'Top Public Companies Responsible For A Third Of All Environmental Damage' In The World

world environmental damage image
Annual environmental costs in 2008 attributable to top 3,000 publicly traded companies. Image credit:Trucost PLC, via Environmental Leader.

The UN recently hired a consultant named "Trucost" to quantify adverse environmental impacts of cultural practices, world-wide. The report looked closely at that portion of the estimated impacts associated with large publicly traded firms (as pictured). The headline coverage you'll see on this part of the report might include this statement or one like it: the "...top 3,000 public companies were responsible for $2.15 trillion, or about one-third, of all global environmental damage." (I assume they are talking about industrial supply chains but include product use and disposal and associated secondary impacts.)

Estimates such as this one are typically very imprecise. Plus or minus 50% would be granting a lot. That said, there are some important political and policy insights to be had.Who owns the problem?
As the story about the Trucost report in Environmental Leader points out, the 'polluter pays' principal makes general sense when you see these numbers. But not always.

Which 'polluter' is most responsible for for the global warming attributable to an old rusty freezer sitting out behind the barn, leaking its refrigerant charge, for example? Would it be the chemical company that originally made the refrigerant? Or, the appliance maker that incorporated it? What about the distributor or retailer? Or, the owner who made it a back yard fixture to avoid having to pay a $20 collection and recycling fee?

Cost vs benefit.
This study quantifies the financial losses only. Life cycle benefits of products such as insulation or solar panels do not appear to be counted. (Someone correct me if this is not so.)

Policy should favor manufactured products which offer improved life-cycle environmental benefits, relative to earlier designs. A good example would be wind turbine manufacture. There's a point in the design life - including reclamation and demolition impacts in the estimates - after which these renewable energy generating devices create only "nega-inputs" of greenhouse gas. (Who gets those 'credits' is a story for another day.) Anyway...

Why does this exist?
As the opening page of the Trucost website indicates, financial institutions love this service. By using it to help select investment goals or even to shape investment portfolios they can claim they are being environmentally responsible and thus attract environmentally concerned investors.

I would be willing to bet that not a single person working for those financial institutions has ever been in a power plant where things are noisy and dirty. This an abstraction and a marketing plan beamed out of London for the world of money.

I'm not saying don't do it. I'm saying that until USEPA and equivalent environmental agencies in other developed and developing nations reach consensus on how to measure pollution with standard metrics, they are putting a micrometer on a fog bank with reports such as this. Industries know it; and some are going to raise a fuss about it with their institutional investors.

Final thoughts.
I have no idea how they are getting estimates of emissions and impacts associated with outsourced production: Asian utilities and factories especially. Perhaps a left handed micrometer?

Agriculture is notoriously hard to quantify for environmental impact with precision. Impossible really. It looks as if that industry sector was not included; although food production obviously does consume water and energy and has other miscellaneous losses which can be quite substantial.

Tags: Corporate Responsibility

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