In Tilikum's memory, I thought I would discuss my favorite example of Socially Responsible Investing and re-post my opine on why Sea World's stock is tanking (pun intended) and why an informed public is to be thanked for stopping them.
When I was about 5 years old, I had a crazy obsession with whales and dolphins, particularly orcas. I would draw them, go to the public library and read about them and catch documentaries on TV whenever I could. I loved them! And my parents saw this and one summer decided to take me to the most magic place on Earth for a dorky kid like me – Sea World. Well I was so enamored by seeing a killer whale in person that for the next five Christmases I would ask Santa for a pet orca to keep in a pool that I was determined to dig in the backyard, because of course that could happen in rural Vermont.
Fast-forward about 25 years, and you arrive at the modern day. I visited the Georgia Aquarium about a year ago and as some of you know may know it’s the largest aquarium in the United States and they have both beluga whales and bottle-nosed dolphins within this facility. After watching these poor, intelligent beings float bored around their tanks, I wanted to go back in time and kick my 5-year-old self. Clearly my view of the world was flawed, selfish, unrealistic and completely one-sided. As a child we don’t think about these things, but as an adult we need to acknowledge that sometimes we are wrong about things.
I share this story from my childhood to show that my view of the world is not static. And neither is yours. With age comes knowledge, and with knowledge comes wisdom, and with wisdom comes the drivers of our adult decisions.
That is precisely what happened for many individuals following the release of the film "Blackfish," which gives a detailed examination of the brutality and horrible consequences that come from keeping orcas in captivity. It outraged the public so badly following its release at the Cannes Film Festival and subsequent broadcast on CNN, that one of its majority shareholders ended up shorting 19.5 million shares of the company's stock.
Whether or not they did this for moral reasons or greedy reasons is irrelevant: the impact is the same, which is that money will always reflect the demands of the consumer. And the consumer is angered, fed up, and looking for a drastic change to take place for the better. When the public wants it, investors will shift their money accordingly - even those who made 19.5-million-share bets on a company.
The change following these actions was also drastic: Congress proposes a bill to ban orca shows and the U.S. Supreme Court upholds OSHA's (Occupational Safety and Health Administration) ruling that it is inherently dangerous for Sea World to force its trainers to enter a tank with an animal that could potentially kill them at any second. Southwest Airlines (LUV) who previously had a great 25-year relationship with Sea World even severed their ties with the park, as they too were outraged. This sparked several other major corporate sponsors and partners also disassociating themselves.
Despite all this, within the same quarter as the release of "Blackfish," Sea World said that it's park attendance dropped 13% over same period in the previous year, but this was not due to an educated public, but rather was "weather" related. For some reference, weather typically only causes a single digit declines, even with extraordinary weather circumstances. So this assessment on their park was purely in denial and idiotic, I might add. There's nothing worse than looking like a complete liar on an earnings call. Later on, after the company's stock dropped more than 33%, they were forced to admit that animal rights activists had, in fact, affected the company's profit margins. Their CEO resigned and the company had to lay off hundreds of workers nationwide.
By the end of 2014, Sea World had seen park attendance drop by more than 1 million customers and lost $25.4 million in the final quarter of that year alone. On top of all this, OSHA continued to issue citations for unsafe work conditions and thus the park was forced to pay over a quarter of a million dollars in lawsuits to its employees for putting their lives at risk. Ultimately by August 2015, Sea World reported a whopping 84% decline in net income...this is an extremely unhealthy number, especially for a large company.
Management started to get their heads out of their...ahem...and announced that in the next 5 years it would release 8 of its dolphins to the wild and it would officially end its orca breeding program. While a step in the right direction, they still grossly missed the point of the public: the orcas must be freed. Despite these desperate measures, the company lost another 500,000 park visitors and its stock plummeted to an all-time low.
Are you convinced now that the actions of the public make a difference to bettering the world? You should! This is what socially responsible investing (SRI) is all about.
Need a visual of this data? PETA recently put together a timeline of the company's stock since the release of "Blackfish" and soon the company will be forced to comply with the demands of the consumer or face some pretty harsh consequences (i.e. bankruptcy).
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