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Review of International Political Economy

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Can shareholder advocacy shape energy

governance? The case of the US antifracking

Kate J. Neville, Jackie Cook, Jennifer Baka, Karen Bakker & Erika S. Weinthal

To cite this article: Kate J. Neville, Jackie Cook, Jennifer Baka, Karen Bakker & Erika S. Weinthal
(2018): Can shareholder advocacy shape energy governance? The case of the US antifracking
movement, Review of International Political Economy

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Published online: 23 Oct 2018.

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Can shareholder advocacy shape energy

governance? The case of the US
antifracking movement
Kate J. Nevillea , Jackie Cookb, Jennifer Bakac , Karen Bakkerd
and Erika S. Weinthale
Political Science and School of the Environment, University of Toronto, Toronto, ON,
Canada; bFund Votes Research, Vancouver, BC, Canada; cDepartment of Geography,
Pennsylvania State University, University Park, PA, USA; dGeography, University of
British Columbia, Vancouver, BC, Canada; eNicholas School of the Environment, Duke
University, Durham, NC, USA

Research on socially responsible investing (SRI) and investor-led governance,
especially in the climate sector, suggests that shareholders adopt social move-
ment tactics to influence corporate governance, including building networks,
engaging directly with corporations and lobbying regulators. Further, research
on corporate transparency and financial disclosure has proliferated, notably in
the extractives sector. Our work builds on these existing literatures, with a
focus on shareholder resolutions on hydraulic fracturing (HF) in the United
States. We analyze US HF-focused shareholder resolutions from 2010 to 2016
to evaluate filing strategies and outcomes. We argue that these resolutions
provide space for a range of new actors to shape corporate governance—but
their power is constrained. The constraints flow from the same political econ-
omy factors that enable shareholders to take collective action: the distance
between individual investors and financial decisions; the structure of resolu-
tions and managerial responses; and the complexity of investment vehicles
and vote shares. We assess how shareholders respond strategically by altering
the focus of resolution demands, liaising with external campaigns and net-
works, and engaging with government to enhance regulatory interventions.
Our work reveals how the upstreaming of power in commodity chains inter-
sects with the power of management boards and the challenges of financiali-
zation, with consequences for corporate and energy governance.

Shareholder resolutions; hydraulic fracturing; corporate governance; financialization; social
movements; socially responsible investing (SRI)

CONTACT Kate J. Neville Political Science and School of the

Environment, University of Toronto, Toronto, ON M5S 3G3, Canada.
ß 2018 Informa UK Limited, trading as Taylor & Francis Group

In October 2014, a group of 18 investors—representing assets of more than

US$300 billion—submitted a letter to the US Environmental Protection
Agency (EPA) and the White House calling for federal regulation of methane
emissions from the oil and gas sector (Murray, 2014).
Then in April 2016, over 70 investors—with US$3.6 trillion in assets—
penned a letter in support of joint US–Canada limits on methane emissions
(ICCR, 2016).
These calls by private sector actors for increased government regulation
and oversight of corporate activity may seem unusual. However, a closer look
suggests that investor demands for sector-wide regulation should be under-
stood within a broader context of financial risk mitigation that operates
beyond the bounds of particular firms. Shareholders have financial incentives
to understand and reduce their risk exposure, especially as they assume risk
across multiple companies owing to diversified portfolios.
Strategies to alter corporate activity to account for these risks may involve
advocating for government regulation from above or corporate change from
within, with the latter including filing shareholder resolutions to draw cor-
porate attention to environmental, social, and governance (ESG) issues
(Rehbein, Waddock, & Graves, 2004). In a process regulated in the US by the
Securities and Exchange Commission (SEC) (Gillan & Starks, 2000), several
hundred ESG-focused shareholder resolutions are filed annually in the US.
These have increased over the years, although the numbers are difficult to
compare.1 Data on social policy resolutions from 1988 indicates that 215 res-
olutions were filed that year, a number which includes those withdrawn and
omitted as well as published on proxy materials (data from the Investor
Responsibility Research Center as reported by Graves, Rehbein, & Waddock,
2001). More recently, 217 social and environmental resolutions were pub-
lished and voted on in 2014, with nearly as many withdrawn and omitted
that year (Welsh & Passoff, 2017)—representing nearly double the filings
reported in 1988—and 233 social and environmental resolutions were pub-
lished in 2016 (CookESG, unpublished data). These figures suggest abiding
investor concern with ESG considerations.
Political scientists, and especially international political economy (IPE)
scholars, have a long-standing interest in corporate governance and private
authority (B€ uthe & Mattli, 2011; Cutler, Haufler, & Porter, 1999). This is
especially the case regarding the rise of corporate social responsibility (Vogel,
2005), certification systems (Auld, 2014), their associated shifting public-pri-
vate relationships (Lister, 2011), as well as the mechanisms through which
capital shapes state interests (Newell & Paterson, 1998; Newell, this issue).
Scholarship on the political economy of commodity chains has tracked the
changing nature of such production systems, finding three intersecting trends
that indicate the growing power of investors in the governance of commod-
ities. First, there is growing distance between nodes in the chain, owing to
flexible specialization and transnational production processes, and second,
there is a concurrent shift of power upstream to investors and downstream to
retailers (Conca, 2001). The second trend is, in part, a result of the third

trend: the increasingly complex financialization of commodities, involving

new forms of derivatives and other traded investments that abstract financial
decisions from the physical goods underpinning their value, obscuring rela-
tionships between capital and commodities (Clapp, 2014). With these trends,
the power of financial actors in commodity chains has increased where
investors control assets at a large enough scale to be a potential counter-force
to management authority in state–corporate relationships.
Investors’ support for both government and private environmental regula-
tion, as highlighted by the situation described above with investors lobbying
for methane emission regulation, raises questions about the role of the private
sector in energy governance. In an increasingly globalized and interdependent
energy system—where regional shifts in fossil fuel production can affect glo-
bal geopolitics and energy markets—what power do investors have to shape
corporate practices? How do investors leverage their influence within individ-
ual companies to affect activity across firms? And what role do financial
actors play in energy governance more broadly?
Scholars have recognized the shifts in power along commodity chains, and
the organized power of investors. Consequently, research is emerging on
investor-led governance, especially in the context of climate change, with a
focus on investor networks (e.g. MacLeod, 2009; MacLeod & Park, 2011) and
carbon and climate risk disclosures (e.g. Kolk, Levy, & Pinkse, 2008; Kolk &
Pinske, 2010; Knox-Hayes & Levy, 2011; Smith, Morreale, & Mariani, 2008).
In the extractives industry, research on private regulation has also advanced
in the area of financial accountability and transparency, with particular atten-
tion to concerns about corruption. Most notably, this research has focused on
the role of the Extractive Industries Transparency Initiative in fomenting
partnerships between the private sector, governments, and non-state actors to
promote transparency in financial flows from the private sector to govern-
ment (e.g. Haufler 2010; Sovacool, Walter, Van de Graaf, & Andrews, 2016).
Still, additional work on the dynamics of investor-led governance is needed,
especially in the energy sector, given the potentially radical shifts in energy
markets that arise through changes in corporate decision making on regula-
tions, environmental responsibility, and risk. This article seeks to fill this gap,
drawing from both business and management literature and social move-
ment literature.
In this article, we investigate how strategies of institutional investors and
SRI networks are creating and transforming opportunities for ESG advocates
to access corporate management structures. In light of the technological
advances of hydraulic fracturing (HF) and horizontal drilling, which have led
to the so-called ‘shale revolution’ of both oil and natural gas, we focus our
analysis on investor attention on HF in the US.2 By analyzing shareholder
resolutions on HF from 2010 to 2016, we examine how the complexity of
commodity chains and financing both enables and limits the capacity of
shareholders to shape corporate governance in energy and extract-
ive industries.

While shareholder resolutions are within the bounds of accepted and regu-
lated investor activities (along with other tools such as campaigning around
board of director elections), investors who take advantage of such opportuni-
ties to attempt to influence corporate governance are often described as
‘activists’ (e.g. Del Guercio, Seery, & Woidtke, 2008; Gillan & Starks, 2007;
Goranova & Ryan, 2014). However, within the investment world, progressive
shareholder demands on issues of social responsibility tend to be described as
“advocacy” (e.g. As You Sow, n.d). We adopt this latter terminology in our
paper, with a focus on institutional and SRI investors leading the push for
ESG-focused changes in corporations, referring to investor/shareholder advo-
cacy, advocacy groups, and ESG advocates. In some cases, these identities
intersect with extra-institutional efforts in climate, environmental health, and
social justice, which we describe as activism.
Our focus on shareholder resolutions as a specific tool of investor ESG advo-
cates follows from our interest in understanding the mechanisms of shareholder
coordination and the constraints that face investors seeking to change corporate
structures. While the literature on shareholder resolutions suggests these tools
have limited impacts on individual firm value, research from social movement
perspectives indicates they have significant potential to shape a corporate sector.
Thus, we place our study in the context of trends in investor advocacy and
shareholder resolutions (Gillan & Starks, 2000, 2007; Graves et al., 2001; Ma &
Liu, 2016; Sjo€stro€m, 2008), the heterogeneity of investors (Gourevitch, 2007), the
impact of investor demands and advocacy on financial outcomes and investment
incentives (King & Soule, 2007; Revelli & Viviani, 2015), the strategies of advo-
cacy networks and campaign tactics (McAteer & Pulver, 2009) and the conse-
quences of coordinated and coalition-based activism (Cook, 2012).
The coordination of resolutions across an issue area, such as HF, repre-
sents one of many forms of investor-led governance. Our work highlights the
role of publicly traded companies in the arena of energy governance—corpo-
rations where shareholders have a voice in corporate activity—and the role of
institutional investors and non-profit organizations in the development of
issue-based campaigns. These dynamics are thus only part of the broader glo-
bal energy governance picture, but still represent a significant component of
the industry, especially in the US (Rapier, 2016). We argue that although
shareholder resolutions provide space for a range of new actors to shape cor-
porate governance, their power is constrained in three ways: (1) boards of
directors often have competing interests, which they assert through manage-
ment responses; (2) individual shareholders have limited leverage due to the
attenuated information available to those who invest via institutional share-
holders; and (3) the changing nature of hedge funds and other complex
investment vehicles alter the one-share one-vote alignment of power.
Shareholders respond to these barriers by using adaptive claim-making strat-
egies, including altering the focus of resolution demands to attract broader
support and engaging with government and industry bodies to advance regu-
latory intervention. Our work follows on other recent research that suggests a
powerful role for shareholders in shaping corporate behavior, such as

Serafeim (2017), who suggests that investors engage closely with business
when they have long-time horizons for their investments and hold shares in
multiple companies within the same sector.
By considering resolutions within the context of broader civil society
efforts to advance environmental health, address climate change, and shift
energy production and governance, we seek to develop a better understanding
of the strategic choices of investor advocates, the repertoires that they
employ, and the limitations and opportunities provided by different tools of
claim-making. In a time where divestment is a visible strategy of climate acti-
vists (as seen with recent efforts to prompt individuals to close accounts with
banks that provide pipeline financing, as reported by Brownstone (2017) and
Remle (2017), among others, and with recent actions by high-profile investors
and philanthropic foundations to pull funds from oil and gas, as reported by
Schwartz (2014)), shareholder resolutions represent an important and less vis-
ible form of activism that, at times, converges with the climate movement.
To illuminate the importance of shareholder resolutions and investor
advocacy for understanding private energy governance, the article proceeds as
follows: Section I reviews the political economy literature on commodity
chains and broader research on private governance, with an overview of strat-
egies used by financial actors to influence corporate management. Section II
traces the rise of ESG investor-advocacy through shareholder resolutions. We
introduce our case study in Section III, explaining the significance of HF for
the global energy landscape and presenting our empirical work on share-
holder resolutions. In Section IV, we consider the direct and indirect impacts
of resolutions, and highlight the strategic adaptation of shareholder advocates.
In Section V, we offer our conclusions, including on the structural limitations
of resolutions as tools for shaping corporate governance. Through this work,
we add support to previous scholarship that views shareholder resolutions as
part of broader social movements. By connecting theoretical IPE work on
commodity chains and finance to shareholder advocacy, we articulate and
analyze intersections of corporate governance with energy governance.

1. Private governance and financialization: power in

commodity chains
Before analyzing shareholder advocacy, we examine the institutional under-
pinnings of investor power within corporations, and their position in relation
to other private sector actors. These contextual dynamics help explain why
investor advocates choose to invest their efforts in resolution filing activity.
We turn to scholarship on commodity chains, distance, upstreaming of
power, and financialization. Our focus on finance and private governance
joins a rich literature in IPE (Frieden, 2016). Keohane (2009), moreover,
highlights the need for increased attention to global political economy, focus-
ing on how corporations and non-governmental organizations shape political
outcomes. His call underscores the study of non-state governance, which has
a deep history in environmental politics and transnational studies (e.g.
Bernstein & Cashore, 2007; Betsill, 2014; Falkner, 2003).

The concept of governance has been widely studied by political scientists,

who express diverse views on the role of the state and other players in con-
ceptualizing and coordinating the rules and institutions of individual and col-
lective life (e.g. Barnett & Duvall, 2004; Bell & Hindmoor, 2009; Pierre,
2000). From an energy governance perspective, we consider the role of cor-
porate actors and the delegation of public authority to private actors, espe-
cially through finance (B€ uthe & Mattli, 2011; Goldthau & Witte, 2010; see
also Kuzemko et al., this issue).
IPE scholars of production and consumption have theorized about the loca-
tion of power in commodity chains. Changes in production systems have shifted
power away from manufacturers in two directions: downstream to large retailers
and upstream to investors (Conca, 2001). These changes are the result of mul-
tiple, intersecting trends that have supported the rapid globalization of produc-
tion, including outsourcing and offshoring in supply chains, flexible
specialization, increased shipping and transportation options, and liberalized glo-
bal trade policies (see, e.g. Gereffi, Korzeniewicz, & Korzeniewicz, 1994, on
changes in global capitalism and Neilson et al., 2014, on global value chains and
production networks). While scholars writing on business and the environment
have explored the role of retailers (Dauvergne & Lister, 2013), and some theoriz-
ing has emerged to understand the role of multiple actors along these chains,
from financiers to traders to consultants (Coe, 2014; Neilson, et al., 2014), more
attention is still needed to the upstream side.
Increasing distance between nodes in the globalized economy enables more
shadows to be cast along commodity chains (Dauvergne, 2008), where those
bearing the burden of damages from the production of goods are often far
removed from those gaining the financial or material benefits of these products
(Clapp, 2002; see also Kuzemko et al., this issue). Further, distancing enables the
separation of physical goods from their financing. Scholarship on agrifood sys-
tems (e.g. Clapp, 2014, 2015; Isakson, 2015; Martin & Clapp, 2015; Sommerville
& Magnan, 2015) has addressed the role of investments in shaping market
dynamics and shifting power relations. Particular emphasis has been placed on
commodity price speculation and financial vehicles that involve complex indices,
derivatives, and futures to increase investment opportunities, which have
expanded the distance between investors and commodities. The term financiali-
zation is used widely, although inconsistently, as highlighted by French, Leyshon,
and Wainwright (2011), to describe the changing nature of the financial sector
within production systems and in relation to the broader economy. Most com-
monly, financialization signifies a shift in the relations of power in global mar-
kets. At times, financial instruments reinforce the power of corporations and of
holders of capital (Clapp, 2014), with producers, especially smallholders, exposed
to new risks (Isakson, 2015). Financial systems might also facilitate the accumu-
lation of capital by the wealthy from the poor through debt and the disposses-
sion of people from land and labor (Correa & Correa, 2015). Indeed, the
decoupling of commodity finance from the physical reality of natural resources
obscures, rather than erases, the links between commodities and their economic
value. Underscoring this ongoing, if concealed, connection, Van Treeck’s (2009)

macroeconomic assessment of financialization highlights the need for physical

investment to enable profit generation. Environmental standards are of note in
these dynamics of distance, with measuring and accounting practices for disclos-
ing and reporting impacts (or risks) embedded in highly technical procedures
and practices. Thistlethwaite (2011) argues that such technicalities can obscure
the politics that drive these systems. With climate change, similar dynamics are
documented of the detachment of the market and physical aspects of emissions,
where Knox-Hayes (2013) articulates the mechanisms through which financiali-
zation—where the ‘use value’ is decoupled from the ‘exchange value’ (2013,
117)—takes place for carbon.
Such financial arrangements shift the locus of power within production
systems to those upstream. Lazonick and O’Sullivan (2000) document the
increasing importance of shareholder value in the US private sector. Gamble
and Kelly (2001) paint a similar picture of the rise of shareholders in the UK.
These trends of prioritizing shareholder returns have reinforced the
upstreaming of power resulting from the vertical integration of firms and
transnationalization of production (Conca, 2001).
Investors are a diverse and fragmented set of actors. They can be individuals
or institutions; the latter range from public pension funds to non-governmental
organizations to corporate asset managers. Given this range of actors, share-
holder identities can blur the lines between public, private, and third-sector
engagement: pension funds can bring public funds into private companies and
non-profit investors bring civil society groups into the private realm. Beyond dir-
ect investment, non-state actors and networks can engender shareholder action.
In some cases, protests can attract shareholder attention through their effects on
stock prices (King & Soule, 2007); in others, shareholders can become central
actors in broader social movements. Through research on investor-linked activist
efforts in the oil industry, McAteer and Pulver (2009) find that joint pressure on
companies by investors and communities shaped corporate governance decisions
across sectoral lines. Such alliances create tension between shareholders as own-
ers of corporations and as challengers to private management.

2. Investor advocacy: shareholder resolutions

Companies are unlikely to acquiesce to new reporting requirements, risk dis-
closures, and other activities without the strong conviction that there are
costs associated with not doing so (whether to operations or reputations); fur-
ther, they will likely take action to shape the outcome and extent of such vol-
untary commitments (Gallagher & Weinthal, 2012). In the context of carbon
disclosures, for instance, while the Carbon Disclosure Project has gained trac-
tion (Knox-Hayes & Levy, 2011), Andrew and Cortese (2013) present evi-
dence that its disclosure standards have been developed primarily by
coalitions of multinational corporations. Along with broad tactics of ethically
motivated investment, shareholders participate in strategies of engagement
(Gillan & Starks, 2000; O’Rourke, 2003), whereby their investments provide
them with a voice in corporate governance. Investors’ activities of targeted

investment, principled withdrawal of funds, and corporate engagement have

contributed to corporate adoption of social and environmental responsibility
commitments. Still, the economic and ecological impacts of these investment
decisions and corporate actions remain under investigation (Ritchie &
Dowlatabadi, 2014).
Shareholders have used proxy statement processes to demand change in
corporate practices. Such efforts to influence corporate governance practices
have been observed around the world, including India (Rajyalakshmi, 2014),
Nigeria (Adegbite, Amaeshi, & Amao, 2012), Canada (Yang, Wang, & An,
2012), Brazil and South Africa (Yamahaki & Frynas, 2016). While many reso-
lutions pertain to corporate governance linked with remuneration and repre-
sentation (Cook, 2013; Ma & Liu, 2016), since the 1990s a growing number
of shareholder resolutions have focused on environmental responsibility
(Gillan & Starks, 2007; O’Rourke, 2003). Scholarly research on SRI, especially
surrounding extractive industries, tracks these investment trends (e.g. Cook,
2012; Richardson, 2012; Sovacool et al., 2016). Almost half of shareholder res-
olutions filed from 2000 to 2003 addressed issues of corporate social responsi-
bility (Monks, Miller, & Cook, 2004). Thirty-eight percent of the 3198
resolutions that came to vote from 2011 to 2016 were social and environmen-
tal resolutions (Cook, 2017). After resolutions on South Africa during anti-
apartheid campaigns, the environment was the most common focus for reso-
lutions from 1988 to 1998 (Graves et al., 2001), and climate in particular has
become a key target for shareholders, with 94 shareholder resolutions in 2016
focused on climate (Welsh & Passoff, 2016).
An early literature survey by Karpoff (2001) revealed that shareholder
advocacy efforts led to some changes in corporate governance structures, but
had little effect on corporate share values and earnings. Evidence of the
effectiveness of shareholder resolutions, based on analyses of the direct
impact on behavior or market capitalization of the target company measured
over a limited timeframe, is mixed. Notably, only a minority of shareholder
resolutions, particularly those addressing social and environmental issues,
achieve a majority of votes in support. A large number of votes are cast
reflexively following management recommendations on proxy items, particu-
larly with respect to social and environmental issues. The reasons for this
include the costs involved in researching decisions on the ballot, the potential
conflicts of interest in opposing management, for instance where an institu-
tion relies on 401(K) business from the target company (see Cvijanovic,
Dasgupta, & Zachariadis, 2016), and structural features of investment firms
and the allocation of voting rights to fund managers who are ill-equipped to
evaluate or incorporate ESG factors into investment decisions (see Harmes,
2011; Richardson, 2012). Even in the event of majority support, shareholder
resolutions are typically ‘precatory’ (or advisory, rather than legally binding)
thus management can nevertheless choose to ignore the requests that invest-
ors advance.
Notwithstanding, there is compelling evidence that shareholder resolution
filing activity has achieved notable beneficial ESG changes to corporate

practices and securities regulation that have helped strengthen US capital

markets by countering inherent short-termism. At least ten such achieve-
ments over the last 15 years are outlined by investor advocacy groups in a
2017 rebuttal to proposed changes to the proxy process advanced by the US
Chamber of Commerce that would undermine the ability of shareholders to
file shareholder resolutions at US companies (see Ceres et al., 2017). There is
therefore a body of literature that suggests that shareholder resolutions should
be assessed through a social movement theory lens, where effectiveness is
measured according to their combined role in developing investor networks,
provoking dialogue on the issue, influencing the public policy agenda, and
furthering broader civil society campaigns (Cook, 2012; Proffitt & Spicer,
2006; Reid & Toffel, 2009).
Resolutions can be included on proxy ballots to be voted on by sharehold-
ers at annual general meetings, or withdrawn before a vote, usually as a result
of corporate engagement (Glac, 2014). Given the latter option, some resolu-
tions appear to be filed to open a firm-level dialogue on issues. Dialogue
enables shareholders to more directly access and persuade corporate manage-
ment (Rehbein, Logsdon, & Van Buren, 2013), although some work points to
a difference between engagement that occurs instead of resolution filing and
that which results from resolution filing, where the former may be viewed as
less effective as a social movement tool (Sparkes & Cowton, 2004).
Scholars studying shareholder advocacy have documented the transition of
these activities from a subversive activity undertaken as part of action outside
of corporations to a mainstream activity within corporations (Goranova &
Ryan, 2014), with resolutions gaining increasing support over time (Sjo€stro€m,
2008). Still, even when they are included on proxy ballots, rather than with-
drawn, resolutions have not tended to garner majority votes. While 50%
stands out as a benchmark for resolution votes, representing majority share-
holder support, such figures need to be understood within the context of SEC
regulations. Since most ESG resolutions are non-binding, even majority sup-
port from shareholders does not legally mandate companies to take action
(US SIF, 2017). These resolutions are, thus, often part of a broader effort to
shift discourses and expectations for the entire corporate sector (Cook, 2012).
Although the fragmented nature of individual investors places some limits
on their potential to change corporate behavior, individuals with relatively
small amounts of money can gain traction in companies through joint action.
Shareholders proposing resolutions are often managers of institutional invest-
ments, and those concerned about ESG issues regularly engage in coordinated
action (Gillan & Starks, 2000). SRI networks include partnerships of invest-
ment managers such as the Investor Environmental Health Network (IEHN)
and non-profit organizations such as Ceres. Network participants may be
large institutional investors concerned about mitigating financial risk in con-
troversial sectors, niche institutional investors with a mandate from their cli-
ents to pursue certain kinds of investments, or non-profit organizations that
enter the market as a strategy for gaining voice in private governance. For
environmental and social claims, resolutions commonly request increased risk

disclosure actions, as has been evident in shareholder efforts to address cli-

mate change and water resources (e.g. Kolk et al., 2008; Rindfleisch, 2008).
As our work is focused on identifying and understanding the strategies
used by investor advocates to shape corporate behavior, we are particularly
interested in activities at the intersection of issue areas—our focus on HF
emerges from an interest in energy governance that spans concerns about
environmental health, climate, and financial risk. Building on work by
MacLeod (2009) and MacLeod and Park (2011) on investor governance net-
works, we investigate the mechanisms through which such networks operate,
and the suite of tools they use for advocacy and change within the issue area
of HF.

3. Shareholder resolutions: energy governance through

financial mechanisms
To analyze the power dynamics and strategies of energy sector investors, we
use a case study of HF shareholder resolutions in the US from 2010 to 2016.
In the early part of the 2000s, natural gas production in the US surged as
technological developments in HF and horizontal drilling enabled access to
new sources of both oil and gas from shale and other tight rock formations.
The US Department of Energy reported a 33% increase in US natural gas
production from 2005 to 2013 (DOE, 2015). Along with the growth in pro-
duction, public debates over HF proliferated, especially concerning impacts
on water quality and quantity, methane emissions, and related seismic activity
(Jackson et al., 2014). A particular area of concern has been fracturing fluid
disclosure laws, as lobbying associations attempted to control what informa-
tion is made public and in what format (Wiseman, 2011). Following public
concern and protest, many jurisdictions across and beyond the US have
restricted HF through moratoria and bans—including the state of New York,
Canadian provinces of New Brunswick and Nova Scotia, sub-state regions in
Colorado, and countries such as France, Bulgaria, and Germany (Neville
et al., 2017).
With these political circumstances, unconventional oil and gas companies
have developed strategies to respond to environmental and health concerns
and constrain additional regulatory oversight. Further, they are increasingly
responding to shareholders concerned about the financial risks of environ-
mental damage, public protest, and regulatory change. Investor concerns over
HF are nested in broader uncertainty about global energy futures, particularly
in the context of climate change, which is consistent with the centrality of cli-
mate change within global environmental politics (Falkner, 2014; Kuzemko
et al., this issue). Along with emissions and climate change, resolutions on
HF address a wide suite of concerns. Our study is situated within the context
of climate change, especially in light of previous work on investor-led govern-
ance, but also considers a broader set of concerns with extractives and the
environment, offering insights into energy governance.

3.1. Case study: HF resolutions

We analyze 54 shareholder resolutions on HF from 2010 to 2016, triangulat-
ing our findings through analyses of corporate responses to resolutions,
shareholder resolution filer networks, and corporate disclosure and social
responsibility reports. In the late 2000s, HF gained traction in the oil and gas
sector, and in 2009 IEHN, As You Sow, Boston Common Asset Management,
and Green Century Capital Management launched a coordinated investor
campaign in the US on the risks of HF (IEHN, 2017a).
We focus on US HF-focused shareholder advocacy for several reasons.
First, shale oil and gas production has surged in the US, while little commer-
cial HF activity is underway in other countries (McBride & Sergie, 2015),
although there is growing production in China and Canada. Second, while
the largest fossil fuel companies in the world are state-owned—with state-
owned enterprises controlling three-quarters of crude oil production, and
multinationals producing only 10% of global oil and gas (Bremmer, 2010)—
in the United States, the sector is dominated by private companies (IPAA,
2012–2013).3 Thousands of independent oil and gas companies in the coun-
try, of which hundreds are publicly traded, produce the majority of US oil
and gas (54 and 85% respectively, according to the IPAA, 2012–2013).
Publicly traded companies are significant in oil and gas production: in
Colorado, one of the top 10 oil and gas producing states in the country,
although only 20% of natural gas companies are publicly traded, they produce
85% of the state’s gas, and oil production is similar, with 88% of oil produced
by publicly traded companies (Inside Energy, 2014). Consequently, most
companies participating in HF are privately owned and publicly traded rather
than state-owned, which makes shareholders relevant to the governance of
these companies (EIA, 2016; Goldthau, 2012). Third, while the investor/cor-
porate component is US-focused, the governance of US energy production
has global ramifications for energy markets and geopolitics, given the US’ sig-
nificant production and consumption of oil and gas.
In the United States, a number of ESG-focused shareholder networks are
in place, often linked or overlapping with transnational networks. Ceres coor-
dinates and tracks climate-focused shareholder action; similarly, IEHN coor-
dinates investor responses to public health and toxic chemical concerns.
Many members in these two networks are also signatories to the global
United Nations-supported Principles for Responsible Investment (PRI),
among other SRI initiatives. From an IPE perspective, shareholder advocacy
networks, which include large institutional investors such as pension and
mutual funds, add a dimension to the study of both commodity chains and
global energy politics beyond states and markets, with a focus on finance and
internal contestation within corporations. An analysis of shareholder resolu-
tions provides a useful complement to studies of the IPE of energy transitions
(e.g. Kuzemko, this issue), and to studies of the role of the state in such tran-
sitions (Newell, this issue).

We compiled our resolution dataset through shareholder resolution data-

bases from IEHN (2017b), Ceres (2016), and CookESG’s Fund Votes data-
base. We compiled the full text of shareholder resolutions, which we coded to
assess filer identity, target company, focus issues in resolution requests (‘asks’,
with particular attention to the use of model resolution language), and man-
agement responses, comparing filings and responses within and across years.
We first present evidence of the growing power of SRI investors in the realm
of HF governance, particularly through the strategic use of networks of filers
that coordinate campaigns, share model resolutions, and shift resolution lan-
guage over time. We then temper our claims of the significance of HF reso-
lution filing activity by offering evidence of counter-claims by corporate
management, the still-limited mobilization of large institutional investors, and
the challenges to ESG investors posed by new financial instruments.

3.2. Vote shares and corporate targets

In our dataset of HF shareholder resolutions, we found that 17 institutional
investors and one individual filed resolutions, sometimes jointly (see Table 1).
Some of these institutions are non-profit organizations, operating specifically
with a values-based mandate to change corporate behavior (e.g. the Park
Foundation), while others are profit-based organizations with the mandate
from clients to invest in environmentally and socially responsible companies
(e.g. Green Century Capital Management). Others, such as Daughters of
Charity, are faith-based associations with specific social agendas, while the
New York State Common Retirement Fund and New York City Pension
Funds are large public pension funds (the 3rd and 4th largest in the United
States, respectively; Llenrock Group, 2012). In contrast to pension fund reso-
lution filers, the asset managers, foundations, and mutual fund filers are quite
small—while one-fifth of assets (over US$8 trillion) that are professionally
managed take ESG factors into account, these are spread out over nearly
2000 commercial and community institutions (SIF, 2016). In 2016, for
instance, Trillium Asset Management managed US$2 billion in assets
(Trillium Asset Management, 2016) and Calvert Investments just over US$12
billion (Donovan, 2016), while the top manager of US wealth—Bank of
America—managed US$1.1 trillion (Wall Street Journal, 2016) and the top
global asset manager, BlackRock, managed US$4.8 trillion (IPE, 2016). SRI
institutions are not identical in purpose, structure, or goals, but most partici-
pate in shared networks, such as the Interfaith Center on Corporate
Responsibility (ICCR), IEHN, and Ceres, often in partnership to jointly file
resolutions, coordinate campaigns, and share model resolutions.
Over the 7-year period, HF resolutions were filed for 26 different compa-
nies. These represented large corporations with a high profile in the energy
industry, such as ExxonMobil, and smaller corporations with substantial HF
operations, such as Chesapeake Energy. This accords with the literature on
shareholder resolutions, which finds that shareholder-advocates generally tar-
get large firms, whether because of higher visibility, potential for greater

Table 1. Filers of HF resolutions.

Organization type Institutional investors
Not-for-profit foundation As You Sow Foundation
Park Foundation
Pension funds New York City Pension Funds
New York State Common Retirement Fund
Investment management companies Calvert Investments
and advisors Green Century Capital Management
Sustainability Group at Loring, Wolcott & Coolidge
Domini Social Investments
Miller/Howard Investments
Trillium Asset Management (employee owned)
Mutual funds MMA Praxis Core Stock Fund (managed by
Everence Capital Management, formerly MMA)
Individual Patricia Karr Seabrook
Faith-based societies, asset managers, and Mercy Investment Services
organizations Benedictine Sisters of Mount St. Scholastica
Daughters of Charity
Sisters of St. Francis of Philadelphia
Catholic Health East and Trinity Health (merged
health care providers)

impact on activities, or potential for more media attention (Goranova and

Ryan, 2014; Rehbein et al., 2004). Among the 26 targeted companies, 18 were
listed in the top 40 US natural gas producers in 2015 and 19 in the top 40 for
2016, including the top four in both years—ExxonMobil, Chesapeake Energy
Corporation, Anadarko Petroleum Corporation, and Southwestern Energy
Co. (according to quarterly reports: NGSA, 2015, 2017; see Table 2). This
represents a significant proportion of US natural gas production: in 2009,
there were over 14,000 oil and gas companies, but the top 40 produced half
of US domestic natural gas, and the top 10 produced one-third
(Kusnetz, 2011).
Votes were held on 28 resolutions filed against 15 companies; the other 26
resolutions were withdrawn prior to a vote, primarily as a result of corporate
commitments or disclosures, with one withdrawn on procedural grounds and
one rendered null because of a corporate merger. These gained vote shares
ranging from 6–49%—but the range is somewhat misleading, as all but two
of the 28 garnered vote shares over 20%, and more than half (15/28) had
vote shares of 30% or higher (see Figure 1(a)). For four companies—
Chevron, EOG Resources, ExxonMobil, and Ultra Petroleum—shareholders
voted on resolutions in multiple years, with Chevron and ExxonMobil each
targeted six times. When a third of shareholders vote for an HF resolution
against management recommendations, companies are likely to take note.
Levels of support short of a majority still matter for management, in part
because of the SEC’s 3/6/10 percent resubmission threshold rule (SEC, 2014).
That is, a resolution can be re-submitted at a particular company within the
following three years if it passes the progressive resubmission support thresh-
olds of 3% on first filing, 6% on second filing, and 10% on third filing, with
support calculated based on all votes for and against.

Table 2. Target companies for HF resolutions.

ExxonMobil (1, 1) QEP Resources (23, 24)
Chesapeake Energy (2, 2) Occidental Petroleum (27, 31)
Anadarko Petroleum Corporation (3, 4) Continental Resources (28, 22)
Southwestern Energy Co. (4, 3) Pioneer Natural Resources (30, 33)
Cabot Oil & Gas (6, 7) Hess Corporation (37, 36)
EQT Resources (9, 5) National Fuel Gas (–, 27)
Chevron (10, 11) Carrizo Oil & Gas (–, –)
Range Resources (13, 12) El Paso Corporation (–, –)
EOG Resources (14, 18) Energen Corporation (–, –)
Ultra Petroleum (16, 20) Penn Virginia Corporation (–, –)
WPX Energy Inc. (19, 38) Stone Energy Corporation (–, –)
Noble Energy, Inc. (21, 15) Williams Companies (–, –)
SM Energy Company (22, 28) XTO Energy, Inc. (ExxonMobil subsidiary) (–, –)
Numbers in brackets denote position of company in the top 40 US gas producers in 2015 and
2016, respectively.

3.3. Filing networks: strategic partnerships and model resolutions

Individual shareholders may not hold particular power in the investment
landscape; however, through collective action, investors can amplify their
voice. Our analysis revealed that HF resolution filers were members of at least
13 different SRI networks, including IEHN and Ceres, along with the UN
Environment Programme Finance Initiative, the longstanding ICCR, and the
climate-focused Portfolio Decarbonization Coalition and Investor Network on
Climate Risk. These networks are not themselves shareholders, but instead
advise and coordinate shareholder action, track corporate commitments and
resolution action, and establish principles to which shareholders can sign on,
thereby enabling collective statements backed by significant amounts
of capital.
Most HF-focused resolution filers hold multiple network memberships;
Calvert Investments participates in at least 10 different SRI networks (see
Table 3). The networks are closely connected and interlinked, with network
membership overlapping: for instance, Calvert and Trillium participate in at
least eight of the same SRI networks, of which seven also include Domini,
and five include As You Sow. Some of the resolution filers were key players
in launching SRI networks: the New York City Pension Funds was one of the
founders of Ceres.
Past work on disclosures has revealed different intentions of institutional
investors, ranging from environmental protection goals to improved corpor-
ate governance, and campaigns can sometimes leverage support for new pro-
posals through ‘crossover campaigns’ by linking these issues (Monks et al.,
2004). Regardless of motivation for shareholder advocacy, these collaborations
offer benefits for all investors with interests in shaping corporate governance.
Networks of shareholders are salient in the push to shift corporate govern-
ance of HF from within companies. The identities of resolution filers offer
some support for understanding shareholder resolutions within a broader
activist context. At least one resolution filer, the Park Foundation, which filed
four of the resolutions, is involved in funding anti-HF activity in commun-
ities (Park Foundation, 2017). The board of As You Sow, another important

(a) CABOT OIL & GAS (O&G): 2010 36%

EOG RESOURCES (O&G): 2010 31%
EXXON MOBIL (O&G): 2010 26%
CARRIZO OIL & GAS (O&G): 2011 44%
CHEVRON (O&G): 2011 40%
ENERGEN (O&G): 2011 49%
EXXON MOBIL (O&G): 2011 28%
CHEVRON (O&G): 2012 28%
EXXON MOBIL (O&G): 2012 30%
CHEVRON (O&G): 2013 30%
EXXON MOBIL (O&G): 2013 30%
CHEVRON (O&G): 2014 27%
EOG RESOURCES (O&G): 2014 28%
CHEVRON (O&G): 2015 27%
EXXON MOBIL (O&G): 2015 25%
QEP RESOURCES (O&G): 2015 32%
WPX ENERGY (O&G): 2015 33%
CHEVRON (O&G): 2016 31%
EXXON MOBIL (O&G): 2016 25%

Model Resoluon Resns Typical Resolved Clause
RESOLVED: Sha rehol ders reques t tha t the Boa rd of Di rectors prepa re a report by [da te], a t rea s ona bl e cos t a nd omi  ng propri etary
Ha za rds to a i r, wa ter a nd i nforma on s uch a s propri etary or l ega l l y prejudi ci a l da ta, s umma ri zi ng: 1) Known a nd potena l envi ronmental i mpa cts of
s oi l qua l i ty [compa ny na me]'s fra cturi ng opera ons ; a nd 2) Pol i cy opons for our compa ny to a dopt, a bove a nd beyond regul a tory requi rements
a nd our compa ny's exi s ng efforts , to reduce or el i mi na te ha za rds to a i r, wa ter, a nd s oi l qua l i ty from fra cturi ng opera ons .
RESOLVED: Sha rehol ders reques t the Boa rd of Di rectors report to s ha rehol ders , us i ng qua ntave i ndi ca tors , by [da te], a nd
Advers e envi ronmental a nnua l l y therea er, the res ul ts of compa ny pol i ci es a nd pra cces a bove a nd beyond regul a tory requi rements , to mi ni mi ze the
a nd communi ty i mpa cts a dvers e envi ronmental a nd communi ty i mpa cts from the compa ny's hydra ul i c fra cturi ng opera ons a s s oci a ted wi th s ha l e
forma ons . Such report s houl d be prepa red a t rea s ona bl e cos t, omi  ng confi dena l i nforma on.
RESOLVED: Sha rehol ders reques t the Boa rd of Di rectors to report to s ha rehol ders vi a qua ntave i ndi ca tors by [da te], a nd a nnua l l y
Advers e wa ter res ource therea er, the res ul ts of compa ny pol i ci es a nd pra cces , a bove a nd beyond regul a tory requi rements , to mi ni mi ze the a dvers e
a nd communi ty i mpa cts wa ter res ource a nd communi ty i mpa cts from the compa ny's hydra ul i c fra cturi ng opera ons a s s oci a ted wi th s ha l e forma ons . Such
reports s houl d be prepa red a t rea s ona bl e cos t, omi  ng confi dena l i nforma on.
Communi ty concerns , RESOLVED: Sha rehol ders reques t tha t the Boa rd of Di rectors prepa re a report to i nves tors by [da te], a t rea s ona bl e cos t a nd
known regul a tory excl udi ng confi dena l or l ega l l y prejudi ci a l da ta, on the s hort-term a nd l ong-term ri s ks to the compa ny's opera ons , fi na nces a nd
i mpa cts , mora tori ums , ga s expl ora on a s s oci a ted wi th communi ty concerns , known regul a tory i mpa cts , mora tori ums , a nd publ i c oppos i on to hydra ul i c
a nd publ i c oppos i on fra cturi ng a nd rel a ted na tura l ga s devel opment.
RESOLVED: Sha rehol ders reques t tha t [compa ny na me] i s s ue a report to s ha rehol ders , us i ng qua ntave a nd qua l i tave mea s ures
Envi ronmental a nd s oci a l
to des cri be how the Compa ny ma na ges the envi ronmental a nd s oci a l cha l l enges a nd opportuni es a s s oci a ted wi th wel l
cha l l enges a nd 2
s mul a on tha t empl oys hydra ul i c fra cturi ng. The report s houl d be a va i l a bl e by [da te], be prepa red a t rea s ona bl e cos t, a nd omi t
opportuni es
propri etary i nforma on.

Reques ts for di s cl os ure of: (i ) envi ronmental a nd publ i c hea l th i mpa ct a nd ri s ks ; (i i ) a dvers e i mpa cts on ground a nd s urfa ce wa ter;
Other 3
(i i i ) potena l hea l th ha rms , envi ronmental ha rms , a nd nega ve communi ty i mpa cts

Figure 1. (a) Hydraulic fracturing resolutions that came to vote: 2010–2016. Colors of bars in 1a cor-
respond to the model requests in 1b. Percentages represent vote shares. (b) Model resolution
requests, with sample resolved clauses.

non-profit involved in filing, includes individuals with active or past roles in

the Rainforest Action Network, Friends of the Earth, and the Sierra Club (As
You Sow, 2017), which are large environmental NGOs with clear anti-HF
positions (Global Frackdown, 2017). While boards and advisors do not alone
dictate the actions of an organization, such linkages are indicative of connec-
tions across institutions, particularly when considered from a social move-
ment perspective.
Although shareholder resolutions on HF differ by company and year,
many resolutions have clear similarities and often include identical phrases
and requests. The uniformity across resolutions reflects the development of
model resolutions by shareholder networks and the efforts of some institu-
tional investors to forward resolutions against multiple companies.
In structure, the resolutions contain three sections: a ‘whereas’ clause indi-
cating the justification for concern; a ‘resolve’ section specifying the requested
company action; and a ‘supporting statement’ offering additional justification
and guidance to the company. Of the 54 filed HF resolutions, 44 had resolve

clauses modeled on only four different types of requests, and half of those
followed a single model resolution. These were the disclosure of general haz-
ards to air, water, and soil (22), strategies above and beyond government pol-
icy to address adverse environmental and community impacts (10), disclosure
of risks to finance and operations from community concerns and regulatory
impacts (8), and the development of qualitative and quantitative measures to
address community and environmental risk (4). The other 10 resolutions
addressed: strategies above and beyond government policy to address adverse
water and community impacts (3), strategies to address adverse impacts on
ground and surface water (2), disclosure and reduction of toxic chemicals (2),
reporting on environment and public health (1), impacts of HF on urban
areas (1), and appointment of a director with environmental expertise (1)
(see Figure 1(b) for model resolve clauses for the 28 resolutions that went to
a vote).
Using model resolutions helps to coordinate and align the actions of dis-
crete shareholder advocates, and propels action beyond individual firm-level
advocacy to broader industry, or ‘field’-level pressure. By forwarding similar
demands to multiple companies operating in the HF realm, shareholders can
push the sector towards harmonized reporting and governance outcomes.
Such strategic action enables smaller shareholders to benefit from the power
of their upstream position in the commodity chain by minimizing the admin-
istrative costs of developing their own resolution requests.

3.4. Limits to shareholder power

The upstreaming of power to investors has enabled environmentally oriented
actors to influence energy governance through finance and corporate govern-
ance. For HF, shareholder resolutions have provided a tool for coordinated
claim-making on oil and gas companies in terms of environmental and regu-
latory risk disclosures, bringing attention to concerns over shale develop-
ments from inside corporations. The complexity of finance offers numerous
channels for institutional investors to gain voice in corporate govern-
ance systems.
However, these opportunities are constrained by many of the same fea-
tures of the financial system that create them. As Lazonick and O’Sullivan
(2000) document, the linking of corporate managerial rewards to shareholder
returns magnified the power of investors; these trends also served to increase
the power of management boards. SEC regulations provide space for boards
of directors to respond to resolution proposals, offering opportunities for
counter-claims to be made both privately and publicly.
In nearly half of the cases studied, companies responded to shareholder
requests with corporate commitments prior to the publication of the resolu-
tions in the proxy statement; that is, the company agreed to take action and
shareholders agreed to withdraw their resolution. Withdrawals and concur-
rent corporate commitments suggest that resolution filing has an influence on
private governance, shifting the field of HF practices towards increased

Table 3. Number of network memberships by filing organization.a

Filing Organization Number of Network Memberships Number of HF Resolutions Filed
As You Sow 6 13
Benedictine Sisters of Mount St. 1 1
Calvert Investments 10 4
Catholic Health East/ 2 1
Trinity Health
Daughters of Charity 1 1
Domini Social Investments 7 1
Green Century 6 11
Capital Management
Mercy Investment Services 5 2
Miller/Howard Investments 6 8
MMA Praxis Core Stock Fund 3 1
NYC Pension Fund 4 2
NYS Common Retirement Fund 5 10
Park Foundation 3 4
Sisters of St. Francis of 2 6
Sustainability Group at Loring, 3 1
Wolcott & Coolidge
Trillium Asset Management 9 2
Individual filers not listed.

disclosure and stronger voluntary commitments. While the actions may be

minor, such as increased reporting on risks and disclosure of environmental
and social impacts, these company efforts might provide the foundation for
requesting more significant action by companies in future years, and might
reduce corporate opposition to state-based regulation. We find that for com-
panies targeted in multiple years by shareholder resolutions, most have
engaged in dialogue that led to resolution withdrawal at least some of the
time: for 13 companies targeted by shareholders in more than 1 year, only
Chevron had all the filed resolutions go to a vote.
When resolutions go to a vote, corporate managers can provide statements
motivating their recommended vote for each resolution on the proxy ballot.
As expected, management recommended against the published resolutions on
HF. We coded managerial justifications for their opposition, finding four
main reasons (with illustrative claims listed in Table 4): first, and most com-
mon (26/28), existing company practices, such as corporate reporting on
risks, including through corporate websites and online chemical registries;
second (16/28), existing industry practices, including American Petroleum
Industry best practice guides; third (14/28), the safety of HF, with 12 of these
also pointing to the EPA as confirming this safety; and fourth (13/28), exist-
ing government regulation.
These corporate responses underscore the nature of within-company con-
testation over rule-setting power and reinforce the need for disaggregated
studies of corporate governance. While investors have power in the commod-
ity chain, this power is challenged by the countervailing efforts of manage-
ment and mediated by the multiplicity of investors involved in companies.

Table 4. Sample claims from companies in management responses to filed resolutions.

Justification Sample claims (emphasis added)
Company practices EOG 2014: ‘We believe that our new and expanded website
disclosures, coupled with our other website disclosures, the
disclosures in our SEC and other public filings and our participation
in the Carbon Disclosure Project’s water and climate change pro-
grams, demonstrate our commitment to open, collaborative
communications with our stockholders, continuous improvement,
transparency and operating in an environmentally responsible and
safe manner.’
Industry practices ExxonMobil 2012: ‘We are working with state governments and
multi-state entities to address concerns, implement effective regu-
latory frameworks, and implement industry consensus on best man-
agement practices. We worked through the Appalachian Shale
Operators for Responsible Practices, a group of about 30 leading
Marcellus and Utica Shale operators, to develop responsible operating
practices and standards for that region.’
Safety of HF Chesapeake 2010: ‘The Board believes strongly that hydraulic
fracture stimulation, commonly referred to as fracing, is a proven
technology that poses no significant risks to the environment as
used in the Company’s operations.’
Government regulation Ultra 2012: ‘Moreover, federal agencies control any adverse impacts of
hydraulic fracturing through the Clean Water Act … , the Safe
Drinking Water Act … , and the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA).’

The evidence from HF resolutions suggests that shareholders may have a

range of goals associated with their proposed resolutions, from financial risk
avoidance to environmental and social improvements. However, in all but a
few cases, the HF actions requested by shareholders focused on corporate
reporting—that is, the disclosure of risk and impacts—not on changes in cor-
porate governance and operational behavior, nor on specific adoption of tar-
gets and commitments. That the requests are not very ambitious may be
explained, in part, by the fact that many large institutional investors do not
directly evaluate corporate governance and shareholder resolutions, but
instead rely heavily on proxy advisory firms, such as Institutional Shareholder
Services (ISS). These advisory bodies add an additional layer of distance into
the investment node of the commodity chain, increasing the reliance of
shareholders on measures of governance that may not accord with environ-
mental and social considerations. Investors who rely on proxy ratings and
indices comprise the majority of shareholders in many companies, making
these advisory bodies key players in the governance landscape (also see
Gourevitch, 2007).
Finally, the very financial tools that enable small, dispersed investors to
gain a voice in corporations (pooled investments such as pensions and
mutual funds, among others) can limit the power of these actors to signifi-
cantly alter the corporate governance landscape. Research suggests that
increasingly complex investment vehicles coupled with rapid financial trans-
actions can be used to strategically shift the balance of power across share-
holders during proxy voting: notably, hedge fund trading can disrupt the

one-share/one-vote nature of investor power, decoupling investments from

governance power (Ma & Liu, 2016). Uncertainty in corporate governance
outcomes is increased through the rise of ‘empty voting’, whereby sharehold-
ers gain disproportionately greater power within companies than their eco-
nomic holdings alone would suggest, or the reverse, ‘hidden ownership’,
where investments are not reflected in vote shares (Hu & Black, 2007). With
the introduction of more complex investment products into financial markets,
such dynamics complicate the nature of shareholder governance power—with
uneven implications for shareholders.

4. Implications for IPE and energy governance: adaptive

shareholder strategies
While much of the shareholder advocacy literature has been situated in busi-
ness, management, law and economics (Ma & Liu, 2016; Sjo€stro€m, 2008),
there are notable exceptions in global environmental politics and critical
geography (see Emel, 2002; McAteer & Pulver, 2009; Thistlethwaite &
Paterson, 2015). To date, these issues are underexplored in IPE despite an
early literature on multinational corporations-state relations in the oil and gas
industry (Vernon, 1971). Through our investigation of the more granular
dynamics of shareholder demands, we add to the contributions of other
scholars who interrogate the growing global power of corporations in energy
and the environment (e.g. Jones Luong & Weinthal, 2010; Kraft &
Kamieniecki, 2007). Our findings affirm the need to see corporations as
spaces in which contestation takes place, as investor advocates with varying
motivations build networks, create alliances, and clash with management
boards. These internal governance dynamics have significant implications for
the energy sector, as they establish some of the rules and conditions for
energy exploration and production. In response to the limits on the power of
investors to achieve corporate change, shareholder advocates develop adaptive
and creative strategies. Investors are advancing their claims for environmental
and social risk management through alternate means—first, through a shift in
the focus of shareholder resolutions, second, by mobilizing large and powerful
asset managers, and third, through appeals for government regulation.
As the relevance of climate change for investment decision-making—its
financial materiality, in other words (Smith et al., 2008)—becomes increas-
ingly apparent, such as through the stranding of assets linked to fossil fuels
(for example, ExxonMobil’s write-down of its oil sands reserves in February
2017), asset managers are supporting shareholder calls for improved climate
risk disclosure to a greater extent than ever before. Indeed, in 2017, three of
these resolutions earned majority shareholder support at large energy compa-
nies (ExxonMobil, Occidental Petroleum, and PPL). It therefore makes sense
to reframe HF concerns in terms that link them to climate risk.
Over time, we observe a reduction in the number of HF-focused resolu-
tions, with only five filed in 2016 versus 12 in 2010; concurrently, we witness
a rise in shareholder resolutions on methane emissions, from three in 2013 to

eight in 2016. Methane-focused resolutions have gained traction, with one

earning majority support in 2016, filed by the California State Teachers’
Retirement System (CalSTRS) against WPX Energy. Such shifts in resolution
focus represent adaptive action by shareholders concerned about natural gas
extraction, oil and gas industrial activity, and climate change. Moreover, the
focus of resolutions is not the only new aspect of these repertoires of corpor-
ate contention—with methane resolutions, we also observe the participation
of additional resolution filers in the investor advocate landscape. Along with
HF-resolution filers As You Sow, Mercy Investment Services, Miller/Howard
Investments, and Domini Social Investments, a number of other asset man-
agement firms, faith-based institutional investors, foundations, and public
pension funds have participated in filing methane resolutions. These include
Arjuna Capital, the Adrian Dominican Sisters, the Nathan Cummings
Foundation, and CalSTRS. Many of these institutional investors also engage
in shared SRI networks with HF-resolution filers. As a result, concerns about
shale gas and tight oil are expressed varyingly through HF-, methane-, and
climate-focused resolutions, indicating strategic issue linkages and network
building by investor advocates.
Further, there has been growing interest among shareholders within and
beyond the SRI community in forwarding resolutions on proxy access—that
is, increasing the power of shareholders to nominate members to corporate
boards of directors. Proxy access resolutions are not framed in environmental
and climate terms, but as a broader issue of corporate governance and share-
holder power. This brings in a wider range of supportive voters, which may
increase the likelihood of such actions being accepted by companies. For
shareholders, this offers increased access to corporate governance structures
and further managerial accountability; for those with environmental and
social concerns, this enables the naming of individuals with ESG expertise,
especially on climate change, to corporate governance bodies. In the language
of the 50/50 Climate Project (2016, 1), this could ‘ensure the competency of
boards of directors in managing climate change risk’. These have gained sig-
nificant traction among shareholders, with Proxy Preview 2016 reporting that
70 companies altered their bylaws in 2015 to allow shareholder board mem-
ber nominations (Welsh & Passoff, 2016).
High-profile successes are likely to encourage continued action:
ExxonMobil made waves throughout the energy community by appointing a
climate expert to its board in January 2017 (Welsh & Passoff, 2017) after
years of proxy access resolutions filings by shareholder advocates for the
appointment of a director with expertise in climate change (ICCR, 2017).
Unlike HF and methane emission resolutions, which are focused on environ-
mental and social concerns, proxy access demands fit squarely in the govern-
ance category of ESG. This type of action, a strategic approach of the 50/50
Climate Project and ICCR among others, offers an alternate strategy to envir-
onmentally concerned shareholders: rather than addressing these issues expli-
citly, changing the nature of the appointment of directors to management
boards can shift corporate environmental actions indirectly. Such strategies

can underpin longer-term environmental goals: if shareholders can nominate

directors to boards, they may be able to forward candidates with climate and
other environmental expertise. Instead of engaging in an antagonistic rela-
tionship with a board hostile to such demands, future boards populated with
environmental experts might be more responsive to environmental concerns.
Shifting managerial identities and values could lead to changes in corporate
governance, with implications for environmental outcomes (Van der
Ven, 2013).
Shareholder advocates have been instrumental in producing and publishing
research linking ESG issues with financial risk, such as the series Disclosing
the Facts (, which has led to asset managers
developing their own financial risk assessments (e.g. BlackRock, 2016). As the
evidence mounts, large institutional investors are mobilizing to support ESG
resolutions: of the three climate resolutions at energy companies that
achieved majority shareholder support in 2017 (Kerber, 2017a), two (at
ExxonMobil and Occidental) were supported by BlackRock and Vanguard,
the two largest asset managers in the world, tipping the scales to achieve
majority shareholder support (Kerber, 2017b; Mufson, 2017). Neither institu-
tion had ever before supported a climate-related resolution. Along with draw-
ing attention to the long-term investment risks presented by neglect of ESG
issues, investor advocates have supported principled proxy voting and disclos-
ure of voting practices. Transparency in voting is viewed as a key strategy in
overcoming the conflicts of interest that keep large asset managers from
opposing management on ESG issues (Kamonjoh, 2017), as it allows SRI
investor groups, including Ceres, to monitor the voting practices of large and
powerful asset managers such as BlackRock and Vanguard (Berridge, 2017).
Finally, when corporations fail to respond sufficiently to investor concerns,
we find that shareholders turn back to government to address financial risk.
Returning to our opening story, we note that in the case of methane emis-
sions and climate change, SRI investors opted to lobby the US federal govern-
ment for regulatory interventions (ICCR, 2016; Murray, 2014). The tools of
corporate owners range beyond those of private governance, connecting pub-
lic and private actors in the development of the rules of energy production.
In these situations, the fragmented nature of the private sector becomes par-
ticularly salient for the political economy of energy governance, with inte-
grated financial and environmental concerns.

5. Conclusions
Corporations remain a contested space in global governance. Gourevitch and
Shinn (2006)’s examination of cross-national variation in corporate govern-
ance attributes outcomes to differing coalitions among workers, managers,
and owners, while Pinto, Weymouth, and Gourevitch (2010) link political
partisanship with shareholder protection levels. Our work adds to this IPE lit-
erature by examining the contested and heterogeneous identities of share-
holders. Given the documented power of corporations in shaping state

policies on climate change (Newell & Paterson, 1998), and the significance of
the relationships between state leaders and corporate executives in determin-
ing decisions about security and energy production (Nitzan & Bichler, 1995),
a shift in internal corporate governance could be significant in altering energy
and environmental outcomes.
Through our assessment of HF-focused resolutions, we address core ques-
tions about the opportunities provided to SRI shareholders by the trends of
distance, upstreamed power, and financialization in commodity chains. The
distance embedded in financialized corporate structures—where individuals
delegate investment authority to asset managers and pension funds—has both
benefits and drawbacks. Delegation allows for some coordinated filing activity
by expert managers, with strong ties to multiple networks, deep knowledge of
corporate governance and financial systems, and the ability to reduce costs of
filing activities through shared model resolutions and strategic planning.
While HF resolutions have not gained majority support from shareholders,
some have come close (Energen in 2011, as seen in Figure 1), and many have
been withdrawn as a result of corporate commitments. These outcomes sug-
gest the significance of these resolutions outweighs their ballot support. More
generally, resolutions calling for disclosures of climate risk and emissions of
greenhouse gases, including methane, have gained increasing popularity
among investors, with key successes in 2016 and 2017 pointing to the wider
recognition of environmental issues and climate change as material financial
risk considerations.
However, shareholder advocates vary widely, and the goals of these groups
and networks are uneven. A vast number of individual shareholders may
have no knowledge of the companies in which they are invested or the activ-
ities being forwarded on their behalf. This can limit the social mobilization
potential that might otherwise be present from such a large collective of
potentially concerned and active investors. Shareholder SRI networks counter
the distance in commodity chains by embedding concerns about the places
and people involved in production into investment decisions. Nonetheless,
the limited engagement of a large body of investors, including some institu-
tions with the greatest impact on the vote outcome, dilutes the potential of
investment strategies for wider transformation of corporate—and
Our findings confirm the growing understanding in the shareholder advo-
cacy literature of resolutions as part of wider social movements, and further
these insights through our examination of adaptive repertoires of contention
within firms. As HF resolutions lost traction, shareholders switched tactics.
Increasingly, shareholders have forwarded methane and proxy access resolu-
tions. The latter shifts resolutions away from specific environmental and
social claims to wider corporate accountability and governance concerns,
thereby increasing the scope of shareholder support—in part, by appealing to
the governance concerns of proxy advisory firms. Naming directors with cli-
mate or other environmental and social expertise to boards of directors may
begin to close the distance between investment, corporate governance, and

the environments affected by corporate activities; however, even if successful,

these processes will happen slowly.
The finance sector opens up new entry points into global energy govern-
ance within the field of IPE, but with mixed outcomes. In part, investors
hold some sway over corporate behavior, since investors can pool their share-
based power to forward demands to corporate authorities. However, as cor-
porations demonstrate their responsiveness to the demands of shareholders,
they may stave off more significant limits on their extractive practices, limit-
ing environmental change to the realm of disclosure and risk assessment,
without fundamental changes to the practices that cause environmental harm.
Such contestation within and across management, shareholders, and actors
beyond the private sphere has significant implications for corporate decision-
making in the energy sector.
The changing distance, uneven upstreaming, and complexity of the finan-
cialization of commodity chains requires unpacking the nature of corporate
power. While energy governance is increasingly in the hands of the private
sector, notably in emerging technological realms such as HF, these dynamics
are not cleanly associated with the retreat of public interest. Instead, we
observe a complex interplay of public and private interests within corpora-
tions, with contestation channeled through alliance-building, adaptive filing
tactics, and strategic investment in new financial vehicles. The uncertainty
embedded in these shifting relationships does not reduce overall investor
power, but shifts the balance of power within the body of shareholders,
requiring sophisticated strategic decisions by those aiming to influence cor-
porate—and consequently energy—governance.

Disclosure statement
No potential conflict of interest was reported by the authors.


1. Many resolutions are filed and withdrawn prior to publication on proxy

materials. For many reasons, resolutions might also fail to be published, for
instance as a result of the company successfully petitioning the SEC for a ‘no-
action letter’ or a formal indication from the SEC that it will not take action
against the company for omitting the resolution from its proxy materials.

2. Technically, the hydraulic fracturing component is a small part of the entire

operation of unconventional natural gas extraction and production. Because
the public discourse has often adopted the short-form ‘fracking’ to indicate the
full cycle of unconventional oil and gas extraction from shale and tight rock
and given the politicized use of the term fracking, we use the abbreviated HF.

3. Jones Luong and Weinthal (2010) document private ownership and private
control of US petroleum resources; this is in contrast to other countries where
petroleum resources are usually owned and controlled by the state.

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Jennifer Baka
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