Image courtesy of The Waterkeeper Alliance

Raising hogs is a dirty job. Hogs are massive, they eat a lot, and they produce even more waste. What's perhaps even more disgusting though, is the standard industry practices used to dispose of this waste.

In the slide show below, we'll walk through these practices in pictures. These pictures come from industry watchdog groups The Waterkeeper Alliance and the Neuse Riverkeeper Foundation, who this month jointly with filed a Notice of Intent to sue the farm pictured, the Stilley Swine Feeding Operation in Trenton, N.C., for Clean Water Act violations from their waste disposal methods.

The environmental impact of these industry practices is obvious -- fish kills; pathogens in the rivers, streams, and water table; Pfiesteria and other bacteria infecting wildlife and people; foul odors; and so on. But there is another lesson in this case study pertinent to long-term investors.

It's about understanding a company's operations and its risks

Invest like Buffett. Image source: Georgetown University

Investing is not abstract. Buying shares of a company is buying ownership in that company. When you invest in a business for the ultra long term, you need to understand the most fundamental nuts and bolts of how that business operates.

Warren Buffett preaches it, and so do we here at The Motley Fool.

Failure to do so can be as ruinous for your investment as hog waste is to local environments. This means digging deep into the financials, it means listening to investor relations conference calls, and reading SEC filings. It also means understanding the basic operations of the business, and recognizing any inherent risks within that operation.

Socially responsible investing

Socially responsible investing is a trend in the investment community where investments are selected based on the company's practices, ethics, product safety, and other factors tied to social impact, in conjunction with traditional considerations like competitive advantage, earnings, growth, and market share. 

Smithfield Foods is the multinational corporation that owns the hogs raised at Stilley Farm.  In September 2013, Smithfield was purchased by Hong Kong-based Shuanghui International Holdings Ltd. for $7.1 billion, making Shuanghui the largest pork producer in the world. 

In its 2013 annual report, Smithfield reported more than $13 billion in sales and more than $500 million in operating profits. Over the past 10 years, the company earned over $4 billion in aggregate operating profits. Financially, the company would likely pass any investor's litmus test.

Fish kill near Stilley Farm in Trenton, N.C. Image courtesy of the Waterkeeper Alliance.

But what happens when you take into consideration how this megacorporation operates? Year after year, small town farms raising Smithfield hogs leach or spill noxious waste into the waterways. In 1995, a Smithfield contracted farm leaked over 25 million gallons of hog waste into North Carolina waterways -- the largest spill in history.

Fast forward 19 years and the company's practices have not changed. It's simply a matter of time before another spill meets or exceeds that mark from 1995. 

Investments in businesses you can believe in

This is a huge risk for the company, but it's an even greater risk to the communities surrounding these farms. As an investor, can you justify using your capital to own a company that puts its communities at such risk?

It's a question that should always be asked, but can only be answered by each individual investor. Asking this question is just as fundamental to an investment as understanding cash flow, growth, market share, and valuation. It's part of understanding the big picture, and it's key to successfully investing for the ultra long term.