RSEI

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RSEI

• ESM 281
• Corporate Environmental Management
• Magali Delmas

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RSEI vs TRI

• TRI big impact on reduction of releases by
  corporations
• But danger of using only TRI data
• If all a company is concerned about is minimizing
  pounds, as TRI encourages, they may use the more
  toxic substance because it lowers overall
  poundage
• If the SRI community is concerned about potential
  future liabilities associated with emissions of
  toxins, then RSEI is much more useful information
  than just how many pounds of toxins a plant
  releases

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TOXIC 100 Political Economy Research Institute

• http//www.peri.umass.edu/Toxic-100-Table.265.0.h
  tml
• http//www.peri.umass.edu/Detailed-Company.263.0.h
  tml

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Issues in ranking companies based on TRI

• Selection of cases (which companies should be
  part of the basket)
• Choice of variables
• What is the goal of the evaluation?
• Efficiency of the company (potential for cost
  savings)
• Compliance (potential for penalties)
• Toxicity (potential for liabilities)
• Exposure of the company as compared to the
  industry (the big polluter will be more likely to
  be the target of environmental activists)
• How do each of these potentially impact the
  bottom line
• Weights
• Backward looking evaluation, Trends?

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Issues with normalization and weights

• Normalization
• facilities
• Revenues
• Cost
• Profit etc

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KLD

• Hazardous Waste (ENV-con-A). The company's
  liabilities for hazardous waste sites exceed 50
  million, or the company has recently paid
  substantial fines or civil penalties for waste
  management violations. Before 1996 the threshold
  for liabilities was 30 million.
• Regulatory Problems (ENV-con-B). The company has
  recently paid substantial fines or civil
  penalties for violations of air, water, or other
  environmental regulations, or it has a pattern of
  regulatory controversies under the Clean Air Act,
  Clean Water Act or other major environmental
  regulations.
• Ozone Depleting Chemicals (ENV-con-C). The
  company is among the top manufacturers of ozone
  depleting chemicals such as HCFCs, methyl
  chloroform, methylene chloride, or bromines.
• Substantial Emissions (ENV-con-D). The company's
  legal emissions of toxic chemicals (as defined by
  and reported to the EPA) from individual plants
  into the air and water are among the highest of
  the companies followed by KLD.
• Agricultural Chemicals (ENV-con-E). The company
  is a substantial producer of agricultural
  chemicals, i.e., pesticides or chemical
  fertilizers.
• Climate Change (ENV-con-F). The company derives
  substantial revenues from the sale of coal or oil
  and its derivative fuel products, or the company
  derives substantial revenues indirectly from the
  combustion of coal or oil and its derivative fuel
  products. Such companies include electric
  utilities, transportation companies with fleets
  of vehicles, auto and truck manufacturers, and
  other transportation equipment companies. KLD
  began assigning concerns for this issue in 1999.
• Other Concern (ENV-con-X). The company has
  environmental problem not specifically covered in
  KLDs categories, usually an environmental
  accident.

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EcoValue21 Quantifying Eco-Value
EcoVALUE 21 analyzes 60 key variables using
over 20 data sources

• Historical Contingent Liabilities
• Superfund
• State and hazardous waste sites
• RCRA
• Toxic torts

• Financial Risk Efficiency Capacity
• Balance sheet strength
• Insurance cover adequacy

• Managerial Efficiency Capacity
• Strategic corporate governance
• capability
• Environmental management
• systems strength
• Environmental audit/accounting
• capacity
• Supply chain management
• Training capacity and intensity
• Generic environmental management protocols
• Relationships with stakeholders
• Industry-specific protocols

• Operating Risk Exposure
• Toxic emissions
• Product risk liabilities
• Hazardous waste disposal
• Waste discharges
• Supply chain management risk

EcoVALUE 21 RATING

• Eco-Efficiency and Sustainability Risk
• Energy intensity and efficiency
• Raw materials natural efficiency and
  intensity
• Product life-cycle durability/ recyclability
• Exposure to shifts in consumer values

• Strategic Profit Opportunities
• ability to profit from
• environmentally-driven industry
• and market trends

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Next week

• Monday evaluation of corporate environmental
  performance on firms websites
• Wednesday discussion of results