Are Other Oil Giants Better Prepared for a Disaster?
Investors representing $2.5 trillion in assets are pressuring oil and gas giants to prove that they're better-prepared than BP was to prevent or deal with a massive disaster. Fifty-eight global investors, including the New York State Comptroller, California State Treasurer, Florida State Board of Administration, sent letters to the CEOs of 27 oil and gas companies.
The effort was led by the sustainable business group Ceres. From the letters to the companies:
The shareholder harm that has flowed from the BP spill has focused investor attention on the need for good governance, compliance, and management systems to minimize the risks associated with deepwater offshore oil and gas development worldwide. The BP Gulf of Mexico disaster has also highlighted the need for clear, comprehensive, well-tested response plans by oil and gas companies for dealing with future offshore accidents.
"It is important for all companies involved in subsea deepwater drilling to be open and transparent with investors and stakeholders at this crucial historic moment," the investors continued. Targets included Petrobras, ExxonMobil and Royal Dutch Shell, the three biggest deepwater drillers, as well as Chevron, ConocoPhillips, Hess, and Statoil.
The investors inquired about how much the companies have invested in spill prevention and response planning, what their contingency plans are in the event of a spill, and what lessons they have learned from the BP disaster. They also asked to see the companies' policies on selecting and overseeing contractors and their internal governance structures in place to manage risks.
It's pretty easy to understand why investors would care; BP's stock has dropped more than a third since the disaster began in April. And it's still not clear how much the oil giant will have to pay out between fines and damages.