An institutional investor group including state pension funds in California, New York and Pennsylvania sent letters to 27 oil and gas companies and 26 insurance companies underwriting their activities, seeking greater transparency on their risk reduction strategies for global offshore oil operations.
In a teleconference on Thursday, Thomas P. DiNapoli, New York state comptroller and sole fiduciary of the $132.6 billion New York State Common Retirement Fund, Albany, said the companies were asked “to take all reasonable steps to mitigate risk in offshore drilling.”
The New York fund, invested in 17 of the companies, has lost more than $2 billion from those investments since the April 20 BP Deepwater Horizon oil rig explosion that killed 11 workers and the ensuing oil spill in the Gulf of Mexico.
Robert M. McCord, Pennsylvania state treasurer and trustee of the $47 billion Pennsylvania Public School Employees' Retirement System and the $24.7 billion Pennsylvania State Employees' Retirement System, both of Harrisburg, in the teleconference called the BP disaster “a game changer” for the oil and gas industry to step up disclosure about catastrophic drilling risks, improvement in risk management and innovation in responding to a disaster.
The Pennsylvania funds have lost $24.7 million in BP stock since the oil rig blowout, Mr. McCord said.
Bill Lockyer, California state treasurer and trustee of the $204.4 billion California Public Employees’ Retirement System and the $129.7 billion California State Teachers’ Retirement System, both of Sacramento, said investors should examine the roles of the board in risk management in oil production and executive compensation incentives in mitigating risk, as well as addressing whistleblower complaints about operations.
The two California funds have lost $349 million in BP investments since the blowout, Mr. Lockyer said.
Exxon Mobil, Royal Dutch Shell, ConocoPhillips, Chevron, Petrobras, American International Group, Swiss Re, Travelers and XL were among companies targeted by the letters.
The letters were not sent to BP and other companies directly involved in the disaster because of the difficulty of getting their attention at this time and because of investor lawsuits, Mr. Lockyer said.
“Every company in the industry pays for the sins of the weaker operator,” Andrew Logan, oil program director of Ceres, said at the teleconference. Ceres, a network of pension funds and other institutional investors and environmental groups, helped organized the letter campaign.
The letters ask the companies to respond by Nov. 1.
