News Article

Spectra Energy Shareholder Proposal on Methane Emissions Receives Strong Support from Shareholders

April 30, 2013: A shareholder proposal asking Spectra Energy Corp. (NYSE: SE) to issue a report about how the company is managing methane emissions received 35.3% of the votes cast by the shareholders at the company’s annual meeting today. The vote far surpasses the 3% threshold that is required by the SEC for inclusion in next year’s proxy voting.

The proposal was filed by Trillium Asset Management, LLC (Trillium) on behalf of the Sierra Club Foundation and Paul Katz and co-filed by The Benedictine Sisters of Virginia, Friends Fiduciary Corporation, and Zevin Asset Management.

Methane is the primary component of natural gas and is emitted across the value chain during production, processing, transmission, storage, and distribution. According to the proposal, “emissions have not been tightly regulated, measured, monitored, mitigated, or disclosed and industry inattention has created a risk to industry, operators, and environment alike.”

Natural gas’s environmental profile and social license to operate have come under significant question when taking fugitive methane emission leakage into account. There is wide disagreement over how much methane is leaking, as scientific findings and industry estimates vary widely. Recent academic studies have identified leakage rates of up to 9%, over 3X EPA estimates and 5X industry estimates. The Intergovernmental Panel on Climate Change estimates that methane has 25x the impact on temperature as CO2 over a 100 year period and 72x the impact over a 20 year period. According to an April 2012 report published by the Environmental Defense Fund and Princeton University, leaking methane may offset the climate benefit of natural gas over coal when leakage rates exceed 3.2%.

“Given the rapid pace of natural gas development in the US, it is no surprise that operators have prioritized growth over efficiency, and regulators have been slow to catch up,” said Natasha Lamb, Vice President at Trillium Asset Management. “The business case for strong oversight and methane reduction targets is clear. Leaking gas is a symptom of poor management systems that neglect shareholder value and amplify climate change.”

In a recent letter to Spectra shareholders seeking support for the proposal, Trillium explained that “Implementing the Proposal would allow investors to better assess the Company’s fugitive methane risk exposure to environmental liability, an evolving regulatory regime, and unnecessary economic loss from leaking gas.”

ISS Proxy Advisory Services, a leading advisory firm, issued a “FOR” recommendation to its clients in support of the proposal, stating: “A vote FOR this proposal is warranted, as shareholders would benefit from additional information on how the company is managing its methane emissions. Such information, including quantitative emissions goals, would allow shareholders to assess relevant company performance.”


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