Occidental Petroleum

Proxy Season Update: Occidental

2014 Annual Meeting: 11:30 AM EST, Friday, May 2, 2014
Bravo Ballroom, Hotel Derek, 2525 West Loop South, Houston, Texas

Occidental has three pending ESG shareholder proposals in 2014.

  • ENVIRONMENT: Methane Accounting
    • The explosion of domestic shale energy production, with its extraction of both gas and liquids, last year prompted investors to begin asking companies for a more granular accounting of methane emissions. The 2013 resolutions earned support in the 30 percent range and this year more proposals are pending—a dozen resolutions at this point. In a proposal from Arjuna Capital at Occidental, the request is for a report on company “policies, actions, and plans to measure, mitigate, disclose, and set quantitative reduction targets for methane emissions resulting from all operations under the Company’s financial or operational control.”

  • ENVIRONMENT: Hydraulic Fracturing
    • Resolutions about shale energy extraction using hydraulic fracturing have consistently earned high levels of investor support since they were first introduced in 2010—and they have helped to encourage greater corporate disclosure. Nonetheless, many investors and others remain skeptical that companies are doing enough to ensure they do not harm the environment and communities in which they operate. In November 2013, for instance, the Investor Environmental Health Network, As You Sow, Green Century, and Boston Common Asset Management released an analysis of 24 companies. In Disclosing the Facts: Transparency and Risk in Hydraulic Fracturing Operations, they concluded, “The shareholder proposals have led to improved disclosures at many of the companies, but…much of this disclosure is narrative and qualitative in form, while quantifiable data are lacking.”

      At Occidental, a shareholder proposal from As You Sow requests annual reports “using quantitative indicators” providing “the results of company policies and practices, above and beyond regulatory requirements, to minimize the adverse environmental and community impacts from the company’s hydraulic fracturing operations associated with shale formations.” In Occidental’s case this language is particularly focused on the acid matrix stimulation techniques used to revive old oil wells adjacent to urban populations.

    • An indirect lobbying proposal at Occidental was filed by the Needmor Fund. It says the board should review, assess, and report on “organizations in which Occidental Petroleum is a member or otherwise supports financially for involvement in lobbying on legislation at federal, state, or local levels.” The proposal raises concerns about ALEC and says a “high level of transparency helps ensure lobbying activities are consistent with stated corporate policies and values, thereby reducing reputational and business risk that potentially could alienate consumers, investors and other stakeholders.” It points out various controversial public policy positions the group takes, including on immigration, voting rights, gun laws, and renewable energy. The proponents highlight that the company is getting the proposal because an executive sits on ALEC’s board and funds it—in contrast to some 50 companies that have ended their ties. The resolutions requests the proposed review do the following:

      1. Examine the philosophy, major objectives and actions taken by the organization supported;
      2. Assess the consistency between our company’s stated policies, principles, and Code of Conduct with those of the organization supported;
      3. Determine if the relationship carries reputational or business risk that could have a negative impact on the company, its shareholders, or other stakeholders;
      4. Evaluate management’s rationale for its direct involvement in, or financial support of, the organization to determine if the support is in the long-term best interests of the company and its stakeholders;
      5. Assess current and potential internal oversight and controls governing the use of corporate assets for political purposes.

For more information, download Proxy Preview 2014 to find more methane accounting, hydraulic fracturing, and lobbying shareholder resolutions.