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Keeping you in-the-know on environmental, social and governance developments

It seems odd to write about the simple act of physically attending a conference, but in a COVID world, it is strangely noteworthy. Last week, I spoke on a panel on ESG data validation at the 33rd Annual Texas Environmental Superconference in Austin. This is the most important environmental law conference in Texas, and arguably in the entirety of EPA Region 6. It focuses on a wide range of legal developments impacting Texas environmental case law, legislation and regulation and this year attendance was limited to just over 300 attendees due to social distancing requirements.

I learned a number of things at the meeting.

  • Meeting logistics were minimally impacted by COVID protocols. Mask use was voluntary, hand sanitizer was prevalent, the hand-to-hand exchange of business cards was limited and a variety of greetings were used – handshakes, fist bumps and elbow bumps. Reduced seating density was nice because everyone had more elbow room at the tables and more walking space between them. The lunches (which were honestly very good) were plated rather than buffet as part of the COVID protocol.
  • The Texas legislative and regulatory trains have not stopped for COVID or federal administration changes. New air and water use/rights mandates have progressed, although waste management seems to have gotten less attention.
  • Interest in ESG data governance, validation and fraud identification appears to be of great interest to the to legal community.

Be Afraid, Be Very Afraid

The most important (and scary) development I picked up is that new mobile air sensing technology using drones and mobile laboratories deployed to measure actual point source air emissions may soon feed results to a public app in real time. The person I chatted with explained that the analytical technology is already used for LDAR (Leak Detection and Repair) monitoring at chemical plants and to track the source of nuisance odors.

If that data is posted on a public app, it could open a Pandora’s box of claims based on environmental law, advertising/marketing claims, securities disclosures and Board liability for air emissions and public health information in ESG disclosures. Not only might this uncover errors and omissions in your company’s direct (Scope 1) carbon emissions, but if your suppliers are also monitored in this manner similar errors and omissions in your Scope 2 and 3 carbon emissions could become apparent.

What You Can Do

Public reporting of mobile analytical results of air monitoring may not be around the corner but it would be prudent to consider the risk it presents. Most air emissions data reported to regulatory agencies is calculated rather than measured directly, and while the calculations are time-tested, they embody numerous assumptions. In addition, not every emission source at a facility is regulated or subject to monitoring, tracking and quantification.

Companies should begin by acknowledging the existence and significance of the risk associated with analytical quantification of actual facility-wide emissions. Consider conducting a thorough site review of plant operations and emissions using a new set of eyes (such as an environmental auditor unfamiliar with your sites) and a comprehensive audit of emissions calculations, monitoring systems and assumptions. This may identify opportunities to close gaps between what is (and has been) reported and analytically quantified site-wide emissions.

Consideration should be given to the same risk if suppliers (Scope 2 and 3) carbon emissions are also monitored and quantified in this manner. At this point in time, it may only be necessary to discuss contingency plans in this regard but part of the plan should be notifying your suppliers about your concerns, an explanation of what your company doing and suggested actions for your suppliers.

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The Editor

Lawrence Heim has been practicing in the field of ESG management for almost 40 years. He began his career as a legal assistant in the Environmental Practice of Vinson & Elkins working for a partner who is nationally recognized and an adjunct professor of environmental law at the University of Texas Law School. He moved into technical environmental consulting with ENSR Consulting & Engineering at the height of environmental regulatory development, working across a range of disciplines. He was one… View Profile