Who Are Your Neighbors?

When Neighbors Contaminate Your Property

A Certified environmental Strategist (CeS) https://www.scic.com/certified-environmental-strategist/ coaches businesses to manage and transfer their environmental exposures.  The process begins with developing and executing their environmental Management Strategy (eMS).  In today’s business environment, an eMS gives businesses a competitive advantage and the foundation for their ESG (Environmental, Social and Governance) initiatives.

An environmental Management Strategy (eMS) reviews four areas of environmental exposures impacting a business.

  1. What is coming in the business front door i.e., raw materials, customers, vendors they hire….
  2. What is going on inside the business’s corporate walls i.e., products and services provided, raw materials stored, tenants, students….
  3. What is going out the business back door i.e., goods and services, transportation, waste / recycling materials….
  4. Who are your neighbors.

In this Competitive environmental intelligence (CeI) we are going to strategize on 4. Who are your neighbors?

When coaching a business on managing and transferring their environmental exposures, you will find most of the time, the business fails to look beyond their property lines / business model to their neighbors.

I want to make sure we are on the same page about the term neighbor.  When a Phase I site assessment is performed, they do a minimum of a 2-mile radius search to find out who the neighbors are and have any of those neighbors been identified as polluters and could that pollution migrate onto the subject property?

Why is this important? Because under Federal law the property owner is ultimately responsible for the environmental condition of their property.  If their property was contaminated by a neighbor who can’t afford to pay for the cleanup or is no longer in business, the property owner can be held responsible.  A business may do nothing wrong, but due to neighbors, they can experience environmental liabilities and potential bankruptcy.

Part of “Best Practices” for business is to make sure they have an environmental financial assurance plan to protect themselves and pollution insurance policies can protect insureds should neighbors contaminate their property.

If you sell commercial P&C insurance, make sure to protect yourself by coaching your insureds about their environmental exposures.  Failing to may result in relying solely on your E&O insurance when an insured experiences a pollution liability.

The following are environmental loss examples caused by neighbors.

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