Harrington Investments divested its shares of Chesapeake Energy Corp. early last year. The stock was trading around $34 a share in late March 2011 when Harrington made the announcement -- and closed yesterday at $16.44. Was it sheer luck that Harrington got out before the share price plummeted?

Harrington made the move because of Chesapeake's poor environmental record. Chesapeake's 100 violations before the Pennsylvania Environmental Protection Agency didn't sit well with Harrington. The issues leading to Chesapeake's recent downfall involve depressed natural gas prices as well as spending and borrowing sprees by CEO Aubrey McClendon. The company's valuation has fallen so low that Chesapeake has become a target for potential acquirers.

Harrington portfolio manager Dale Wannen in no way claims that Chesapeake's lousy environmental record could have predicted that the energy company would face other problems that would hurt share-price performance.

But Napa, Calif,-based Harrington is concerned that companies that don't adequately address sustainability issues could see a negative impact on stock performance, although nothing has been proved in that regard, Wannen says. Still, he adds, "It's clear companies that are not confronting sustainability topics the way they should could potentially risk valuation of their company."

In fact, more research firms are marketing tools to assess environmental, social and governance (ESG) performance of companies, although there are no uniform standards that make it easy to assess which firms are most at risk of faltering. Nevertheless, more investors are concerned about ESG factors, and as information becomes easier to evaluate and compare, it will more frequently be used to weed out companies that are at the highest risk of trouble.

In the case of Chesapeake, one does have to wonder why environmental violations in the triple digits and outrageous compensation for its CEO didn't push more investors to dump the stock sooner. Bad management is an issue that should concern every investor.