An advisory firm has divested its entire holding in a leading natural gas producer because of the company's "poor environmental record and its lack of accountability to shareholders."

Harrington Investments Inc., a long-time socially responsible investment advisor based in Napa, Calif., divested its entire holding in Chesapeake Energy Corp. (CHK), according to Harrington portfolio manager Dale Wannen, in a blog posted on March 23.

According to Wannen's blog, Chesapeake is the leader in environmental health and safety violations from the Pennsylvania Department of Environmental Protection resulting from the company's hydraulic fracturing to extract natural gas from Pennsylvania's Marcellus Shale rock formation. Hydraulic fracturing, or "fracking," involves injecting water, sand and chemicals into deep, underground wells to release natural gas. The process has been criticized for polluting water supplies, although the companies that use fracking say it's safe.

Harrington not only is critical of Chesapeake's environmental record, but also of it's executive compensation awards, including a $77 million bonus in 2008 to Chesapeake's CEO.

At this point, the overall market doesn't seem bothered by Chesapeake's environmental record or executive pay. The stock has been trading around $34 a share, near its 52-week high, and it's rated a "buy" by First Call.

But the market isn't too smart when it comes to gauging the long-term risks the environmental record of a company might pose to its business. Think of BP. Before the Deepwater Horizon disaster last year, the company has amassed many environmental violations around the country. Most money managers, including many socially responsible ones, were among those caught with BP stock in their portfolios when the Deepwater Horizon oil rig exploded in the Gulf of Mexico off the Louisiana coast last April 20.

Chesapeake's environmental record doesn't mean it will face a similar disaster to BP. Nevertheless, money managers, especially those who purport to serve long-term investors, should spend more time evaluating a company's environmental performance in an effort to assess potential risks. It would be wise for money managers to follow Harrington's lead and take a close look at whether Chesapeake belongs in their portfolios.