Water, food, weather, savings—ESG is about protecting you

Water. Food. Weather. Savings. The stability of local infrastructure. Health and safety. Homeowners insurance. Small business revenues. Pollution, unsustainable practices, and climate disruption, are creating everyday threats to families and communities in all of these ways, all at once.

You can be sure if an elected official is telling you to look away, to pay no mind to these issues, to ignore scientists and professionals who warn that these pressures will make everyday life more difficult, that person is not putting your best interests first. Unfortunately, a lot of money has been made by industries that impose harm on defenseless people and communities, and those profits often depend on the industries being shielded from liability by cooperative politicians.

You don’t have to look very deep to see the near total alignment between the talking points promoted by those industries and the arguments made by elected officials who put those industries’ profits over your family’s health and wellbeing. Often, they appear to be reading from the same cheat sheet.

Many Americans have grown up with the idea that local drinking water systems are world-leading, safe and secure, and provide total protection from harmful natural and industrial toxins. Tens of millions, however, have always lived with the knowledge that this is not so for everyone.

Across the U.S., rapidly expanding development, unsustainable practices, and underfunding of key services, are putting health at risk through waterborne contaminants. Image shows the Brazos River, in Fort Bend County, Texas.

All over the United States, local water systems fail to deliver truly clean drinking water. Even the federal standards for allowable thresholds of dissolved solids, radionuclides, and other contaminants, are far higher than safety limits proposed by experts in public health and environmental safety. More than 100 million Americans have been found to be using household water laced with toxic PFAS “forever chemicals”.

Most people are surprised to learn that radioactive materials show up in drinking water as well, all over the U.S. The Nuclear Regulatory Commission publishes annual reports from nuclear power facilities, which provide a relatively superficial window into the ongoing release of radioactive materials into air and water. What those reports do make very clear is that such releases are common, ongoing, allowed, and not always made clear to local authorities responsible for keeping your water clean.

Radionuclide releases are not always made clear to local authorities who could take action to prevent contamination of drinking water, because reported releases are often below the threshold at which federal regulation requires reporting. This focus on reporting (rather than the implied obligation to maintain demonstrable safety at all times) is so prevalent, the nuclear power industry generally describes such releases as “reportable”. Of course, all releases can be reported, but the language makes clear that there is a preference to report some, but not all releases of radioactive materials into air and water.

Climate disruption is also impacting the quality of drinking water supplies. Because ecosystems function differently at different temperatures, and because pollution affects the balance between ecological health and anomalies like major blooms of toxic algae and bacteria, climate disruption and other forms of pollution are creating new microbial threats to the safety of drinking water supplies.

Local water systems can only perform the technical services they are equipped and funded to perform. When outmoded technologies or inadequate funding make it difficult to properly clean water supplies, water authorities or service providers tend to “shock” water with chemicals that might neutralize some of the microbial threat. This is one reason you might find an intense chlorine smell or taste in your water.

When a swimming pool is “shocked” with chlorine, people are told to refrain from swimming for a period of time. This same advise is not provided to households affected by the shock treatment of contaminated public drinking water systems. Local residents are rarely, if ever, warned that their water will be chemically shocked.

So, what can be done?

• On the one hand, municipalities can set aside more funding for improved water treatment systems. Communities can make this easier by supporting local and state authorities that work to achieve these improvements, and to raise the revenues to fund them.

• Another way of slowing this degradation of water systems is to make sure the nonlinear threats are reduced. Decision-making by public agencies, by the federal government, and by private industry and investors, can influence the prevalence and urgency of climate-related and pollution-driven threats, degradations, and costs.

• Reducing those threats will make it easier and more cost-effective to keep water supplies clean, and to provide for the health, safety, and livability of local communities.

• Among the major threats to safe drinking water are agricultural pollutants—both chemical pollutants and the microbial population surges or “blooms” that can result from overloading waterways with nutrients.

When we talk about “ESG investing standards” (standards rating the quality of environmental and social value-building, and the quality of governance, and transparency), we are talking about helping decision-makers choose better. The only people disadvantaged by ESG investing standards are polluters and industries that seek to profit by harming innocent third parties, while incurring zero accountability.

The red herring argument is often put forward that by restricting polluters’ activities, those who work in polluting industries are harmed. This argument is a deflection, because those workers could prosper in the same industry, working for the same companies, and enjoying healthier lives in the same communities, if their employers actively managed and reduced pollution. ESG is not about defunding industries; it is about favoring better practices.

In California, where the “wildfire season” has in recent years stretched to year-round, insurance companies are declining to provide any homeowners insurance in areas with high fire risk. Some are refusing to fund insurance for homes and businesses in vulnerable coastal areas, and others have declined to provide crop insurance unless taxpayers fund guarantees against catastrophic losses.

Climate disruption creates very real, immediate, mid-term, and long-running costs. As we often repeat, because these are such important data points:

• In a 2022 report, Deloitte found unchecked climate disruption could lead to $178 trillion in traceable costs by 2070.

• The Commodity Futures Trading Commission (a major U.S. financial regulator) and the Financial Stability Oversight Council (representing all U.S. financial regulators) both warn that unchecked climate disruption will put the entire financial system at risk, undermining its ability to sustain the wider economy.

• In other words, even the wealthiest nations could fail in the face of unchecked climate disruption.

The behavior of insurers and commodities markets is one way of looking ahead at how things will get worse. Insurance companies are guarding against loss. Traders of commodity futures linked to agriculture or other climate-vulnerable activities can adjust future prices ahead of time to guard against financial losses. This can have a predictive effect, but it can also accelerate aggressive price spikes that will put affordable food beyond the reach of less affluent people.

Opponents of ESG investing standards want all communities, and all other economic actors, to be made more vulnerable, and more liable (and arguably, less well off), so polluting industries’ profits can be funded by someone other than the industries’ own investors. The push-back against ESG is about one thing, and one thing only: those that profit from unaccountable harm want that standard to persist, while responsible actors in all sectors are simply trying to use the best information available to make smart decisions about the future.