American Water Works – Environmental Justice Assessment (2024)

Outcome: Pending

Environmental Justice Assessment

Resolved: Shareholders urge the board of directors to commission an independent, third-party environmental justice assessment (within reasonable time and cost) which assesses the racial impacts of American Water Works’ (“AWK”) operations and produces recommendations for improving them above and beyond legal and regulatory matters. Input from stakeholders, including civil rights organizations and affected community members, should be considered in determining the specific maters for assessment. A report on the assessment, prepared at reasonable cost and omitting confidential information, should be published on the company’s website.

Supporting Statement: Proponents suggest that the assessment and report consider

– Disparate environmental and health impacts from its operations;

– How governance and management responsibilities of environmental justice issues are allocated within the company;

– Quantitative and qualitative metrics on how environmental justice impacts inform business decisions; and

– How AWK intends to improve its policies and practices in the future.

Environmental racism is a systemic risk that exacerbates the climate crisis and racial inequities.[1]

AWK reports it has “long considered the impacts and implications of decisions on overburdened communities, adopting environmental justice practices,” but has not disclosed information on such impacts or practices.[2]

Some parties believe assessments are not warranted if there are no controversies. While we believe that it is in AWK’s best interests to conduct an environmental justice assessment regardless of and to avoid controversies, it appears there are at least two unresolved controversies involving AWK.

– Cahokia Heights, Illinois: Despite AWK satisfying regulatory requirements in 2023, residents continue to report drinking water that is “brown, foul-smelling, cloudy, [or with] visible particles” and do not use it out of fear of contamination.[3] The city formed from a merger in 2020 which included Centreville, a city with a 93 percent Black population previously established as one of the poorest cities in the country. Described as a “textbook example of environmental racism” by the Illinois governor, Cahokia Heights’ ongoing issues reflect decades of disinvestment.[4]

– Marina, California: AWK’s proposed desalination plant is still being appealed and has been characterized as having significant environmental justice concerns by the California Coastal Commission.[5] Marina, where a third of the residents are low-income and many speak limited English, already contains a landfill, sewage plant, and sand mine.[6]

Environmental justice is a priority for legislators. In 2020, New Jersey, where AWK operates, enacted a landmark environmental justice bill that requires impacts on overburdened communities to be a deciding factor in industrial permitting decisions, including water services.[7] California, Pennsylvania, and Illinois have similarly adopted environmental justice legislation that could potentially affect AWK.[8] Moreover, the current administration has made environmental justice a priority through its Justice40 plan.

We are concerned that a “business as usual” approach could not only perpetuate racial injustice but could pose regulatory and reputational risk to the company.

[1] https://news.climate.columbia.edu/2020/09/22/climate-change-environmental-justice/

[2] https://s26.q4cdn.com/750150140/files/doc_downloads/esg_docs/2023/2021-2022-Sustainability-Report.pdf

[3] https://www.bnd.com/news/local/article281094103.html

[4] https://www.nbcnews.com/news/us-news/raw-sewage-polluted-black-community-now-residents-are-fighting-back-n1277292

[5] https://www.montereyherald.com/2022/12/03/desalination-cal-am-faces-tough-road-ahead-to-meet-coastal-commission-conditions/, https://www.latimes.com/environment/story/2022-11-18/desalination-project-wins-approval-despite-equity-concerns

[6] https://www.latimes.com/california/story/2020-09-15/cal-am-desalination-coastal-commission-marina-california

[7] https://dep.nj.gov/ej/law/

[8] https://www.ncsl.org/environment-and-natural-resources/state-and-federal-environmental-justice-efforts