On November 11, Kevin Sullivan, former director of environmental remediation for the Pacific Gas and Electric Company (PG&E), a large California utility company, gave a talk at the Scheller College of Business. His lecture was an installment in the Business, Environment, and Society Speaker Series, sponsored by the Ray C. Anderson Center for Sustainable Business.
Sullivan’s presentation focused on the Hinkley groundwater contamination disaster in the Southern California desert. From 1952-1964, PG&E disposed of hexavalent chromium (Cr6), a carcinogenic chemical used in operating a natural gas compressor station, which led to unsafe levels of chromium in the local drinking water. In 1996, PG&E settled a class-action lawsuit for $333 million and began the long process of remediating the quality of the local water. In addition to serving as a technical expert in contaminated soil and groundwater remediation, Sullivan helped boost community engagement and develop creative reuse solutions for contaminated spaces.
Kevin Sullivan, former director of environmental remediation for PG&E, speaks at the Scheller College of Business.
While the task at hand was scientifically complex and uncertain in scope, it also required building relationships with the local population to find creative solutions that balanced remediation goals with economic sense. For example, PG&E’s main strategy for reducing the Cr6 levels was to chemically transform it to Cr3, which is actually a nutrient, not a carcinogen. This could be done passively by using the polluted water for alfalfa farming (as the plants grow, they transform the Cr6 into Cr3). Not only did this neutralize the contamination, it provided local farmers with cheaper water (since PG&E already had to pump it up) and resulted in a source of income. This type of win-win solution is fascinating to me—when it is possible not only to make amends for an environmental injustice but also to find positive returns.
I am originally from Southern California and earned a BA in Environmental Studies from University of California, Santa Barbara, so Sullivan’s detailed description of groundwater contamination had me nodding along, trying to recall my undergraduate classes in environmental chemistry. Now, as an MBA student, I am constantly trying to identify patterns and understand how I can use case studies to inform my own decision-making process. Since PG&E has been in the headlines lately due to its liability in recent California wildfires, I had hoped that the talk would teach me about the company’s fire remediation strategy. While Sullivan concentrated on his direct experience, the broader themes of managing uncertainty, geographical challenge, and stakeholder management were applicable not only to the wildfires but also to most sustainability challenges our society faces today.
Another takeaway was how hard it is to manage environmental risk while operating across vast rural areas. Before the talk, I already knew that wildfires are often caused by downed power lines in remote areas where it is challenging to properly maintain the network. The Hinkley disaster brought additional perspective. I realized that in vast rural areas, on top of the difficulty of physically accessing and maintaining a network of equipment, there is more uncertainty about the risks the business may encounter. The due diligence required to make the right decision is extensive—and highly important.
To further illustrate, if your company operates in a single location, you can learn the weather patterns, geography, local culture, history, and other factors that might impact business operations. On the other hand, if you operate in thousands of places, especially places that are distant from dense population centers, that challenge exponentially increases. Even if you are motivated to do the right thing, you may not have all the information you need to do so. Businesses must be fully alert to this challenge when they are expanding. This is especially true for industries with large physical footprints, such as transportation, agriculture, and construction/development. Sullivan emphasized the need for involving technical experts in the risk management process. I agree with him on this point. Additionally, I think there is a need for more people who can bridge the gap between technology and business. These individuals can help companies understand how risks can be translated into financial and strategic plans.
Finally, it stood out to me how important it was for Sullivan to earn the trust of the local community for the project to move forward effectively. Regardless of how technical a problem may be, the key to finding a solution involves using “people skills” to effectively listen to, learn from, and lead others. The best solutions incorporate the needs of all stakeholders, so I hope that business leaders can better collaborate with external stakeholders and learn from past mistakes in order to inform risk management solutions of the future.
Cassidy Martin is a second-year student in the Full-time MBA Program at the Scheller College of Business. She is currently serving on the leadership board of the College’s Net Impact MBA chapter and is co-chair of the Scheller College Alumni Committee.