesses are tackling climate change and pollution.

Investors increasingly are pushing for action on methane, a powerful heat-trapping gas that contributes to climate change, after prodding more companies to produce sustainability reports and disclose their carbon dioxide emissions.

Some resolutions would press executives to detail plans for limiting methane leakage from wells, pipelines and other energy equipment. Investors need more information about those emissions, including details on the extent of the problem and what companies are doing about it, according to a report being released Monday by the Environmental Defense Fund.

“Methane presents short-term risks to investments in the oil and gas industry in the form of economic losses and existing and future regulations,” the New York-based environmental group said in its report. “There are practical and cost-effective solutions to minimize methane emissions, many of which will increase the bottom line for companies.”

No companies have disclosed plans for reducing methane emissions, and few report any data about it, according to the EDF analysis. When they do, the information tends to be vague and qualitative, making it ill-suited for judging how well a company is doing in managing the issue.

New Importance

Methane has taken on new importance in President Barack Obama’s fight against climate change as his administration moves on multiple fronts to clamp down on the oil and gas industry’s emissions of the potent greenhouse gas. Methane, the primary component of natural gas, is 84 more times powerful than carbon dioxide at warming the atmosphere over a 20-year period.

Investors in late 2015 and early 2016 have filed 10 shareholder resolutions to press U.S. energy companies on the issue before annual meetings this year.

The international climate agreement reached in Paris in December, the potential for stranded assets and low oil prices are “really coming together to drive more of these resolutions,” Gregory Elders, an environmental, social and governance analyst for Bloomberg Intelligence, said in an interview. Low oil and coal prices also are underscoring the need for energy companies to consider the risk of stranded assets, including fossil fuel reserves, that could become harder to produce in a world with more stringent carbon dioxide limits.

Provoking Discussion

Companies faced 167 shareholder resolutions in 2015 related to climate change, up from six in 2001, according to Ceres, a Boston-based coalition of investors that tracks them. 

Investors view the resolutions as a way of provoking negotiations with executives, said Rob Berridge, director of shareholder engagement at Ceres. Initially, the focus was on forcing companies to disclose their carbon dioxide emissions.

“So many companies started doing that that investors have shifted from ‘disclose your emissions’ to ‘set goals to reduce your emissions,’” Berridge said in an interview. “The work has been getting more specific, and you’ve seen these sub-topics crop up, like methane.”