The oil industry has gone through the full grieving process for the Gulf oil disaster--from denial (this is something that could only happen to BP) to acceptance (creation of an industry-wide deepwater rapid response plan). But shareholders are still concerned for the overall safety of the sector, which is why 58 investors representing $2.5 trillion in assets banded together recently to demand improved disclosure of oil disaster response plans.
The investors, led by Ceres and the Investor Network on Climate Risk, made their demands to CEOs of 27 oil and gas companies and 26 insurance companies in a form letter (PDF). The letter explains:
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. We write to request additional information on the measures and programs Apache has in place for managing risks associated with its offshore oil and gas operations, as well as any changes the company plans to make in its risk management framework as a result of the BP Gulf of Mexico spill.
Demands include detailed information on contractor selection and oversight, whistleblower complaint policies, disaster contingency plans, and lessons learned from the BP Gulf blowout. And if oil companies don't want to lose the trust of major investors like the California State Treasurer, the New York State Comptroller, and the Florida State Board of Administration, they had better comply.
Pennsylvania State Treasurer Rob McCord explained the situation facing many investors in a recent press release:
"The Deepwater Horizon disaster was a game-changer for shareholders. It demonstrated the catastrophic consequences that can result when firms fail to provide essential risk assessment...Would I invest in an offshore drilling company if its disclosure statement revealed that its 'rapid response' to a catastrophic oil spill involved the unproven technique of stuffing golf balls, hair clippings and shredded tires down a well? Probably not."
It can't be said that anything truly good came out of the Gulf disaster, but at least we can be assured that oil company shareholders are finally paying attention to what the BPs and Exxons of the world are risking with deepwater drilling. And while the federal government may not be able to tame the oil companies, the collective demands of companies representing trillions of dollars in assets probably can.