January 28, 1969: An oil platform off Santa Barbara's coast ruptured.
According to Smithsonian Magazine, for the first 11 days of the spill, oil escaped at a rate of almost 9,000 gallons an hour. By the time Union Oil managed to stop the leakage, roughly 3-million gallons (4.5 Olympic swimming pools’ worth of oil) had spread over 35 miles along the coast.
At that time, the U.S. had no official environmental agency or laws in place. A factory could spew toxic matter into the air or a waterbody, and nothing there was nothing illegal about it.
April 22, 1970: Senator Gaylord Nelson created Earth Day to force these issues onto the national agenda. Millions of Americans rallied across the country to protest environmental abuses and ignorance.
The oil spill of the previous year was a rude wake-up call. Citizens saw on television the beaches black with oil, birds with feathers plastered in oily muck, and corpses of sea birds, seals, sea lions and dolphins washing in with the tide. The oil company had to spread 3,000 tons of straw on the beaches to sop up the crude oil.
President Richard Nixon was forced to act. In December 1970, Congress authorized the creation of a new federal agency to tackle environmental issues, the Environmental Protection Agency (EPA). That first Earth Day led to the passage of landmark laws, including the Clean Air, Clear Water and Endangered Species Acts.
The year 1969 marked a turning point for environmental activism.
So what now?
You have two choices. You can view Earth Day with disdain, and mock the marches, rallies and advertisements as pure optics. Or, you can let it serve as a reminder to make better environmental choices, whether at home or for your portfolio.
There is no dearth of information that suggest ways to lower your personal carbon footprint and be a more sustainable consumer. But if you are fortunate enough to be an investor, perhaps the most impactful thing you can do is to focus your investments around sustainability. Invest in companies that are concerned about developments and strategies that truly will move the needle when it comes to environmental issues.
Here are some examples purely for illustrative purposes; not stock recommendations.
- In its 2017 Environmental Responsibility Report, Apple stated that it pushed its major suppliers to pledge to power their Apple production entirely with renewable energy. Over 99% of the paper in the product packaging is from recycled or responsibly managed sources. It intends to use only recycled or renewable materials for its products at a future date (what it referred to as “pioneer a closed-loop supply chain”).
- In 2007, Google became carbon neutral, and set an ambitious task of being the first major company in the world to run on carbon-free energy by 2030. In 2010, it was the first tech company to buy renewable energy at scale and in 2019, made the largest corporate purchase of renewable energy in history.
- Anand Mahindra’s target is for his business empire to achieve carbon neutrality by 2040. The Mahindra & Mahindra group acknowledges decarbonisation as a business opportunity, as well as a planetary issue, and applies a universal decarbonisation framework to all Mahindra companies, irrespective of their sector or their emissions profile. The four drivers to propel this are energy efficiency, renewable energy, electric mobility, and offsetting.
- Diageo India aims to become carbon neutral by the end of 2025. It has achieved 100% replenishment in community areas where water is extracted for manufacturing, and now has targets on improvement in water efficiency in operations and recycling of content packaging.
In the U.S., even oil companies are looking at their processes. Since they use copious amounts of freshwater for fracking and element separation, many have focused on improving their freshwater recycling processes. A Morningstar study in 2020 revealed that integrated oil companies, under pressure from investors and regulators, are taking steps, to varying degrees, to reduce emissions. Repsol, Shell and Total lead on this front.
The Santa Barbara oil spill of 1969 was solely the result of inadequate safety precautions by the oil company. A waiver from the U.S. Geological Survey allowed it to build a protective casing around the drilling hole that was 61 feet short of the federal minimum requirements at the time. Other areas required protective steel casing to extend at least 300 feet below the ocean floor, but Union Oil got permission to install only 239 feet of casing for the new well. While it bore a severe financial cost, the environmental repercussions devastated the entire ecosystem.
On a closing note…
On Earth Day, feel free to scorn at the tokenism. You may even believe it is overhyped. But let us also remind ourselves about what is at stake. Heat waves, soaring temperatures, melting glaciers, droughts, wildfires, floods and hurricanes leave no one unscathed.
May Earth Day serve as a reminder to make informed decisions as consumers and as investors. Do it for your planet, your children and grandchildren, and for your fellow citizens who don’t have the means to invest.
Do your part to mitigate the climate crisis, however small or insignificant it may seem to you. As Robert Swan famously said, “The greatest threat to our planet is the belief that someone else will save it.”
Happy Earth Day!
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