[Ed. note: Today is Part 1 of a 3-part guest blog on how EPA’s revised National Enforcement Compliance Initiatives (NECIs) relate to company ESG initiatives. The articles were written by Doug Parker and Mary Ann Grena Manley. Doug is the Co-Founder and CEO of Ecolumix, a data intelligence company that applies verified data to measure EHS and sustainability performance for companies and investors. Prior to founding Ecolumix, he advised corporations on EHS compliance and served as a special agent in EPA’s enforcement office for over two decades, including as Director of the agency’s Criminal Investigation Division. Mary Ann is the Founder and President of 15E Communications, a Washington, DC-based strategic communications firm specializing in environmental policy analysis, content creation, and brand leadership consulting. Before founding 15E, Mary Ann managed Bloomberg Industry Group’s coverage and analysis of global EHS and sustainability issues for over 20 years. She is also an Ecolumix Advisory Board member.]
In the world of environmental protection and sustainable business practices, it’s crucial to connect traditional compliance initiatives with the broader conversation surrounding environmental, social, and governance (ESG) factors. Compliance with environmental laws forms a foundation for any credible ESG program and is a minimum requirement to showcase progress. With increasing calls for transparency and public concern for sustainability, organizations cannot claim advancement on ESG performance without fulfilling basic regulatory and compliance obligations.
When looking at the enhanced scrutiny of corporate responsibility and performance, companies operating in the United States need to be aware that the Environmental Protection Agency (EPA) is expanding its current climate change focus beyond voluntary programs and regulations and placing a broader emphasis on enforcement – with consideration of social impacts. We see further evidence of this prioritization as revised National Enforcement Compliance Initiatives (NECIs) roll out – adding climate change as one of its top six priorities over the next three years.
What are NECIs?
The NECIs are built off massive amounts of compliance data and thousands of hours of input from federal and state agency experts, and are informed by comments from industry, NGOs, and the broader public. Every three years, the NECIs are updated based on this input, identifying the six most pressing environmental protection areas the agency believes it needs to address from an enforcement and compliance perspective.
Companies working to improve their performance and reputation must understand the relevance of NECIs to the ESG landscape. The NECIs are a key part of EPA’s enforcement playbook – they make the agency’s top priorities clear.
Climate Change, PFAS, Overarching EJ Focus
In its most recent proposal, the administration outlined its NECI plan for 2024-2027, which includes keeping four of the current areas:
- reducing excess emissions of harmful pollutants;
- reducing risks of accidental releases at chemical and industrial facilities;
- reducing significant non-compliance in permitted water discharges; and
- reducing non-compliance with drinking water standards.
EPA plans to move two back to its core program (i.e., less intense focus):
- stopping aftermarket defeat devices for vehicles and engines, and
- reducing hazardous air emissions from hazardous waste facilities.
The agency identifies two new focus areas as replacements: mitigating climate change and addressing PFAS contamination – both of which will also have a specific environmental justice element relevant to many companies. The proposal states: “promoting environmental justice…is a core element of all enforcement and compliance work” and that EPA is incorporating environmental justice (EJ) considerations in every existing and new NECI. Through this lens, EJ is undeniably intertwined with a company’s EHS program regarding environmental permitting, community impacts, and compliance. In fact, many companies have started looking at EJ as another core compliance area, along with air, water, and waste. EPA compliance is more directly a component of the “S” in “ESG” than ever.
Part 2 of this blog will discus how the NECIs impact corporate commitments, performance and disclosure.
