Praxis Mutual Funds and other investors are participating in shareholder advocacy conversations with Union Pacific – the largest railroad company in the U.S. – about how the company addresses safety concerns related to transporting of crude oil.
Crude oil accounts for a very small, but growing percentage of Union Pacific’s total business. Discussions have centered on board-level oversight of safety programs, Union Pacific’s approach to hazardous materials, the rail cars themselves, and a review of the emergency response process.
The shale oil boom of the last few years has pushed rates of United States oil production to an all-time high.1 However, a lack of adequate pipeline capacity to move this burgeoning supply to market has led to a steep increase in oil transport by rail.2
The increased crude oil rail traffic – a 4,000 percent jump since 2008 in some places3 – leads to questions about safety. Train derailments and rail car fires have made headlines, including the 2013 train derailment in Lac Mégantic, Quebec, which killed 47 people. The train reportedly carried crude oil from the Bakken region of North Dakota.
1U.S. Energy Information Administration, June 2015.