In today’s fast-moving and complex world, business leaders have more to consider than ever before. With ESG (Environmental, Social, and Governance) issues driving the boardroom agenda, societal concerns such as environmental justice have become increasingly important for leaders to understand and address when developing policies and operational strategies.
Environmental justice is a social movement that originated in the 1960s when communities began protesting polluting facilities in their neighbourhoods. People started to voice their opposition to large industries that had established landfills and sanitation sites in residential areas, resulting in significant environmental pollution and health hazards for residents.
Manufacturers are responsible for caring for and considering the well-being of the local communities surrounding their facilities, and operating with the community in mind is now more crucial than ever.
Understanding environmental justice
The United States Environmental Protection Agency (EPA) defines environmental justice as the fair treatment and active involvement of all people, regardless of race, colour, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws and regulations. Equitable access to healthy environments is critical for community well-being, as it affords cleaner air, safer schools, and supportive workplaces, which together foster personal and communal growth, drive innovation, and boost quality of life for all individuals.
Environmental justice addresses systemic inequalities that historically have placed marginalised groups at greater risk of exposure to pollution, environmental hazards and combats issues like pollution, climate change, and access to clean air and water. More recently, terms such as “environmental racism” have emerged, spotlighting the issue that lower socio-economic status communities often bear the brunt of living close to hazardous sites and pollution.
Advancing environmental justice is everyone’s responsibility – from governments to regulators, industry, and local communities. Manufacturing plays a pivotal role in moving the needle in the right direction, as historically, manufacturers have been some of the worst polluters and environmental justice offenders in the world. With increased scrutiny from regulators, the public, consumers, and investors, manufacturers have nowhere to hide.
A renewed focus on environmental justice and how that is impacting manufacturers
In April 2023, the Biden Administration strengthened its commitment to environmental justice by signing an Executive Order 14096 titled “Revitalizing Our Nation’s Commitment to Environmental Justice for All.” This order promotes a comprehensive approach to environmental justice across all government agencies in the US.
Climate-change lawsuits, central to environmental justice, are increasing: chemical manufacturer 3M reached a $10.3 billion settlement in 2023 to resolve water pollution claims, the largest settlement of its kind. This lawsuit could open the floodgates as climate change affects marginalised communities around the world more than the relatively more privileged sections of the population.
For example, Small Pacific Island Nations produce just 5 per cent of fossil fuel emissions, much lower than industrial countries. However, they face severe climate change threats, especially from rising sea levels that endanger their existence.
With rising scrutiny, compliance and legal battles looming, how can manufacturers effectively plan for environmental justice and the communities affected by their operations? Here are five things manufacturing leaders can consider as they prioritise environmental justice in their planning:
1. Develop an environmental justice plan
The EPA recommends regular assessments, specifically when a manufacturing facility needs to expand or relocate. Leaders can create an Environmental Justice Plan that addresses concerns early on. Aspects to focus on could include budget for staff to lead community engagement efforts and revising hiring practices to employ people from local communities.
2. Embrace environmental justice in corporate culture
It starts at the top. To truly embrace environmental justice, companies must weave this commitment into the fabric of their corporate culture, ensuring it influences decisions and actions at every level, from the boardroom to the shop floor.
3. Use screening tools
Use available screening tools, such as the Climate and Economic Justice Screening Tool (CEJST). The CEJST is a geospatial mapping tool created by the EPA to highlight dangers to at-risk communities. Such tools help identify potential environmental justice or civil rights concerns early in the process when setting up a new plant and changing existing facilities, as these may affect the surrounding communities.
4. Engage with the community
Manufacturers should actively engage with local communities to meet governmental environmental justice expectations and gather input on decisions that affect them. By understanding community impacts, forming strategic partnerships, and collaborating on initiatives, companies can enhance their relationships with residents and catch any potential problems early on.
5. Measure and report progress
Setting clear metrics to measure progress on environmental justice initiatives is essential for accountability. Companies should regularly evaluate their Environmental Justice Plan and community engagement efforts, using data to showcase successes and identify areas for improvement. By publicly sharing results—like emissions reductions and local hiring practices—manufacturers can demonstrate their commitment to environmental justice.
Inaction around environmental justice is costly
Ignoring the importance of environmental justice will damage community relationships and your company’s reputation and can lead to significant financial repercussions.
Research by Bank of America Securities (BofA) indicates that more than $600bn of market cap for Standard & Poor 500 companies was lost to “ESG controversies,” such as failures around governance failures between 2013 and 2020. Savita Subramaniam, Managing Director and Head of ESG Research at BofA said in an interview: “ESG controversies can be especially costly and long-lived, and even highly regarded companies are subject to such reputational risk.”
To successfully promote environmental justice, manufacturers can leverage the Consumer Sustainability Industry Readiness Index (COSIRI) as a valuable resource. COSIRI offers an ESG framework that helps companies assess their environmental, social, and governance maturity, providing essential tools and insights for integrating sustainable practices.
By evaluating their ESG performance, manufacturers can identify areas for improvement, enhance transparency, and align with global sustainability standards. This proactive approach positions them as leaders in sustainable manufacturing and advocates for environmental justice, ultimately helping to build stronger relationships with communities and mitigate potential risks associated with environmental impacts.
