Is there another Enron-size accounting scandal on the horizon? Environmental groups seem to think so, and they have gone to the Securities and Exchange Commission seeking new accounting guidelines to force polluting corporations to release the true extent of their environmental liabilities to shareholders and the public.

Friends of the Earth, along with The Conservation Land Trust, Alaska Conservation Foundation and a few other environmental groups, are demanding that the SEC adopt a disclosure standard for environmental liability that calls for materiality to be based on aggregate rather than individual environmental liabilities. Currently, companies can estimate environmental liabilities on a site-by-site basis. This leads to "systematic underreporting," according to Michelle Chan-Fishel, manager of the green investments program at Washington-based Friends of the Earth. If the SEC concurs–and that's a big "if"– the environmentalists contend that the financial disclosures will create the same kind of earnings craters that scarred the corporate landscape following the Enron Corp. and WorldCom Inc. revelations. "We'll find out what the real story is behind toxic waste cleanup, which can amount to hundreds of millions of dollars for any given company," says Chan-Fishel. "We just don't know."

Given the Bush administration's record on environmental issues, one might be inclined to breathe a sigh of relief and move on to the next crisis. No such luck: It's not just environmentalists agitating for change. Joining the greens is a small, but influential coalition of institutional investors, including the Rockefeller Family Fund. Their presence may require companies to keep this one on their radar screens.