In years past, we have seen a small – but growing – amount of shareholder activism in publicly traded companies concerning sustainability and environmental matters. Several Fortune 500 companies have faced and defeated these attempts at requiring greater environmental risk assessment and disclosure.
2010 looks to be dramatically different.
Setting the stage in 2008, TVA experiences a catastrophic failure of an ash pond in Tennessee that also prompts EPA to initiate their own risk assessment of similar ash ponds across the country.
Then, SEC published its Interpretive Guidance on climate risk assessment/disclosure that is effective beginning this year.
On the H&S front, Massey Energy faces a mine disaster that claims 29 lives and raises the profile of MSHA enforcement gaps.
Now, BusinessWeek reports that investor groups are gearing up to require far more information and disclosure from the companies they invest in. Some highlights of the article:
In the past, demands for risk disclosure tended to be viewed as hypothetical. In light of the Gulf disaster, [Robert Graham, founder and head of the environmental law practice at Chicago-based Jenner & Block] predicts that requests for such information will become more mainstream. “These issues are real and this disaster dramatically demonstrates how they impact a company’s balance sheet,” he says.
Companies will be pressed by shareholders to disclose more information about safety practices, the kinds of fail-safe mechanisms they have in place for high-risk operations, and their plans and prospects. Companies will have to reconsider the insurance they’ve arranged to better gauge how much and what kinds of coverage they need to cover potential risks. They’ll also need to figure out how much cash to set aside in reserve to cover unforeseen incidents that may cause environmental damage, he says. Shareholders will also start to insist on viewing companies’ safety records, including any sanctions received from federal or state agencies regarding their operations.
If your company is not already in the process of evaluating how to define and assess environmental matters in the context of “risk” rather than “compliance” or “management systems”, then you are probably behind.