Some Free Advice To CEOs

When Your Company Causes An Environmental Crisis, You've Gotta Make It Right.

Photo by Bogomil Mihaylov on Unsplash

I’ve been watching CEOs fumble for years, and I have one simple message to convey.

The truth always comes out.

When you start with ethical business practices, you don’t have to deal with legal or regulatory repercussions. You can be the ones to stop this legacy of pollution and corruption.

Because… Chemicals spill. Trains derail. Accidents happen. Toxins escape.

It’s never “if,” it’s mostly certainly “when.”

The world is watching you. There’s a real opportunity in this moment to become a leader in your industry and become a better neighbor in your community.

Here are a few ideas of how to make that happen.

Get your plans together.

I like to imagine a world where companies that produce or work with any kind of chemical spend their resources keeping people safe.

People are the ones you depend on to buy your goods and services. If we’re all poisoned, there’s no one left to keep the economy running.

How about instead of huge legal departments, PR campaigns, and all the time and money used to cover your tracks, you spent that same amount of money (probably significantly less) creating safety plans or prevention-and-response plans?

Run your business ready for things to go wrong so that you’re prepared. So that you know what to say and you know what documents to give to the EPA. You can keep first responders safe. You can create departments that focus on how to better handle clean-up and invest in new technologies. Hire scientists and experts to keep you on the cutting edge of safety.

Ask yourself if you would rather be the hero or the villain of this story because one of the two is bound to happen.

Just be honest.

I’m so sick of those at the top of companies being surprised when things go wrong and then skirting their responsibilities. It’s exhausting watching CEOs act like they had “no idea” that the chemicals they work with might be unsafe, especially when they get into the water, soil, or air.

I’m reminded of BP CEO Tony Hayward after the 2010 Gulf of Mexico spill, the worst in U.S. history, when he said, “There’s no one who wants this over more than I do. I would like my life back.”

Stop talking about yourselves in these press meetings and put the emphasis on the people suffering. Don’t leave the locals to handle the ramifications of your pollution.

Be truthful upfront. We live in an information age where the truth always comes to light. Sometimes, you can delay it. It might not emerge until years of litigation and legal battles, but pretending like your chemicals aren’t harmful isn’t helping anyone.

Communities are becoming braver at standing up to polluting corporations. You might try to hide information, but so many more people are willing to do the research, request FOIAs, speak up, and stand up to you.

Put down the industry playbook and give the people what they want—honest, transparent business. Stop speaking from a corporate culture that ducks any real responsibility.

Build trust with the communities you work within.

CEOs, it’s time to get hip to the fact that if you don’t want more oversight, you need to oversee yourselves. BUT for real.

The private sector has way, way more resources than regulatory agencies or local governments and can easily take the lead on reducing waste, increasing efficiency, and helping to solve environmental problems rather than create them.

If you’re at the top of a company dealing with a crisis, for goodness sake, get out there and respond. Talk to the people in the community you have harmed and give them straightforward information. Take notes and make changes. Do better. Become a success story that others want to model.

Business can and must become a force for good in the world.

You want to regulate yourselves, do it. Set your regulations as if your children have to live next to a plant that’s polluting. Pretend your family is drinking contaminated water, and then set limits for what you think is an acceptable release. You’re the ones you’ve been waiting for. You have all the power to change your business practices and make this world a better place.

You certainly make enough money for it. The gap between CEOs and employees has never been bigger.

In 1980, Bloomberg Businessweek reported that the ratio of CEO pay to employee pay was 42 to 1. Today, the ratio is more like 264 to 1, according to an analysis of S&P 500 companies by the AFL-CIO. And in some industries it’s more like 500 or 1,000 to 1.

Amazon CEO Andy Jassy (who replaced Jeff Bezos last year) made $212.7 million in compensation in 2021, while the typical Amazon employee made about $32,000.

That’s a ratio of more than 6,000 to 1.

With great power (and money) comes great responsibility.

A Closer Look At Norfolk Southern Corp.

Let’s take a peek at Alan Shaw.

Mr. Shaw has been CEO of Norfolk Southern Corporation since May 1, 2022 and president since December 1, 2021. He previously served as Norfolk Southern’s executive vice president, chief marketing officer, and has held various positions with Norfolk Southern since 1994.

This can’t possibly be his first rodeo.

When Mr. Shaw was promoted to CEO in 2022 he replaced Chairman and CEO James A. Squires, who retired.

“Norfolk Southern has a strong foundation for continued success,” said Steven F. Leer, Norfolk Southern’s lead independent director in a press release to announce Shaw’s promotion. “During his [Squires] tenure he has increased shareholder value by more than $30 billion, implemented precision scheduled railroading, led the company through a freight recession and global pandemic, and brought company leadership together in a new, state-of-the-art Atlanta headquarters.”

You can read more about the “perils of precision scheduled railroading (PSR)” here, including a former Norfolk Southern employee who says he sees, “a lot of deferred maintenance occurring among the Class I railroads as a result of PSR.”

But let’s talk about money for a moment.

Just for scale, in 2022 Norfolk Southern’s income from railway operations was $4.8 billion, up 8 percent, an annual record.

The proposed 2023 budget for the U.S. EPA is $11.881 billion—that’s for dealing with environmental issues throughout the entire country.

In 2021, the village of East Palestine had total revenue of $3.9 million and program expenses of $2.5 million, leaving them with about $1.4 million to service debt, fund pensions, and deal with emergencies.

Once you see those numbers, does it feel clear who should pay for clean-up?

That same press release described Mr. Shaw as, “one of the freight industry’s most respected leaders,” and that the company was “in a rock-solid position.”

“Alan has a unique combination of skills and experience that prepare him to lead the company,” Squires said. “He’s a veteran railroader who understands operations and will drive continued improvement in service and efficiency. At the same time, he has an unparalleled understanding of our customers and the markets we serve, as well as the vision to grow shareholder value in our competitive, rapidly evolving industry.”

Norfolk Southern declined to attend a town hall meeting last week with residents impacted by its trail derailment, stating they, “feared for their safety.”

Mr. Shaw made more than $4 million in total compensation as president at Norfolk Southern Corp. in 2021, according to the Economic Research Institute. I can only imagine his salary has increased since becoming CEO in 2022.

Someone with that kind of money and power needs to step in and make it right.

Just imagine that all your shareholders lived in the town where the chemicals spilled and then act accordingly.

In that same press release from 2021, Norfolk Southern is described as a company that, “connects customers to markets and communities to economic opportunity, with safe, reliable, and cost-effective shipping solutions.”

Safe, reliable, and cost-effective.

How much of the company’s resources are devoted to safety?

What’s the plan to lead an industry that has become increasingly dangerous?

We don’t want platitudes; we want details.

Yes, derailments have declined since the 1970s, but our country still has more than 1,000 derailments every year, according to reporting in The New York Times, and in the past seven years, costs from derailments of trains carrying hazardous materials has increased.

That same Times article noted that during both the Obama and Trump administrations, the rail industry successfully lobbied against stricter rules for trains carrying flammable chemicals, and against more advanced brakes that experts and the rail industry itself have said could lessen the severity of derailments.

Anne Junod @AnneNJunod

What contributed to the Norfolk Southern train derailment in East Palestine, OH & what can be done to stop further accidents? I did my dissertation on catastrophic train derailments at @OhioState w/fieldwork across the country, including two Ohio rail communities. Some thoughts:

That’s not a good look for Norfolk or any other rail company that hauls hazardous chemicals across the U.S. near homes, schools, and businesses.

Unsupervised industry pollution combined with aging infrastructure is a recipe for disaster.

Norfolk Southern’s service area includes 22 states and the District of Columbia, every major container port in the eastern U.S., and a majority of the U.S. population and manufacturing base.

This disaster in Ohio could easily happen anywhere. In fact, the fiery crash was one of more than a dozen train derailments reported in the U.S. this year, only 1 1/2 months in, according to reporting in Newsweek.

People in times of crisis need leaders.

I want to give a shout out to East Palestine Mayor Trent Conaway.

I’ve seen many local politicians let their phones ring rather than answer their constituents’ questions when environmental tragedy strikes, and that’s not him.

He’s working around the clock for his people to feel safe. I’ve seen many comments along the lines of, “he’s a good mayor; he went days without sleep and was constantly letting people know what was going on.”

“People keep forgetting, I’m a local politician,” he told the press at last week’s town meeting. “I live in this town. I don’t live somewhere else. I live two blocks from the train tracks. I’m concerned just like everybody else.”

When these incidents happen, trust gets diluted. People wake up to how little they know about the regulations that safeguard their water, air, and soil, and are left wondering who is helping protect them and their health.

The people of East Palestine and neighboring communities need continual, accurate information about water safety, soil testing, and air quality. They need ongoing, reliable access to healthcare that’s versed in environmental health issues.

If terrorists dumped chemicals into a community, we would call it a chemical attack. But when it’s American industry, we let the chips fall where they may.

Join me for a Town Hall This Week:

Friday, February 24
6 PM EST

Location:
East Palestine High (Auditorium)
360 W Grant St
East Palestine, OH
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For more details, go here.

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Add your voice to the conversation below! What advice do you have for CEOs and leaders of industry?