Norfolk Southern’s Train Derailment in Ohio Damages ESG Credentials — ESG Insight

The aftermath of

Norfolk Southern’s

50-car train derailment in East Palestine, Ohio, on Feb. 3 could cause concern for sustainability-minded investors. The critical incident, which resulted in the release of at least six dangerous chemicals including vinyl chloride, butyl acrylate and ethylhexyl acrylate and an evacuation order, could have negative implications on the company’s environmental credentials and community relations. Following the controlled release of chemicals to prevent a larger explosion, officials confirmed that the release affected local waterways and resulted in 3,500 fish dying, local wildlife and pets falling ill, and residents experiencing burning eyes and headaches. The release of chemicals resulted in a column of black smoke covering the skies over East Palestine for several hours. Officials also confirmed that at least a portion of the 1 million pounds of vinyl chloride—an odorless and highly flammable gas that has been linked to various forms of cancer—carried by the train had entered the Ohio River Basin, which is used by around 35 million people. In a statement on Feb. 14, the U.S. Environmental Protection Agency said it was continuing to conduct tests on the air and water to detect potential hazardous amounts of the spilled chemicals, but that “no detections of vinyl chloride or hydrogen chloride were identified.”

The company recently registered two other derailments, one in Akron, Ohio, on Nov. 22 and another in Sharpsburg, Md., earlier this year. While still dealing with the fallout from the East Palestine derailment, another Norfolk Southern train derailed on Feb. 17, outside of Detroit. Authorities in Michigan said there was no evidence of exposed hazardous materials in this case. A company spokesman said none of these derailed cars held hazardous materials, adding that the company responds to all derailments. Negative sentiment around the derailments was captured by the news signal component of the Dow Jones sustainability scores, shaving about three points off from Norfolk’s aggregate ESG score. The news signal ensures that the sustainability scores reflect the most recent information.