A growing number of states are adopting laws that promote environmental justice (EJ), which is the equitable treatment and involvement of all people, regardless of demographic, in the development and application of environmental laws and policies.
These laws are giving regulators and communities new tools to mitigate negative environmental impacts that have historically and disproportionately affected minority and low-income communities.
Ten states have already codified environmental justice in some form—with Connecticut the latest to do so, in October 2020—while another 13 states have pending legislation.
New Jersey has perhaps the most rigid of these laws, requiring companies that want to build or improve certain facilities to include EJ analyses in permit applications, and directing that permits be denied or amended if unnecessary EJ impacts are identified.
These requirements make New Jersey’s law the first of its kind, but similarly robust proposals are being considered in Connecticut, Minnesota, New York, Rhode Island, Texas, and Vermont. States with less rigid laws require similar EJ analysis but ultimately leave any action to agency discretion.
California provides another leading example. In addition to planning and enforcement initiatives, state law requires that disadvantaged communities receive baseline financial benefits from California’s greenhouse gas cap-and-trade program.
Michigan has similar proposed legislation that would create a special fund to direct proceeds from regulatory fines for air pollution to EJ communities.
Emerging ESG Risks
States’ intensifying focus on environmental justice overlaps with many environmental, social, and governance issues that companies already face.
While these laws could further the adoption of ESG initiatives in some cases, they also expose companies to new ESG-related risks, including enhanced enforcement, litigation, and possible disclosure requirements. For those reasons, ESG-conscious companies should be paying close attention to this trend.
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