The Carbon Disclosure Project (CDP) launched its second annual Water Disclosure Global Report on Friday, November 16th. It is based upon a questionnaire sent to 315 companies on the Global 500 Index identified as operating in the most water-stressed locations or industry sectors. The CDP report shows some improvement by reporting companies on water management issues but overall, the report concludes that more board-level attention is required to address this critical concern.
The following are some key findings from the process and the report:
- 190 companies or 60% of identified companies responded to the questionnaire – a 10% increase over last year.
- Over half (59%) of companies responding reported exposure to water-related risks such as flooding, scarcity and reputational damage.
- One third (38%) of companies already have experienced water-related business impacts, such as disruption to operations from severe weather events or water shortages.
- 63% of companies believe that water presents commercial opportunities and commonly identified opportunities relate to increased water efficiency, among others.
- 72% of companies understood the linkages or tradeoffs between water and carbon emissions.
- 41% of companies confirm that the biggest water risk facing their businesses is water stress or scarcity.
CDP Water Disclosure collects data annually on water use, strategies, and risks and opportunities from companies on behalf of 354 investors representing US$43 trillion in assets. The Carbon Disclosure Project is an independent not-for-profit organization providing a transformative global system for companies and cities to measure, disclose, manage, and share climate change and water information.
The 2011 CDP Water Disclosure Report is available at https://www.cdproject.net/CDPResults/CDP-Water-Disclosure-Global-Report-2011.pdf.
On November 17, 2011, Institutional Shareholder Services Inc. ("ISS") published the 2012 updates to its U.S. Corporate Governance Policy. The proxy voting guidelines in this document, which is reviewed and updated annually, influence how many major institutional shareholders vote on shareholder proposals and are monitored closely by all public companies. In its 2012 updates, ISS included specific policies regarding shareholder proposals related to hydraulic fracturing (also known as fracking), water issues, and workplace safety, as well as an updated recycling policy. ISS had previously used its existing General Environmental Proposals and Community Impact policy for shareholder proposals on hydraulic fracturing and water issues.
The most significant development is that ISS generally recommends a "For" vote on shareholder proposals requesting greater disclosure of a company's natural gas hydraulic fracturing operations. ISS reasoned that, given the high profile and the number of previous shareholder proposals on the subject , as well as the level of institutional investor support for such proposals , that "a specific policy on hydraulic fracturing-related proposals [was] warranted."
On the other hand, ISS makes a "case-by-case" voting recommendation regarding: (1) proposals to adopt a comprehensive recycling strategy; (2) proposals requesting that a company report on, or adopt a new policy on, water-related risks and concerns; and (3) requests for workplace safety reports, including reports on accident risk-reduction efforts. With respect to water issues, ISS notes that shareholder proponents are submitting proposals regarding water-related risks more frequently and that water risks are rising in profile. Similarly, ISS cited high-profile accidents in the oil and gas industry as driving recent shareholder proposals on workplace safety.
In sum, along with the Securities and Exchange Commission's guidance on disclosure of climate-related risks, environmental issues are likely to be a hot topic during the 2012 proxy season.
To view the full text of the 2012 Updates, click here.
Criminal Charges Filed For Sale of Fake Renewal Energy Credits; NOVs Issued to Companies that Purchased Fake Credits
On October 3, 2011, Rodney Hailey, the Chief Executive Officer of Clean Green Fuels, LLC was charged with wire fraud, money laundering, and Clean Air Act violations for allegedly selling $9 million in fake renewable energy credits. According to the complaint, Hailey is alleged to have sold 32 million renewable energy identification numbers representing approximately 22 million gallons of biodiesel fuel. The credits were purchased by oil companies to demonstrate compliance with a provision in the Energy Independence and Security Act that requires these companies to either produce a specific quantity of renewable fuel or purchase renewable energy credits.
On November 7, 2011, U.S. EPA issued notices of violation to 24 companies that had purchased these invalid credits, noting that the use by these companies of invalid credits to demonstrate compliance was still a violation "regardless of that person's good faith that the [credits] were valid at the time they were acquired." U.S. EPA has ordered these 24 companies to submit revised corrected compliance reports within 14 days or face potential penalties of $37,500 per day. Please click here to go to U.S. EPA's website for more information on these notice of violations.
Keri Holleb Hotaling, a Partner at Jenner & Block and member of the Firm's Environmental & Workplace Health & Safety Law Practice, has been selected as a panelist for Northwestern Law School's upcoming Environmental Law Society Career Panel. This informal panel discussion is designed to expose students—especially first-year students—to the practice of environmental law and to various environmental law career options.
The panel speakers represent many facets of environmental law practice, and include:
Nancy Loeb: Director, Environmental Advocacy Center (Northwestern Law Clinic);
Bob Peachey: United States EPA; and
- Steve Thorn: solo practitioner.
The Environmental Law Society Career Panel discussion will be held on Friday, November 11, from 1:30 pm - 2:45 pm at Northwestern Law School, 375 E. Chicago Avenue.
On November 3, 2011, the Agency for Toxic Substances and Disease Registry ("ATSDR") published its 2011 Priority List of Hazardous Substances. Pursuant to Section 104(i)(2)(A) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), ATSDR, in collaboration with EPA, is charged with developing a list of hazardous substances, in priority order, that are most commonly found at sites on the National Priorities List ("NPL") and pose the most significant potential threat to human health. The Substances Priority List consists of the hazardous substances receiving the top 275 highest scores according to ATSDR's priority calculation. ATSDR calculates a priority score for each hazardous substance that is determined to be a "candidate" for the list, based on its presence in at least one environmental media at three or more NPL sites. For 2011, the candidate list was 847 substances long.