Have you ever bought a car thinking that it was going to be awesome and it turned out to be a lemon? Instead of being an asset it became a never-ending stream of repair bills? This is what the film GasLand is all about. At this point in time we don’t know how much of the repair bill for water contamination will be met by the offending oil and gas companies and how much will be borne by taxpayers.

The problems caused by the extraction of coal seam gas through a method known as hydraulic fracturing, or ‘fracking’, casts a shadow over its perceived benefits as a transition fuel. It is a practice that is not confined to the US, it's also happening in Queensland and ramping up in NSW. Western Australia is next in the firing line.

GasLand is a powerful movie because it tells intensely personal and tragic stories about ordinary people. It is more of an inconvenient truth than Al Gore’s Inconvenient Truth. It documents a range of people and communities in the US that have been subject to severe contamination of their groundwater after oil and gas companies conducted fracking operations nearby.

In the Bush-Cheney era, a bill was passed that exempted oil and gas companies from America's Safe Drinking Water Act and the Clean Water Act (as well as the Clean Air Act and the Superfund Act). Following the outcry sparked by the movie, a bill is currently before congress to repeal these exemptions and force the disclosure of the chemicals used in the process. The EPA has been sidelined because, without disclosure, they don’t know what they need to monitor.

The link between these actions and our superannuation savings might sound tenuous, but it isn’t. Consider that carbon-emitting companies have historically benefited from zero emission costs and we have come to a point where the scale of that problem means that everyone pays for the cleanup; and the longer we play fiddlesticks with such problems, the harder and more costly they are to clean up.

At first glance, it might seem that an investment in the shares of companies that have reaped the rewards of free emissions would have locked in a handy financial return. It may have in the short term; what is not immediately obvious is that investors will pay for it in the long term.

So how do we make the link between toxic contamination and our long-term retirement savings? Surely if we invested in the right oil and gas companies at the right time then we walk away with bonus returns? We might like to think this way, but we would be deluding ourselves.

This is a classic case of ‘externalising’ a cost. The companies in question are pushing the pollution costs onto the broader community rather than paying for it themselves. Sound familiar? During the global financial crisis it was governments who picked up the bill for the bailout.

When the interests of business and community get so far out of whack, something has to give. The strangling regulations applied to tobacco products came about because governments were picking up the tab for long-term healthcare costs, but not before tobacco companies walked away with handsome shorter-term profits.

We rely on our superannuation funds to generate investment returns that will improve the prospects for our standard of living in retirement. With government regulation spurring an increased level of competition between funds, we find that the industry is undergoing merger-mania. Size means scale, and scale means lower overheads for funds; which is one way they positively differentiate themselves from their peers. You have to be $5 billion in size to be considered a player these days.

Scale brings with it another feature: how do you invest so much money? With large sums of money involved, it gets spread around most of the companies listed on the stock market which, in turn, is representative of the economy. And here’s the rub: stock market returns have been shown to be correlated with economic activity. According to a recent CFA Institute journal paper by Bradford Cornell, "the performance of equity investments is inextricably linked to economic growth."

When the pieces of the puzzle come together, we see that the cost of pollution, unless borne entirely by companies themselves, is a burden on broader society. Such burdens come at a cost to economic growth as expenditure goes towards remediating damaged ‘assets,’ instead of being invested in newer, more productive ones. When we damage our economy we also damage our investment returns. What goes around comes around; future investment returns will suffer. Short-term benefits for some companies come with a long-term cost for the market as a whole.

At least in the US we are witnessing the first signs of investor reaction. A coalition of investors who are concerned about their portfolio exposure to cleanup costs, litigation and regulatory risks, have put shareholder resolutions to a range of companies, including Exxon and Chevron, asking them to disclose their practices and ensure gas well integrity. We may see Australian investors following suit, pursuing local and offshore companies for disclosure. In the meantime, a network of local action groups in Australia is demanding a moratorium on all fracking until a rigorous regulatory approach is developed.

GasLand also contends that the thousands upon thousands of coal seam gas facilities constructed in the US are letting out enormous quantities of greenhouse gases into the atmosphere. As if the water contamination and health impacts weren’t enough.

Phil Preston is the Principal of Seacliff Consulting, a firm offering specialised consulting services in the financial and responsible investment fields. His prior work includes 17 years of financial research and portfolio management in the funds management industry.