The United States Environmental Protection Agency (EPA) has proposed new standards for the sulfur content in gasoline, a move designed to cut harmful smog produced by cars and trucks. The EPA wants fossil fuel companies to reduce the amount of sulfur in gasoline to a maximum of 10 parts per million, down from the current standard of 30 parts per million. The State of California already has such a standard, so in a sense this is the rest of the country catching up to California’s standard. The gasoline with lower sulfur content is called “ultra low sulfur” gasoline and is currently available in Europe, South Korea, and Japan, in addition to California. The global auto industry supports the EPA’s move, "We have been anxiously awaiting this rulemaking because it is good for the environment and will help harmonize the federal and California programs for both vehicles and fuels," said Michael J. Stanton, president and CEO of Global Automakers, as reported by PR Newswire. The EPA estimates that the reduction in smog from lowering the sulfur content nationwide would be the equivalent of taking 33 million cars off the road.

However, the U.S. fossil fuel industry is fighting the EPA’s proposal through its trade association, the American Petroleum Institute (API), as well as efforts by Republican politicians. Responding to the EPA’s proposal, the API said in its press release: “There is a tsunami of federal regulations coming out of the EPA that could put upward pressure on gasoline prices.” They go on to say that gasoline prices could be increased by up to nine cents per gallon because of the increased costs to produce lower sulfur content gasoline.

The U.S. fossil fuel industry is producing ultra low sulfur gasoline for the California market now, but they are selling the higher sulfur gasoline to the rest of the country. They seem to be putting their profits above considerations of your health. They do not want to upgrade their refineries to produce cleaner burning fuel. And their response to the EPA proposal is closer to a lie than a half truth. They are basing their argument to delay or avoid the new regulations on the concept that this would cause the price of gasoline to rise. In reality, they have a choice: increase the price of gasoline or earn a slightly lower profit.

This is a great but tragic example of an “externality,” where a company or industry produces a product that causes harm but is able to lay the cost of the damage off onto society at large. I am somewhat amazed that the fossil fuel industry is so brazen in their position.

Smog contributes to thousands of premature deaths each year and makes respiratory ailments more severe for tens of thousands of people. The fossil fuel industry can improve their product and reduce these health problems, but they prefer the higher profits over your health. And of course you do not have to be a consumer of gasoline to suffer these ill effects; people who do not own a vehicle have to breathe the same air as drivers.

The EPA states that over 158 million Americans are currently experiencing unhealthy levels of air pollution, which are linked with adverse health impacts such as hospital admissions, emergency room visits, and premature mortality. Motor vehicle emissions are a particularly significant source of air pollution, especially in urban areas. Further, the EPA states that if implemented, the new standards would prevent by 2030 annually: between 820 and 2400 premature deaths; 3200 hospital admissions and asthma related emergency room visits; 22,000 asthma exacerbations; 23,000 upper and lower respiratory symptoms in children, and 1.8 million lost school and work days.

The EPA also provides a cost benefit analysis of implementing the regulation and suggests that in 2030 the annual cost of the program would be about $3.4 billion, or $130 per vehicle and 1 penny per gallon of gasoline. The economic benefit is between $8 billion and $23 billion in monetized health benefits to the country.

The fossil fuel industry views this expense as detrimental to its profits and against the interests of its corporate shareholders. It prefers the higher profits of the existing higher sulfur gasoline to the health benefits of the country.

Portfolio 21 does not invest in the stocks of fossil fuel exploration and production companies. The fossil fuel industry’s response to the EPA’s proposed new standards on sulfur content for gasoline is just another of many, many reasons for our fossil fuel free position.

John Streur is President of Portfolio 21 Investments. He has 25 years of experience in the field of investment management. 

In early 2011, with 30% of Japan’s base energy no longer available, the nation was asked to conserve electricity by as much as 15%.  Power companies fired up old gas and oil powered stations and the country worked to secure imported fossil fuels.  Despite the country’s energy security challenges, and fears of increased energy prices and widespread blackouts, the citizens of Japan united and their demands for a nuclear-free Japan strengthened.

Japan recently announced its new energy policy entitled “Revolutionary Energy and Environment Strategy,” which seeks to phase out nuclear power by 2040. To accomplish this, the policy calls for Japan to seek cheaper sources of liquefied natural gas and other fossil fuels.  Additionally, the policy focuses on energy conservation, procurement of additional renewable energy sources, and energy saving measures, such as smart metering.  Unfortunately, the policy is not without caveats and loopholes and there is also potential for it to be rescinded by the country’s next political party.  But regardless of how Japan’s new energy policy is changed over the coming months the tone has been set: Japan’s future will no longer rely on nuclear energy.

It is encouraging to see countries around the world, including Italy, Switzerland, Germany, and now Japan, commit to weaning themselves off nuclear power.  At Portfolio 21 Investments we do not support the expansion of nuclear power because we consider the cost of new nuclear installations to be high relative to the environmental and health risks associated with nuclear reactors and waste.

Beth is a Senior Research Analyst with Portfolio 21 Investments.  She has 10 years of environmental and social investing research experience. 

The Skin Deep Database can be used by consumers to assess the toxicity of the ingredients in their personal care products or by investors like Portfolio 21 Investments to help assess the risk associated with particular raw materials or companies.  The database is searchable by product type (skin care, eye care, etc.), by product name, or by ingredient.  The database provides information on the health concerns of ingredients and assigns a hazard score between 0 (low hazard) and 10 (high hazard).  It also offers a data score (None to Robust) that identifies the scope of ingredient safety data contained in the database, and the number of studies available in scientific literature.

For example, one can determine that the ingredient aluminum starch octenylsuccinate carries a high hazard score of 9 out of 10, with a data score of “fair.”  Of products covered in the database, aluminum starch octenylsuccinate is present in 67 eye shadow products, 55 anti-aging products, 54 foundations, 52 moisturizers, and 47 concealers.  Unfortunately, this ingredient also shows strong evidence for human neurotoxicity and moderate evidence for developmental/reproductive toxicity.  The database organizes its search results from low to high hazard score, so consumers who are interested can find products and companies with low hazard scores.

In a similar vein, each year as summer approaches EWG publishes a guide to sunscreens to help inform the public which products are most protective and which ingredients to avoid.  In 2012, the non-profit reviewed 262 scientific studies and examined the labels of 1,800 sunscreens, moisturizers, make up and lip products with SPF ratings.  While it compiled a list of more recommended products than ever before, 75% still did not meet its safety standards.  EWG’s sunscreen guide says to look for active ingredients such as zinc oxide or titanium dioxide, and to use lotions over sprays or powders, along with other tips.  Sun lovers should avoid sunscreens with vitamin A, as it causes skin cancer in laboratory tests, and oxybenzone because it is a hormone disruptor and skin allergen.

EWG has a host of other focus areas and tools to inform the public on the intersection of human and environmental health.  In addition to the resources mentioned above, the non-profit provides an annual shopper’s guide to pesticides in produce, a national drinking water database, tips on cell phone radiation, a meat eater’s guide to climate change, and a U.S. farm subsidy database.  As a non-profit organization, EWG provides non-commercial, grounded, useful information that can help consumers avoid toxic substances or select better products for themselves and the environment.

Emily is a Senior Research Analyst with Portfolio 21 Investments. She has 9 years of experience in the environmental field.

The amount of fresh water on the planet has remained fairly constant over time as it is continuously recycled through the atmosphere, until very recently.    The earth’s population has exploded and is expected to increase by another 20% to 30% over the next few decades.   This means that competition for clean water is intensifying on an exponential basis.  Unfortunately, humans have proven to be inefficient water users.  According to the United Nations, water use has increased at more than twice the rate of population growth in the last century.

Competition for fresh water is already fierce in the commercial sector.  Agriculture claims the bulk of fresh water worldwide, soaking up around 70%, and industrial uses consume another 22%.  The remaining 8% goes to city and home use.    Furthermore, new research indicates that the world’s unquenchable thirst for fresh water is causing sea levels to rise faster than they otherwise would due to climate change.  Trillions of gallons of water pumped out of underground aquifers, rivers, and lakes are reaching oceans through rivers and evaporation from the soil.

As the fresh water deficit rises, companies that offer viable solutions may spell opportunity for investors.  Many corporations are already working to address the fresh water deficit.  Investors who are aware of the issues may be better informed and better positioned to manage the risk and opportunity of the fresh water deficit.

Tony is Senior Portfolio Manager with Portfolio 21 Investments.  He has 15 years of experience in the field of investment management.

Human impacts can damage the health of ecosystem function, which, over time, can degrade their abilities to provide necessary services.  This is particularly evident in urban areas—their environments are dominated by human technology and their infrastructure must operate on a large scale in order to offer transportation, food, housing, and recreation to a dense population.  When confronted with environmental challenges, such as clean drinking water, wastewater treatment, or air filtration, some municipalities are identifying that their highest value investment is to take a Green Infrastructure approach to invest in their natural capital.  Supporting the natural processes of ecosystems turns out to be less capital intensive than trying to build and maintain systems to provide the same services.

A prominent example is from New York City in the 1990s, when the city’s drinking water quality had fallen below standards required by the Environmental Protection Agency.  Water quality in the city had historically been very high, but its source in the rural Catskill-Delaware watershed had undergone several decades of increasingly intensive agriculture, and was rapidly transitioning to higher population suburban developments.  The city estimated the costs to build and operate a water filtration plant at $6-8 billion, with an annual cost of $300-400 million.  But rather than pursue this route, it opted to spend approximately $1 billion to restore the watershed so that it was once again able to purify water through its diverse ecosystem services.

Some examples from our home region of the Pacific Northwest include retrofitting Portland, Oregon neighborhood streets with bioswales and tree planting projects that capture 80-95% of stormwater runoff and filter its pollutants onsite.  This practice has reduced sewer overflows and the need to upsize existing infrastructure pipes, which avoids considerable expense.  In Seattle, Washington, replacing streets with permeable pavement and other green infrastructure has cut paving costs almost in half.

Many more pilot projects, and studies to quantify their impacts, are currently underway around the world.  The majority of projects are not made more expensive by their environmental investments, in fact, they are of equal or lesser expense.  It is encouraging to see this trend in cities embracing the vision of an ecosystem services approach and linking it to long term economic value.

Amanda is Portfolio 21 Investments' Communications Manager.  She has more than 10 years of research, communications, and interactive media experience in the financial industry.

As we all recall, on April 20, 2010 the Deepwater Horizon oil drilling rig exploded.  Eleven men were killed and a seabed well ruptured, which allowed approximately 210 million gallons of oil to enter the Gulf’s saltwater churn.   In addition to the oil leaked from the well, an additional 2 million gallons of chemical dispersants were introduced into the coast’s ecosystem to break up the heavy crude oil.*

Two years later, monitoring and research on the Gulf coast have yet to make clear scientific links between health concerns, food safety, and the oil spill.  The U.S. Environmental Protection Agency reports that it monitored for a range of air pollutants during the oil spill and cleanup.  The EPA states that its analysis “did not detect levels of air pollution higher than what is normal on the Gulf coastline for that time of year.”  However, critics question whether the government has gathered enough data to be able to declare the air safe, and noted that poly-aromatic hydrocarbon levels were not measured for days after the spill.  There is also concern that the health effects of the chemical dispersants are understood even less, and may have magnified in toxicity when combined with the crude oil.  Residents, specifically those involved in the clean up efforts, have reported exhaustion, headaches, stomach pains, and chronic coughs.

In addition to human health impacts, many scientists believe that the chemicals used to clean up the spill have induced ecosystem-wide changes, such as an increase in toxic algal blooms or interference in the absorption of arsenic by oil-coated marine rocks, which has increased the levels of this toxin in seafood.  According to a survey led by the University of South Florida, after the spill between two and five percent of fish in the Gulf have skin lesions or sores, compared with data from before the spill, when just one-tenth of one percent of fish had any growths or sores.

Meanwhile, the U.S. Food and Drug Administration officially deemed Gulf seafood safe for eating.   Yet the FDA’s findings assume that the average adult eats the equivalent of about three jumbo shrimp per week.  After spending a significant amount of time in New Orleans, I can say with confidence that locals’ diets traditionally rely on Gulf fish, in an amount much greater than three shrimp per week.  Today, however this reliance on local foods is changing.   I understand that many Gulf residents are refusing to eat the fish from their local waterways, choosing instead imported or farm raised fish, or other protein sources altogether.

Despite the repeated safety claims by federal agencies and BP, on April 18, 2012 (two days shy of the second anniversary of the spill) BP sealed an out of court settlement for $7.8 billion, representing thousands of individuals and businesses. Of this sum, the Gulf seafood industry is slated to receive over $2 billion for economic loss.  Needless to say, even this significant monetary compensation is a long way from addressing the true economic costs of the disaster’s damage to the Gulf region’s ecosystem and cultural food traditions.

Raising Elijah describes the domestic routines of family life with young children and how they are linked to public health issues.  The book explores a range of issues, from increased exposure to chemicals like phthalates, which have been linked to asthma, to the toxicity of play structures built from pressure treated wood, which have been shown to leach arsenic.  In the U.S., there are over 80,000 chemicals on the market and little is known about their effects on human health and the environment.  In addition, less is known about the safety of these chemicals in combination with each other.  Steingraber focuses less on pointing fingers and more on a broken system that fails to regulate dangerous chemicals:  “…give me federal regulations that assess chemicals for their ability to alter puberty before they are allowed access to the marketplace…give me chemical reform based on the precautionary principle.” Her commitment to creating regulations that protect consumers can be seen as an example of environmental justice.  Indeed, consumers with less knowledge and/or financial ability to purchase alternatives should not have to unknowingly expose themselves and their children to toxic chemicals.

Alternatives do exist, but are not yet mandatory or mainstream.  Voluntary programs for business such as the EPA’s Design for the Environment  (DfE) can be utilized in concert with the precautionary principal to develop chemicals and mix chemical formulas with less environmental impact.  DfE focuses on chemistry and identifies safer alternatives, while the precautionary principle is a form of risk analysis that aims to ensure a higher level of environmental protection.  Used wisely, programs and guidelines such as these can help break a legacy of toxicity and help to usher in an era of responsible environmental design.

There is increasing demand for safer chemical products and some companies are responding.  We are encouraged to see companies adopt policies that prohibit the use of substances listed as persistent, bioaccumulative, or highly toxic; potential carcinogens; mutagens; or reproductive toxins.   In our world of increasing population and declining ecosystem services, we believe chemical companies that formulate non-toxic substances, facilitate the reduction and reuse of chemicals, and create products that have environmental benefits for the end user will have a competitive advantage.

Emily is a Senior Research Analyst with Portfolio 21 Investments. She has 9 years of experience in the environmental field.