|BOSTON, MA – A group of American and British investors released a statement today expressing disappointment at BP’s (NYSE: BP) investment in the Canadian tar sands, calling the move a “disturbing step backwards.” A representative from the Ecumenical Council for Corporate Responsibility intends the statement at BP’s annual stockholder meeting, which is taking place today at ExCeL London in London Docklands at 11:30 a.m. GMT. The investor group includes Trillium Asset Management, Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, the Ecumenical Council for Corporate Responsibility, Rathbone Greenbank Investments, Newground Investments, Pax World, Northstar Asset Management, Sierra Club Funds and Green Century Capital Management.
In December 2007, BP announced its entry into the tar sands business via two joint ventures with Husky Energy of Canada (Toronto: HSE.TO) with a total joint investment of $3 billion. Husky brings its “Sunrise” oil sand project to an upstream partnership, and BP will contribute a refinery based in Toledo, OH. The first output is expected to commence in 2012, and build to 200,000 barrels per day within a decade.
The life-cycle environmental impacts of tar sands-derived oil, or bitumen, compare poorly to that of conventionally derived fossil fuel. Extracting and refining bitumen produces nearly triple the greenhouse gas emissions (GHGs) of traditional oil extraction and requires 2-5 barrels of fresh water for every barrel extracted. The reliance on the Athabasca River as a source of fresh water, along with the fragmentation of natural habitats, is endangering numerous species of bird and mammal. In addition, the province of Alberta is struggling to cope with the stresses that rapid development has placed on its social and physical infrastructure.
The statement also notes the investors’ skepticism that today’s “best practices” methodologies for extracting tar sands will be adequate enough to protect the environment. “We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign.” It quotes a report from Canada’s independent Pembina Institute that concludes, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” * Using SAGD does not lower carbon emissions.
ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX) are facing shareholder proposals this spring calling for public reporting on the environmental and social impacts of the companies’ tar sands development. Those proposals have been filed by Trillium Asset Management and Green Century Capital Management, respectively.
The growing backlash against tar sands is spreading beyond Canadian environmental groups to include and other international non-governmental organizations and even the US government. Last year’s US energy bill included a provision that banned the federal government from purchasing any fuels whose life-cycle GHG emissions exceed those of conventional fossil fuels.
At the stockholder meeting, a representative of the shareholder group intends to question BP’s leadership on its plans to reduce or offset greenhouse gas emissions from the Sunrise project; what assurances the company can provide that best practices will be applied to the project; how BP will engage in public-private efforts to protect the Canadian boreal forest; and how the company is assessing the risks to reputation, health and safety posed by the tar sands.
Joint Statement on BP’s Entry into the Canadian Tar Sands
The following investors wish to go on record at this shareholder meeting concerning BP’s entry into the Alberta tar sands: Trillium Asset Management, Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, Green Century Capital Management…
We are long-term investors in BP. From our perspective, BP has been an attractive investment in no small part because of its pursuit of environmental and social sustainability, its robust stakeholder engagement programs, and its development of solar, wind and biofuels businesses. For this reason, we are deeply disappointed by BP’s entry into the Canadian oil sands.
On a comparative basis, oil sands development offers some of the worst life-cycle environmental impacts of any fossil fuel, emitting emits nearly triple the GHG emissions of traditional oil extraction; using 2-5 barrels of fresh water for every barrel of oil extracted; and endangering numerous species of birds and mammals. Canada has fallen behind in its Kyoto commitments due to oil sands development. Even if managed superbly, the oversized environmental footprint of the tar sands is unavoidable.
We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign. According to Canada’s independent Pembina Institute, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” *
We believe that this is a disturbing step backwards for BP, whose very logo and tag line, “Beyond Petroleum” communicate the highest aspirations. Prior to BP’s announcement in December, we had understood that our company would not pursue tar sands development due to the heavy carbon footprint of both the operations and the end-product. We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long term shift away from high-carbon fuel sources, and we question whether this may undermine our future competitiveness. We do not wish to see the benefits of BP’s leadership as a renewable energy innovator and market leader being offset by the harsh environmental impacts unleashed by tar sands development.
We respectfully request answers to the following questions:
We have found BP to be quite responsive to our concerns in the past and invite you to dialogue with us on these issues. Thank you.
For more information please contact Lauren Compere at lcompere(at)bostoncommonasset.com, (617) 720-5557.