CCRcorp Sites  

The CCRcorp Network unlocks access to a world of insights, research, guides and information in a range of specialty areas.

Our Sites


A basis for research and practical guidance focusing on federal securities laws, compliance & corporate governance.


An educational service that provides practical guidance on legal issues involving public and private mergers & acquisitions, joint ventures, private equity – and much more.


The “one stop” resource for information about responsible executive compensation practices & disclosure.

Widely recognized as the premier online research platform providing practical guidance on issues involving Section 16 of the Securities Exchange Act of 1934 and all of its related rules.


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

A few interesting developments have happened in the short time since my post yesterday that focused on Norfolk Southern’s 10-K and ESG disclosures.

The first – and biggest – thing is that the Pennsylvania governor is investigating whether criminal charges should be filed against the company. According to NPR (thanks to my Mom for sending this to me last night), Pennsylvania Gov. Josh Shapiro said:

“We made a criminal referral to the office of attorney general. They’ll determine whether or not there was criminal activity … What I know is that Norfolk Southern is governed every day, not by caring about the communities that they send their trains through, but by corporate greed.”

In response, the railroad issued a statement to NPR about their concern for, and importance of and commitment to the community’s health and safety:

“We recognize that we have a responsibility, and we have committed to doing what’s right for the residents of East Palestine… We are committed to thoroughly and safely cleaning the site, and we are reimbursing residents for the disruption this has caused in their lives.”

Norfolk Southern CEO Alan Shaw said “we’re going to invest in this community for the long haul and help this community recover and help this community thrive.”

What I find interesting is what I pointed out yesterday that arguably speaks to inadequacies of their ESG materiality assessment and associated programs – which could be used against the company:

“Based on the company’s explanation of their stakeholder universe, it appears that communities and populations along their chemical transportation routes were not included in the ESG assessment process. Certainly, looking at things through the lens of East Palestine, that seems to be a major oversight. Perhaps it was expected that one or more of the five selected groups would act as a proxy to some extent for other views not in the room. I don’t think that happened – or it didn’t happen adequately.”

In another article, CNN presented further indication of what some could argue is a lack of concern about communities along their routes, as the company is now “facing criticism for spending nearly $18 billion on share repurchases and dividends over the last five years, more than 2,500 times what it has pledged to residents and the community.”

CNN also reported that the NTSB is expected to release a preliminary report on the accident which

“comes amid mounting questions about how Norfolk Southern, the train’s operator, has handled the incident and the mechanical failures that may have preceded it… federal investigators probing the wreck have said surveillance video captured a wheel of the train bearing ‘in the final stage of overheat failure moments before the derailment.’ In a February 14 statement, the NTSB said the ‘suspected overheated wheel bearing’ was collected for examination from engineers.”

Zach wrote last week about earlier reports of potential staffing issues that some believe are an underlying potential cause of a mechanical failure leading to the catastrophe:

“Last year, rail workers’ unions were poised to strike. Their grievances included a lack of paid sick leave, allegations of rail workers being overworked, and lines being understaffed which they state is the result of a practice known as precision scheduled railroading (PSR). Concerns over PSR were reported on by Freight Waves in 2021 in an interview with Jason Cox a leader of the Brotherhood of Railway Carmen Union – who stated that due to PSR the inspection time per rail car was cut from three minutes to one.

When these issues and others came to a head last year, the railway unions were ready to strike. However, on December 2, 2022, President Biden signed a bill into law that made the rail strike illegal. The provision of that bill which would have guaranteed sick days to rail workers failed to pass Congress. The law avoided a strike that would have damaged the US economy but failed to solve the underlying human capital management issues facing rail companies. 

Roughly two months later, a Norfolk Southern train carrying hazardous chemicals derailed in East Palestine, Ohio. The suspected cause of the crash was a mechanical issue with an axle on one of the 150 cars.”

If you haven’t read Zach’s blog, his primary point is that “Keeping employees happy, healthy, and safe is critical to smoothly operating a company. However, when it comes to employee relations, things don’t always go smoothly. Sometimes there are disputes and how companies choose to resolve those disputes can have unintended and significant impacts on company operations and risks.”

In the case of Norfolk Southern, union workers were unhappy about a number of issues, including the lack of paid sick days. Now the company has agreed to giving one union those paid sick days and is talking with others about doing the same. CNN reported

“The deal is with the Brotherhood of Maintenance of Way Division, the union representing 3,000 track workers at Norfolk Southern, and the third largest union at the railroad behind the unions representing conductors and engineers. Norfolk Southern has about 19,000 employees total and about 15,000 of whom are union members.”

What This Means

Putting these pieces together doesn’t paint a great picture of how the company operationalizes its ESG initiatives. It also highlights that companies should consider ESG materiality assessments not just in terms of normal operations and when things are good, but also in the context of when things go bad. As I stated yesterday, working closely with securities counsel to understand ESG foundations of financially material risks (i.e., 10-K Item 1A risks) should help in this.

Back to all blogs

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