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In a likely move, investors are demanding improved disclosure of oil disaster response plans. In fact, 58 investors representing $2.5 trillion in assets came together recently to demand just that.
The group penned a letter to G. Steven Farris, chairman and CEO of Apache, a company that recently purchased $7 billion of oil and gas fields from BP. As the letter states:
“The April blowout at BP’s Macondo well in the Gulf of Mexico, and the explosion and fire on the Deepwater Horizon drilling rig that killed 11 workers, has led to one of the greatest environmentally-related destructions of shareholder value in history. The shareholder harm that has flowed from the BP spill has focused investor attention on governance, compliance and management systems needed to minimize risks associated with deepwater offshore oil and gas development worldwide.”
The 1-page letter (with 10 pages of questions and signatures) goes on — urging all companies, including Apache, involved in subsea deepwater drilling to be open and transparent with investors and stakeholders regarding the programs they have in place for managing risks. The questions submitted inquire into the amount of money spent on R&D with respect to safer offshore drilling technologies, contingency plans, lessons learned from BP Macondo and the well blowout, contractor selection and oversight and governance and management systems.
With pressure like this, it is hoped that the Exxon’s and BP’s of the world will be forced to answer tough questions regarding managing the extreme risk they encounter. Like every other public company, they must answer to the owners — the shareholders. Let’s hope they do . . . and do so truthfully.
The above article is reprinted from the Risk Management Monitor - the official blog of Risk Management magazine.
Reprinted with permission from the Risk Management Monitor. Copyright 2010 Risk and Insurance Management Society, Inc. All rights reserved.
