If the biggest companies in the world had to account for all the environmental damage they cause, could they still turn a profit? According to a UN-supported analysis, no way.
In fact, the 3,000 largest publicly-traded companies were responsible for $2.15 trillion in environmental damages in 2008 – but these damages are often written off as “externalities” and are not accounted for on the bottom line. What’s even worse, these externalities cost the global economy an estimated $4.7 trillion per year in health and social costs, lost ecosystem services and pollution.
These figures come from Natural Capital at Risk, a 2013 report on the top 100 externalities of business produced by a combined effort of the United Nations Environment Programme, TEEB (The Economics of Ecosystems and Biodiversity), the World Business Council for Sustainable Development and Trucost consulting firm.
As Greenpeace points out in its breakdown of the report, almost no business on Earth would be profitable if it accounted for every greenhouse gas it emitted into the air, how much land it monopolized and poisoned, and how many diseases were spread in relation to its products. One example is the mercury that Chisso Chemical Corporation dumped into a Japanese bay for four decades, and that resulted in the deaths of nearly 1,800 people and the spread of birth defects and disabilities in 10,000 more. Obviously, the impacts to health and environment don’t stop there.
“The unpaid costs of modern industry include the honey bee collapse that affects global pollination, the massive health effects of endocrine disrupting chemicals from the hydrocarbon chemical industry, and of course, global warming that will impact humanity and all of nature into the future,” writes Greenpeace International co-founder Rex Weyler.
The Natural Capital at Risk report investigated a broad swath of industries, including agriculture, forestry, fisheries, mining, utilities, cement, steel, paper and petrochemicals, and concluded that no sector generates enough revenue to cover its real, external costs.
The report calculates that these costs tally up to an astounding $7.3 trillion per year, or 13 percent of the global economic output in 2009.
The majority of these costs were incurred via greenhouse gas emissions (38 percent of the total), followed by water use (25 percent), land use (24 percent), air pollution (seven percent), land and water pollution (five percent) and waste (one percent).