World's Largest Firms Causing $2.2 Trillion/Year in Damage

Preliminary findings of a report commissioned by the United Nations have identified that the world's 3,000 largest companies in 2008 caused loss and damage to the environment totaling $2.2 trillion. The cost is the equivalent to about one-third of the profits or 6-7% of sales of the 3,000 firms, states Trucost (London), an environmental consulting firm, and the study's author. A final version of the study is due to be published in the summer.

"Externalities of this scale and nature pose a major risk to the global economy and markets are not fully aware of these risks, nor do they know how to deal with them," says Richard Mattison, Trucost's COO and leader of the report team. "What we're talking about is a completely new paradigm," he says. More than half of the estimated $2.2 trillion costs were related to the impact of greenhouse gas (GHG) emissions on climate change. Other key costs include local air pollution, such as the dispersion of particulates, and the damage cause by the over-use and pollution of water.

The real cost is likely to be higher than $2.2 trillion/year as this figure does not include environmental damage caused by households or governments in their consumption of goods and services, or the long term costs of toxic waste.

The study estimates that of the leading 3,000 companies, industrial firms cause $201 billion/year in environmental damage, of which $104 billion is related to GHG emissions, with $40.4 billion related to water abstraction, and $50.6 billion for other environmental damage. Oil and gases firms cause $175 billion/year in environmental damage, with $100.2 billion from GHG emissions, $38 billion from water abstraction; $19.4 billion from acid rain and smog; and $43.2 billion for other costs.

The aim of the study is to encourage leading firms and their investors to minimize their environmental impacts before governments step in with tougher environmental regulation, Mattison says

Separately, leading industrial companies in Europe say they are increasingly concerned about the ongoing implementation of the European Union's (EU) planned Environmental Liability Directive (ELD), according to a survey by industry body the Ad-Hoc Industry Natural Resource Damage Group (Brussels).