Got an Environmental Issue? Investors Are Scrutinizing Your Response

Jayni Hein’s commentary was included in an Agenda article covering how companies manage the economic, reputational, and governance consequences of environmental incidents.

Jayni said it’s not only important for boards to have a “robust internal audit and investigation process” for environmental incidents, but also to “have more awareness and involvement…regarding environmental compliance and potential liabilities. That could include improving board fluency regarding environmental requirements and potential risks including reputational risks.”

Jayni also commented on the relationship between reputational harm and the strength of a company’s brand and stock price. “The more that companies can position themselves to prevent environmental catastrophe or violations of relevant environmental laws, the better position they will be in to protect the business reputation and the way consumers and the general public are thinking about businesses,” she continued. “A major environmental incident risks the elimination of that social license to operate.”

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