9 disasters that showed the world the importance of ESG

1. BP Oil Spill 

Date: 20 April 2010

An explosion at the BP Deepwater Horizon oil rig led to over 130 million gallons of crude oil to spill into the Gulf of Mexico, off the coast of the US. 11 workers and millions of marine animals lost their lives due to this oil spill, making this one of the worst environmental disasters to date. The spill lasted for over 87 days and the clean-up was extremely technical and challenging. It is estimated that BP has spent over $65 billion towards cleanup, compensation and legal fees related to this oil spill. The disaster sparked a series of regulatory actions including first, a review of the regulatory environment that allowed the disaster to occur, followed by reforms that introduced new environment and safety regulations. The BP oil spill is a striking example of how our reckless pursuit for resources can have extreme impacts on biodiversity.  

Source: Britannica, Harvard Law 

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2. Bhopal Gas Disaster

Date: 3 December 1984

In 1984, a Union Carbide pesticide factory leaked over 27 tons of lethal MIC gas into the city of Bhopal in India due to the shutting down of safety systems. While the claims of the exact death toll vary, local survivors conservatively estimate that over 8,000 died on the night of the disaster. The Bhopal Gas Disaster is the world’s worst industrial disaster to date. Today, the Union Carbide plant site is yet to be cleaned and the disaster continues to impact the city via continuous poisoning of groundwater. Research has found a multitude of ailments and birth defects to be prominent amongst the new generations. While the action by both, the corporate and the government, has been inadequate to address the impacts of the Bhopal Disaster, it has been heavily cited when discussing corporate negligence. 

Source: Bhopal Medical Appeal ‍

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3. The Chernobyl Disaster‍

Date: 26 April 1986

The Chernobyl nuclear power plant exploded in Ukraine, releasing large amounts of radioactive matter into the atmosphere. 31 people died as a direct cause of this accident and many developed serious radiation illnesses. Following the explosion, over 30,000 inhabitants of the city of Pripyat were evacuated and the city remains a ghost town to date. The Chernobyl disaster became an international controversy as the radiation crossed several borders due to the wind. Following Chernobyl, many countries decided to halt or postpone their nuclear energy efforts and forced corporations and governments to engage in better risk management. The disaster showed that pollution has no borders, leading to debate and action within the international community. Today, the disaster is widely cited as a warning of the consequences that can be caused by nuclear fission energy. 

Source: Britannica, European Parliament

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4. The Rana Plaza Incident

Date: 24 April 2013

In 2013, the Rana Plaza building, which housed 5 garment factories, collapsed, killing 1,132 people and injuring 2,500 more. It is said that the building’s condition was a cause of worry to the workers, yet no actions were taken. Despite the major loss of life, of workers, and livelihoods, for the families of the victims, the labour code did not mandate any compensation. This incident brought to light the extremely poor working conditions of supply chain workers, especially in the developing world. It sparked a conversation about multinationals being more accountable to the worker conditions and rights for the employees in their supply chains.

Source: International Labour Organisation ‍

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‍5. Hinkley groundwater contamination

Date: 1952-1966

Between 1952 and 1966, Pacific Gas and Electric (PG&E), a utility company, allegedly dumped 370 million gallons of toxic chromium-tainted wastewater into ponds around the town of Hinkley, California. Chromium-6 was found to be a highly carcinogenic substance, causing several residents of Hinkley to develop serious health conditions. In 1996, a lawsuit against PG&E was settled for $333 million worth of compensation - the largest settlement of a class action lawsuit in US history. The story of Erin Brockovich, the legal assistant who initiated the investigation, was turned into an oscar-winning movie starring Julia Roberts. However, it is said that the groundwater continues to be toxic even today and the town of Hinkley is slowly turning into a ghost town.

Source: Banks, 2003

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6. Amazon/Australia/California forest fires

Date: 2019-2020

2019 saw the highest amounts of carbon emissions related to forest fires since 2002. The fires that caught the most media attention were the Amazon fires in Brazil, Peru and Bolivia, the bushfires in Australia and wildfires in the state of California. The Amazon fires have been linked to agricultural activities. The greenhouse gas emissions from the 2019 Amazon fires were equivalent to approximately 80% of Brazil’s total 2018 greenhouse gas emissions. In the Australian case, the bushfires burned more than 6 million hectares, with the smoke reaching as far as Argentina. Similarly, wildfires have been raging in California, leading to frequent power cuts and massively disrupting business-as-usual. The wildfires have been classified as ‘high’ ESG risk by several energy companies including Edison International, Southern California Edison, and San Diego Gas & Electric. Such fires are a major climate-related risk for companies and are attracting attention from investors. California has enacted several new laws to mitigate the frequency and destructive force of forest fires. As climate change goes on, scientists fear that wildfires will get more and more frequent and aggressive. 

Source: Bloomberg, FitchRatings‍

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‍7. Fukushima Daiichi Nuclear Disaster

Date: 11 March 2011

After a 9.0 magnitude earthquake, centered 130km off of the eastern coast of Japan, the resulting 15-meter tsunami caused a failure in three nuclear power reactors at the Fukushima Daiichi Plant. The reactors were unable to run the cooling and water circulation functions. This led to high levels of radioactive releases. While there were no direct deaths due to radiation, over 100,000 people had to be evacuated as preventative measures. In addition, the disaster led to the largest amount of radioactive material discharged into the oceans - leading to a ban on fishing off of the coast of Fukushima, as the fish have been found to have high levels of radioactive cesium. This disaster could have been avoided if better safety measures and risk assessments were in place. Similar to the aftermath of Chernobyl, the international community responded by halting plans for nuclear energy plants and revisiting safety and environment related regulation. 

Source: World Nuclear Association, Physicians for Social Responsibility‍

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8. Beirut explosion 

Date: 4 August 2020

A colossal explosion at the port of Beirut, Lebanon, rocked the city in August this year. The blast sent an enormous mushroom cloud into the air, along with supersonic blastwaves throughout the city. This led to the death of at least 200 people, major wreckage of the port, and caused damage to many buildings further inside the city. It is also estimated that around 300,000 people were made temporarily homeless. The cause is said to be 2,750 tons of ammonium nitrate which was stored unsafely at the port. While the Prime Minister promised to hold the guilty accountable, his government resigned six days after the explosion. While who is exactly to be blamed for this catastrophe still remains a mystery, the explosion has once again shown the harms of negligence for societies and the planet. 

Source: BBC‍

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9. Visakhapatnam gas leak

Date: 7 May 2020

LG Polymers is a chemical company based in India, and a subsidiary of the South Korean company LG Chemicals. In May this year, the LG Polymers factory in Visakhapatnam, India, leaked clouds of toxic gas into nearby villages leading to the death of 12 people and hospitalisation of hundreds. Investigation revealed that the plant was operating for two decades without proper environmental clearing. Such cases of gross negligence can result in deadly outcomes. The incident sparked a major conversation in the media about corporate accountability and the need for better government regulation. 

Source: The Hindu