Environmental Justice: One Key to Corporate Sustainability
By Wade C. Foster and Krista K. McIntyre
Defining Environmental Justice
Consider these three statements: I experience odor or discoloration in my tap water, English is not the primary language spoken in my home, and I live near industrial activity.
Now, consider these statements: The organization that I work for can access environmental subject matter experts, the organization that I work for has influence in the regulatory review of projects that I care about, and the organization that I work for can access regulators and leaders of agencies.
Responses to these and similar prompts may highlight the persistent disparities among communities and reveal the varying levels of involvement in regulatory processes among stakeholders in communities across America. The refreshed focus on Environmental Justice (“EJ”) in regulatory and commercial activities is targeted at narrowing the gaps in lived experiences across American neighborhoods.
EJ is defined by the U.S. Environmental Protection Agency (“EPA”) as 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.”[i] EJ aims to combat the disparate impact of environmental and health hazards on low-income neighborhoods and communities of color through distributive, procedural, corrective, and social justice.[ii] EJ is no longer only a subject of activism and academia; it is at the forefront of minds in the White House, state legislatures, and even board rooms.
EJ touches nearly all aspects of society today: pollution, food security, energy equity, disaster relief, housing access, internet access, tribal sovereignty, urban planning, socioeconomic growth, political representation, transportation, education, climate change, and resiliency. EJ targets every facet of the lived experience and an individual’s ability to enjoy a safe, healthy community and to access opportunity. EJ impacts nearly every commercial and industrial sector. Unpacking the definitions of “environmental,” “justice,” and “community” reveals meanings that are broader and more complex than generally understood, even by experienced environmental lawyers.[iii]
The term “environmental justice” emerged during the civil rights movement of the 1960s, when Rev. Dr. Martin Luther King, Jr. brought attention to environmental injustices borne by predominately black garbage workers at a Memphis, Tennessee sanitation facility. Later, a national study found a positive correlation between subjects’ race and their proximity to hazardous waste sites. [iv] Empirical evidence of environmental injustice sprouted.[v] Overburdened communities are not only in black and brown or urban neighborhoods. Following an Executive Order signed by President Clinton in 1994, federal agencies began work to identify and address impacts in communities of color and among low-income areas.
Refreshed Emphasis on EJ
Current events impacting overburdened communities, like the Flint, Michigan water crisis (2014), the Dakota Access Pipeline protests (2016), and the disproportionate rates of COVID-19 hospitalization and death in communities of color,[vi] punctuate the urgency for new EJ conversations. On January 3, 2023, for example, the EPA published its final Strategic Plan 2022-2026. It declares an imperative for the agency to embed EJ and civil rights into its core mission and day-to-day work.[vii] National and regional offices within the EPA are directed to develop plans to achieve specific EJ goals and will be accountable for performance against those goals.
EPA Administrator Michael Regan directed all EPA offices to integrate EJ considerations into their plans and policies, noting EJ was one of his “top priorities as administrator.”[viii] Among Regan’s EJ focuses are strengthening environmental enforcement in and improving engagement with EJ communities and incorporating EJ into regulatory processes, including impact assessments and rulemaking. A recent EPA Enforcement and Compliance Assurance memo directs staff to protect EJ communities by boosting inspections and enforcement while increasing engagement with community members about enforcement efforts.[ix]
Other federal agency plans are required by President Biden’s Executive Orders 13985 and 14008. For example, the U.S. Department of Transportation committed to ensuring opportunities for minority and low-income communities to influence the transportation planning and decision-making processes through enhanced engagement and meaningful input and actively preventing disproportionately high and adverse effects of transportation projects on minority and low-income communities.
The U.S. Department of Housing and Urban Development (“HUD”) committed to a variety of actions to empower communities to achieve climate resilience, facilitate economic opportunities, and eliminate health risks caused by environmental injustices. HUD has established EJ as a budget priority, ensuring that both HUD staff and its external stakeholders are aware of the significance of avoiding and reversing environmental inequities. As goes federal government priorities, also go state government obligations.
Tools for identifying overburdened communities where EJ may be relevant conversation include EPA’s ECHO database, EPA’s EJSCREEN, the Climate and Environmental Justice Screening Tool (“CJEST”), and the U.S. Census. None of these tools is perfect or complete. These tools provide only indicators, not determinations, of disparity or lack of meaningful involvement. Beyond the more obvious metrics, data collected on health outcomes, education levels, access to healthy food and the internet, and language proficiency can inform identification of EJ opportunities.
Companies are implementing EJ strategies to confront the refreshed EJ emphasis proactively. Strategic EJ implementation can yield real benefits and complement investments in Environment, Social, and Governance (“ESG”) objectives. Businesses that hesitate to incorporate EJ principles into their corporate sustainability strategies open themselves up to stakeholder (e.g., regulatory, community, and employee) scrutiny.
The Business Case for EJ
Implementing an EJ strategy is good for long-term business durability and sustainability.[x] Stakeholders, including shareholders, employees, supply (or value) chain partners, customers, and community members are increasingly demanding that companies be good corporate citizens. Ahead of regulatory mandates, businesses are confronting growing pressures to articulate corporate sustainability principles and execute on them. Social impact assessments are emerging in transaction due diligence and influencing commercial dynamics; these can include EJ evaluations. Employees are demanding that employers not only demonstrate commitment to diversity, inclusion, and equity internally, but walk the talk externally to advance EJ in impacted communities as well.
Environmental injustice is bad for business. Adverse outcomes ripple. Companies do not operate in a vacuum. In today’s tight labor market, for example, the very communities that could be a local workforce and offer innovative ways of operating and impacting the surrounding area are experiencing real barriers to advancement in today’s economy. Implementing an effective strategy for meaningful engagement with EJ communities can not only lead to diversity of a company’s workforce but can also reveal durable, community-driven improvements.
Neglecting investment in disproportionately impacted communities deters growth of economic power, diminishes community welfare, and slows advancement of the next generation of contributors, consumers, and leaders. Ignoring the environmental impacts on underserved communities perpetuates an un-virtuous cycle where poor health outcomes, poverty, and societal conditions repeat for generations – a cycle that is very much not consistent with corporate sustainability.
Focusing on EJ complements ESG objectives, aligning environmental impacts, social and racial equity, and governance with community-centric metrics can enhance collaborations between businesses and the communities impacted by their operations.
Projects in Peril and Reviews by Regulators
Local opposition and the related uncertainty over project postponements create real challenges for businesses. In one example, an international petrochemical company, Formosa Group, proposed to build a $9.4 billion chemical and marine shipping facility in St. James Parish, Louisiana. The project faced strong community opposition due to environmental and EJ concerns that the new plant would adversely impact the area EJ activists call “cancer alley.”
The U.S. Army Corps of Engineers (“USACE”) initially issued a dredge and fill permit to the company in 2019. After EJ advocates challenged the permit on behalf of the predominantly black fence-line communities, the USACE suspended the permit in 2020. In August 2021, the Acting Assistant Secretary of the Army announced that a full environmental impact assessment was warranted, stating: “[t]he EIS process will provide opportunities for voices to be heard in an open, transparent, and public way.”[xi] The average time to complete an EIS is approximately four and a half years.
In another example, Acting Regional Administrator for EPA Region 5, Cheryl L. Newton, urged the Michigan Department of Environment, Great Lakes, and Energy to perform a cumulative impacts analysis before issuing an air quality permit to Ajax Materials, Corp., for construction of an asphalt plant. The Region recommended analyses of ambient air impacts on the community and evaluation of whether the proposed construction will cause “adverse and disproportionate impacts for nearby residents.”[xii]
In the letter dated September 16, 2021, the EPA also encouraged the company to consider an alternative site to avoid potential impacts uncovered by the additional review, and, if the plant is permitted, encouraged the company to generate data regularly on an easily accessible website for the community. The EPA also nudged the company to “engage with the local community to address community concerns that may not be within the scope of the air permit.”[xiii] These messages are consistent with the explicit EJ priorities and objectives outlined in the EPA’s draft Strategic Plan and are likely to be repeated by other EPA Regional Administrators.
The EPA is increasing personnel in its regional offices to focus on its EJ strategy. Recent publications outline the authorities and activities relevant to increasing scrutiny on permitting, enforcement, and other processes in support of EJ for EPA managers and staff. These include Principles for Addressing Environmental Justice in Air Permitting dated December 22, 2022, EJ Action Plan dated September 2022, EPA Legal Tools to Advance Environmental Justice dated May 2022, and EPA Legal Tools to Advance Environmental Justice: Cumulative Impacts Addendum dated January 2023.[xiv] More guidance for regulators and the regulated community is expected this year.
In Idaho, the U.S. Attorney for the District of Idaho launched an EJ reporting hotline to “protect the community from harmful violations of federal health and safety laws.”[xv] The EPA is also including EJ in enforcement actions against Idaho companies using existing statutory authorities.
EJ as a Key to Corporate Sustainability
The ESG framework can facilitate risk management to ensure long-term corporate sustainability and can highlight opportunities to create value for long-term success. ESG derives from notions of corporate sustainability and the enterprise leadership that stakeholders expect will confront risks and identify opportunities that increase value. The guiding principles of ESG are rooted in the United Nations Global Compact(2000) and subsequent report Who Cares Wins (2004).[xvi]
ESG factors selected by companies as material priorities are unique to each organization. Environmental factors address the business’ long-term ability to secure raw materials and to produce goods and may include pollution, packaging, climate change resiliency, biodiversity, soil health, or energy use. Social factors address the business’s long-term relationships with people and society and may include workforce and workplace priorities, supply (value) chain impacts, economic opportunities in impacted communities, or education. Governance factors address the leadership and accountability of the business amid uncertain and complex commercial realities and may include compliance, business ethics, transparency, board diversity and leadership pipeline, internal controls, or reporting and accountability practices.
Much is written and debated about the implementation of ESG and the lack of standardized methods to determine material risks, institute adequate controls, and clearly communicate progress toward desired outcomes. The most well recognized and widely employed standards for implementing ESG strategies are developed by the Global Reporting Initiative (“GRI”),[xvii] an international standards organization that helps businesses quantify and communicate on ESG impacts.
In 2022, 78% of global 250 companies used the GRI framework.[xviii] Overall, the standards create a continuous improvement cycle that places measurable ESG goals at the center of corporate decision-making and action. ESG standards encourage systems that monitor, report, and reevaluate relevant metrics, creating a holistic picture of current operations, material risks, and possible opportunities. The holistic, stakeholder influenced framework that informs the E, S, and G factors can incorporate the lived experiences in fence-line communities – where EJ is ripe.
A successful ESG program begins with a materiality assessment, a candid and stakeholder-driven review of risk factors that threaten the long-term sustainability of a business. Identifying risks to mitigate and opportunities for investment future-proof an enterprise and create value. To apply ESG principles to EJ needs, companies meaningfully engage with impacted communities in an assessment to understand the lived experiences in the communities. To be effective, businesses must acknowledge and overcome the cultural, language, and power barriers that might stifle the exchange. Materiality assessments are recalibrated routinely to reevaluate topics that are material, as topics will change with time.
Leading corporate sustainability efforts using ESG as a tool to identify risks and opportunities is a journey and certainly more encompassing than just EJ. As government and other stakeholders express more concrete expectations for narrowing the disparities among communities in America, a commitment to EJ can be a key to ensuring a business’s future and to creating value that endures.
Wade C. Foster is an environmental attorney with Stoel Rives LLP in Boise, Idaho. His practice includes environmental and natural resource-related project development, regulatory compliance, and litigation. Prior to joining Stoel Rives, Wade clerked for the Honorable B. Lynn Winmill, U.S. District Judge for the District of Idaho.
Krista K. McIntyre is an environmental lawyer and enforcement defense partner based in Stoel Rives LLP’s Boise, Idaho office. Krista started her career in Washington, D.C. as an enforcement attorney at the U.S. Environmental Protection Agency and the U.S. Department of Justice. In 2018, Krista was admitted to the American College of Environmental Lawyers and currently serves as chair of their Environmental Justice Committee.
[i] See U.S. EPA, Learn About Environmental Justice (last visited Mar. 27, 2023), https://www.epa.gov/environmentaljustice/learn-about-environmental-justice.
[ii] See Robert R. Kuehn, A Taxonomy of Environmental Justice, 30 Envt’l L. Rptr. 10681 (2000), https://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1137&context=aprci.
[iii] Seema Kakade, Defining Environmental Justice Communities, American Bar Association (Mar. 3, 2023), https://www.americanbar.org/groups/environment_energy_resources/publications/trends/2022-2023/march-april-2023/defining-environmental-justice/.
[iv] See United Church of Christ, Commission for Racial Justice, Toxic Wastes and Race in the United States (1987), https://www.ucc.org/wp-content/uploads/2020/12/ToxicWastesRace.pdf.
[v] See Clare E.B. Cannon, Intersectional and Entangled Risks: An Empirical Analysis of Disasters and Landfills, Front. Clim. 3 (Dec. 13, 2021) (collecting sources), https://www.frontiersin.org/articles/10.3389/fclim.2021.709439/full.
[vi] Centers for Disease Control and Prevention, Hospitalization and Death by Race/Ethnicity (Dec. 28, 2022), https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization-death-by-race-ethnicity.html.
[vii] U.S. EPA, FY 2022-2026 EPA Strategic Plan (Mar. 2022), https://www.epa.gov/system/files/documents/2022-03/fy-2022-2026-epa-strategic-plan.pdf.
[viii] U.S. EPA, EPA Administrator Announces Agency Actions to Advance Environmental Justice (Apr. 7, 2021), https://www.epa.gov/newsreleases/epa-administrator-announces-agency-actions-advance-environmental-justice.
[ix] Lawrence E. Starfield, Acting Assistant Administrator, Strengthening Enforcement in Communities with Environmental Justice Concerns, U.S. EPA (Apr. 30, 2021). https://www.epa.gov/sites/default/files/2021-04/documents/strengtheningenforcementincommunitieswithejconcerns.pdf.
[x] See Richard L. Harris, Environmental Justice is Good Business, American Bar Association(Oct. 1, 2003),https://www.americanbar.org/groups/crsj/publications/human_rights_magazine_home/human_rights_vol30_2003/fall2003/irr_hr_fall03_business/; Thomas P. Lyon & John W. Maxwell, Corporate Social Responsibility and the Environment: A Theoretical Perspective (Oct. 2007), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1011793; Lucy Perez et al., Does ESG Really Matter—and Why?, McKinsey Quarterly (Aug. 10, 2022), https://www.mckinsey.com/capabilities/sustainability/our-insights/does-esg-really-matter-and-why; Robert G. Eccles, From “Who Cares Wins” to Pernicious Progressivism: 18 Years of ESG, Forbes (Nov. 5, 2022), https://www.forbes.com/sites/bobeccles/2022/11/05/from-who-cares-wins-to-pernicious-progressivism-18-years-of-esg/?sh=159b631379fe.
[xi] Memorandum for Commanding General, U.S. Army Corps of Engineers, Formosa Group Chemical Plant Environmental Impact Statement (EIS) and Referral for Decision, Department of the Army at 1 (Aug. 18, 2021), https://www.biologicaldiversity.org/campaigns/ocean_plastics/pdfs/Formosa-Memo-Signed-18-Aug-2021.pdf.
[xii] U.S. EPA, Letter to Mary Ann Dolehanty at 2 (Sept. 16, 2021), https://www.epa.gov/system/files/documents/2022-03/ajax-egle-permit-comment-letter-9-16-2021.pdf.
[xiv] U.S. EPA, EJ in Air Permitting – Principles for Addressing Environmental Justice Concerns in Air Permitting (Dec. 22, 2022), https://www.epa.gov/caa-permitting/ej-air-permitting-principles-addressing-environmental-justice-concerns-air; U.S. EPA, EJ Action Plan (Sept. 2022), https://www.epa.gov/system/files/documents/2022-09/OLEM-EJ-Action-Plan_9.2022_FINAL-508.pdf; U.S. EPA, EPA Legal Tools to Advance Environmental Justice (May 2022), https://www.epa.gov/system/files/documents/2022-05/EJ%20Legal%20Tools%20May%202022%20FINAL.pdf; U.S. EPA, EPA Legal Tools to Advance Environmental Justice: Cumulative Impacts Addendum (Jan. 2023), https://www.epa.gov/system/files/documents/2022-12/bh508-Cumulative%20Impacts%20Addendum%20Final%202022-11-28.pdf.
[xv] U.S. Attorney’s Office, District of Idaho, Environmental Justice & Public Health (last visited Mar. 27, 2023), https://www.justice.gov/usao-id/Environmental%20Justice.
[xvi] See United Nations Global Compact (last visited Mar. 27, 2023), https://unglobalcompact.org/; Who Cares Wins: Connecting Financial Markets to a Changing World, Swiss Federal Department of Foreign Affairs and United Nations (Dec. 2004), https://www.ifc.org/wps/wcm/connect/de954acc-504f-4140-91dc-d46cf063b1ec/WhoCaresWins_2004.pdf?MOD=AJPERES&CVID=jqeE.mD.
[xvii] See Global Reporting Initiative (last visited Mar. 27, 2023), https://www.globalreporting.org/.
[xviii] KPMG, Big Shifts, Small Steps – Survey of Sustainability Reporting 2022 at 24 (Oct. 2022), https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2022/10/ssr-small-steps-big-shifts.pdf.