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Companies and Communities: Environmental Justice as an Effective and Proactive Business Practice

Friday, August 2, 2019
Benjamin F. Wilson

Benjamin F. Wilson

Chairman, Beveridge & Diamond, P.C, Washington, DC

In recent months, the long-standing environmental justice (EJ) movement—which began with the civil rights movement—has gained new momentum. EJ refers to the “fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” As natural disasters ravage minority, low-income communities, global climate justice campaigns demand equitable solutions, and members of Congress underscore the importance of ensuring environmental protection for our most vulnerable communities, EJ principles are given a leading role in the conversation about environmental policy.

A key player in this conversation is industry—often villainized in the EJ context as the main offender and source of environmental harms. However, there are many examples of companies that have prioritized EJ principles in their work, from project design to completion, showing the good that can come from communities working with industry to ensure that all voices are heard and injustice averted. Successes often come from a willingness to engage a community, and focus the dialogue on where parties agree, rather than where they do not, and how they can work together to achieve as many shared objectives as possible.

The energy sector has taken a leadership role in this respect, and as the case studies below highlight, companies can balance the achievement of EJ principles with proactive, informed business decisions and effective risk management. Indeed, when well informed by communities, industry stakeholders can make EJ a priority in ways that are economically and operationally feasible. 

Pacific Gas and Electric Company

Pacific Gas and Electric Company (PG&E), a utility company that provides natural gas and electricity to much of northern California, has shown thought leadership in the energy industry by drafting and implementing its Environmental Justice Policy. The policy establishes clear guidelines on how the company can work cooperatively with communities and is designed to ensure that PG&E is transparent, accountable, responsible, and consistently working to address the concerns of communities. PG&E employs a full-time Environmental Justice Program Manager, trains and educates employees about EJ and the company’s policy through a multi-year training program, manages operations and facilities to minimize impacts on nearby communities, integrates EJ considerations into reviews of potential new sources of power generation, invests in alternative fuels and renewable energy to improve air quality in the communities that they serve, and takes responsibility for impacts related to historic operation.

Beyond its EJ Policy, PG&E is a leader in corporate social responsibility and environmental reporting. The Carbon Disclosure Project (CDP) named PG&E to the 2012 Carbon Disclosure Leadership Index—recognizing PG&E for the quality of its reporting on greenhouse gas emissions and the business risks and opportunities from climate change. Moreover, as a charter member of the California Climate Action Registry, PG&E was the first investor-owned utility in California to complete a third-party-verified inventory of carbon dioxide emissions in 2003. In 2009, PG&E began voluntary reporting to the Climate Registry, a nonprofit organization that sets consistent and transparent reporting standards for North American businesses and governments. PG&E is a founding member of the Climate Registry.

Valero

Valero, an international manufacturer of transportation fuels, petrochemical products, and power, is among one of the first energy companies to adopt a formal EJ Policy and initiate a robust outreach effort to fence-line communities. Valero operated a refinery in the low-income community of Port Arthur, Texas, where 97% of the community is African American. After the Texas Commission on Environmental Quality placed Port Arthur on its Air Pollutant Watch List regarding benzene, residents in the Port Arthur community began to worry about related health effects. Recognizing the community’s concerns as well as the lack of access to affordable health care, Valero and environmental activist Hilton Kelly convinced the U.S. Environmental Protection Agency to allow Valero to divert one million dollars to fund a community health clinic, as part of Valero’s satisfaction of a 2011 consent decree. Valero also performed construction oversight of the clinic, which broke ground in August 2012. In addition to building the health clinic, Valero sponsored several other projects in Port Arthur as part of the EJ Showcase Community project including: providing information to residents on how to make homes healthier; hosting emergency response training to residents; and supporting community revitalization through cleanup assessment grants.

Marathon Petroleum

Marathon Petroleum (Marathon), an independent international energy company, provides another great example of an EJ success. Marathon operates a refinery in the southwest region of Detroit, where the population is 57.2% Latino and 23.6% African American, and many residents suffer from high rates of asthma and other disease. The region is saturated with heavy industry. Marathon, Severstal Steel, U.S. Steel, Detroit Edison Coal Plant, U.S. Gypsum, and the Detroit Wastewater Plant (the single largest sewage plant in the United States) are all within a four-mile radius of a community of about 25,000 people. In early 2016, Marathon sought approval to expand its operations (and related emissions), but after community opposition, Marathon altered its emissions request. In March 2016, Marathon committed to reducing its emissions by 20%, which would reduce the company’s output from 400 tons per year to 320 tons per year.

On another occasion, when Marathon announced plans to build a new coker unit, it took the time to understand the neighboring Detroit community’s concerns and share information on the emission impacts associated with the new project. Through an effective campaign of community engagement, Marathon identified the community’s wishes and, in accordance with their interests, offered to buy out homeowners that were located downwind and nearby their operations. Marathon has purchased at least 277 of the 294 properties in nearby Oakwood Heights. They agreed to pay at least $50,000 per home, though the average appraisal for each home was about $16,000. The company’s average offer for each home was about $65,000.

Conclusion

As demonstrated by the above case studies, early and effective community engagement, alongside comprehensive internal EJ policies, can show great results for all involved. At a time when investors and customers are demanding environmental, social, and governance program performance, alongside effective corporate social responsibility efforts, the business case for implementing EJ principles is increasingly persuasive. The solutions are not one-size-fits-all, and will often be project-, community-, and industry-specific. However, much can be learned from the success stories and their shared techniques, including: reaching out to nearby vulnerable communities early and often to meet them where they are; actively listening to communities to understand their needs; offering transparency on project design, impacts, and time lines; and developing internal policies that embody these EJ principles and apply them companywide.

The current political climate has encouraged industry actors to become leaders in environmental policy, and EJ should be no exception. The time is ripe to explore the potential for those in all sectors to embrace these best practices, allowing them to meet their bottom line while also being the best possible neighbors.