Environment

Social Capital

  • Human Rights & Community Relations
  • Customer Privacy
  • Data Security
  • Access & Affordability
  • Product Quality & Safety
  • Customer Welfare
  • Selling Practices & Product Labeling

Business Model & Innovation

  • Product Design & Lifecycle Management
  • Business Model Resilience
  • Supply Chain Management
  • Materials Sourcing & Efficiency
  • Physical Impacts of Climate Change
General Issue Category
(industry agnostic)

Disclosure Topics (industry specific) for:
Rail Transportation

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GHG Emissions

Greenhouse Gas Emissions

The Rail Transportation industry generates emissions mainly through the combustion of diesel in locomotive engines. Despite relatively low emissions compared to other transportation industries, fuel management has implications for companies in the industry in terms of operating costs and regulatory compliance. Greenhouse gases (GHGs) including carbon dioxide (CO2) are of particular importance to government regulators concerned about climate change. Intensifying regulation of locomotive exhaust emissions and high fuel costs provide incentives for rail companies to invest in fuel efficiency enhancements to manage emissions. This can increase operational efficiency and impact the cost structure of rail companies, with chronic and acute impacts on value and competitive position both within the industry and compared to other modes of transport.

Air Quality

Air Quality

Rail operations emit several types of air pollutants that are regulated under national and international laws, including hazardous air pollutants (HAPs), criteria air pollutants (CAPs), and volatile organic compounds (VOCs). These pollutants tend to have localized environmental and health impacts. For example, locomotive engines idling at rail yards may be a health concern for nearby human populations as HAPs such as benzene are known human carcinogens, while nitrogen oxides (NOx) are a major component of smog and acid rain. At the same time, fuel is a significant industry cost. Rail companies that implement fuel efficiency enhancements and manage emissions may see impacts to their costs in both the short and longer term.

Employee Health & Safety

Employee Health & Safety

Moving freight by rail is associated with the risk of accidents and unintended releases of hazardous materials. These can harm the health and well-being of employees as well as have negative financial impacts on companies, such as reduced productivity, higher employee turnover, and increased insurance costs. Rail operators are likely to be impacted by accidents, and in some cases, poor health may also cause accidents. A healthy workforce, strong safety culture, thorough and systematic approach to safety, risk management programs (including emergency preparedness and response), and operational integrity at all levels of a company can help lower the probability and magnitude of rail accidents.

Competitive Behavior

Competitive Behavior

Industry consolidation and prior allegations of anti-competitive practices in relation to captive shippers, among other reasons, create pressure on antitrust immunity granted to railroads in some regions. Some of the proposed policy changes could lead to significant costs or impede investment in the industry. Rail companies operating at the limits of allowable charges in areas where they could be found to have market dominance, or those not complying with regulations about reasonable rates, are likely to face increased regulatory scrutiny. Any associated fines or penalties may negatively affect a company’s valuation by increasing its cost of capital. In an environment of increased concerns about the market power and pricing practices of rail companies, it is in their interest to continue to ensure competitive pricing and transparency in rate-setting while achieving adequate returns on their investments.

Critical Incident Risk Management

Accident & Safety Management

Rail accidents and unintended releases of hazardous materials can have repercussions for the environment and communities along railroad tracks, as well as financial impacts on companies themselves. Increasingly stringent safety regulations and the potential for significant costs following major accidents provide incentives for companies to manage their safety performance through a robust safety management system. In addition, the loss of consumer confidence after such events can result in lower revenues and potentially damage a company’s social license to operate, increasing its cost of capital.

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