Financial institutions should demand transparency on toxic emissions so that they can thoroughly assess the risks of their investments, according to a report from Planet Tracker.
The report, Toxic Fog – Known Unknowns, highlights what Planet Tracker says are 10 major failings regarding toxic emissions and that financial institutions often overlook or ignore when it comes to chemicals and plastic production. These failings include data that is essentially hidden but allowed under current regulations, and areas where data transparency can be improved.
Planet Tracker says among the issue of transparency is that the EPA is not permitted to reveal information surrounding some of this pollution, keeping important information from both investors and the public. The new report follows Planet Tracker research from July, which reveals the prevalence and toxicity of chemical pollutants, as well as the facilities most accountable for them.
The analysis focused on petrochemical and refining industries located in Louisiana and Texas, which Planet Tracker says account for a quarter of the petrochemical facilities in the United States. Planet Tracker identified 7,400 financial institutions that support the facilities, which includes much of the country's oil and gas industry.
The report says there is an opportunity for investors to pressure the companies responsible for the toxic footprints to change how they operate. It also provides data and a toolkit for investors to better understand the industry and link pollutants, facilities, and investors.
The research used publicly available data from the EPA, including Toxic Release Inventory (TRI) and the Risk Screening Environmental Indicators (RSEI). That also revealed further information that facilities and operators are able to hide from investors, Planet Tracker says.
The EPA’s TRI tracks the management of certain toxic chemicals, and US facilities in different industries are required to report how each chemical is released and managed through recycling, energy recovery, and treatment. An RSEI score is a value that accounts for the size of a chemical release, the chemical’s toxicity, and the scope of an exposed area. The Planet Tracker report says financial institutions should require this information to be revealed so that full risk assessments can be made.
Regulations and investors have been driving sustainability and emissions changes in industries such as oil and gas. A report from Haynes and Boone and EnerCom shows most are publicly disclosing ESG efforts.
Additionally, transparency is becoming more of a factor to make improvements and has played a role in businesses setting targets. Tools also are being developed to standardize sustainability information and reporting methods, as accountability is seen as more important across business operations.
The failings Planet Tracker highlights include that companies can classify their chemical compounds as “trade secrets,” which allows them to hide the substances’ names and keep them from scrutiny. Also, non-production waste is excluded from emission release thresholds.
It also outlines inconsistent data reporting, missing data, eradicating information, and a lack of toxicity information.
Some of the ways the report says improvements can be made are adding geographic information to the TRI basic files, which Planet Tracker says is the quickest and easiest for companies to use and understand. Also, TRI self-reporting metrics should include when a facility has gone past its legal limits of releases.
“Financial institutions can put a stop to this fogginess,” says Planet Tracker Director of Research John Willis. “By fully understanding the toxic footprint of their investments and their effect on both the environment and human health, they can undertake a fully informed and accurate risk/reward assessment for themselves and for their clients.”
