What Is The Cost Of Climate Pollution? Corporate Profits, That’s What

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The US Securities and Exchange Commission (SEC) had proposed a rule mandating that public companies report their greenhouse gas (GHG) emissions. The idea was to provide information on material risks to investors and to spur companies’ customers and employees to force emissions reductions. But corporations will do nearly anything to hide the true cost of their climate pollution, and the lobbying pressure against full disclosures won out.

The SEC now requires a mere baseline transparency around climate risks and emissions, and only “large accelerated filers” and “accelerated filers” must disclose Scope 1 and 2 emissions.

Meanwhile, corporations continue to create feel-good campaigns in which they boast about their zero emission goals and progress — while they’re lobbying against policies to slow the problems their carbon emissions cause.

As CNN reports, the vast majority of the world’s biggest companies have done almost nothing in the past 5 years to cut their planet-heating pollution enough to avoid catastrophic climate change. In fact, large companies are either more likely to contribute to extreme levels of warming or are not disclosing their greenhouse gas emissions at all. These conclusions take into account direct emissions from operations as well as indirect emissions from use of the companies’ products. “This is particularly important for oil and gas firms,” the analysis indicates, “as most of their emissions are generated from the burning of their products such as gasoline and jet fuel.”

Emissions from burning fossil fuels warm the atmosphere, and they also contaminate the air with small particles that can seriously damage human health. For example, the use of fossil fuels for power generation, industry, and polluting transport are all major sources of both particulate matter and CO2. A World Bank report estimates that the cost of the health damage caused by air pollution amounts to $8.1 trillion a year, equivalent to 6.1% of global GDP. Particles from coal combustion or diesel-fueled vehicle emissions are among the most toxic types of PM2.5 and are more damaging to health than particles from most other air pollution sources. Addressing these sources of PM2.5 — like coal combustion and traffic – would address the most toxic climate pollution.

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However, if companies were held accountable for their climate pollution, their profits would collapse. That means trillions in financial gains could evaporate. These numbers were calculated by a team of researchers who assessed only direct emissions from companies — not “downstream” or Scope 3 emissions related to the products they sell. They concluded that the cost of damage surpassed profits for highly polluting industries, including energy, utilities, transportation, and materials manufacturers.

The calculations use the US Environmental Protection Agency’s $190 cost per ton for carbon dioxide emissions and the study doesn’t give a bottom line number in dollars, just in percent of profit and revenues.

The major impact would not be on small investors like you and me — it would affect the mega-wealthy most significantly. In a world where power is the most enticing allure, corporate leaders will do nearly anything to hold onto their profits.

Corporate Greenwashing & Greenhushing

The European Union agreed to ban deceptive environmental ads in September, 2023, and the US Fair Trade Commission is in the process of updating its guidelines around green advertising. These positive measures are just a breath of a start to uncover the truth about climate pollution. Some 70% of sustainability-minded companies around the world are deliberately hiding their climate goals to comply with new regulations and avoid public scrutiny, according to the climate advocacy group South Pole.

InfluenceMap research in 2023 determined that a majority of companies were found to be at risk of “net zero greenwash” due to their policy engagement. Those results occurred if a company announced a net zero or similar target but was not sufficiently supportive of policy to deliver the Paris Agreement. The assessment of policy engagement included both the company’s own engagement and that of its industry associations.

Chevron, Delta Air Lines, Duke Energy, ExxonMobil, Glencore International, Nippon Steel Corporation, Repsol, Stellantis, Southern Company, and Woodside Energy Group Ltd. were among the 21.5% of companies assessed to be at significant risk of “net zero greenwash” due to their policy engagement. All announced a net zero or similar target, but they are misaligned in their climate policy engagement activities with policy to deliver the Paris Agreement. The companies were highlighted as case studies due to their highly-active levels of engagement with climate policy and above-average use of net zero terms on their corporate web pages.

Another trend is emerging in the business world in which companies have zero emissions targets but decide not to make them public. It’s called “greenhushing,” and it’s becoming common for companies to stay muted about their climate strategies, whether due to caution, restraint, anxiety, or defiance.

Greenhushing has a little in common with greenwashing — it’s actually its counterpart. Firms engage in greenhushing when they have active company net zero goals and policies. They recognize it is important to reduce their carbon footprint, so they’re cutting energy use, regulating business travel, doing business with sustainable suppliers, taking advantage of carbon offsets, strategizing solutions to waste, conserving water, choosing sustainable materials over plastic, and seeking out other methods to build greater sustainability.

However, many of these companies aren’t transparent about their zero emissions efforts — they’re staying quiet about climate goals and progress.

Nature-Based Tech Can Help to Mitigate Climate Pollution

Drone technologies for reforestation. Satellite and eDNA data for monitoring biodiversity and natural capital. Blockchain for transparent carbon transactions. Increased processing power, better algorithms, machine learning, and widely available data. A wave of technologies is accelerating natural climate solutions, and experts say that, together, they can provide around one-third of the cost effective climate mitigation needed between now and 2030 to achieve the 1.5ºC target of the UN Climate Paris agreement.

In fact, nature-based solutions are estimated to have the potential to lift a billion people out of poverty, create 80 million jobs, add an additional $2.3 trillion of growth to the global economy, and also prevent $3.7 trillion of climate change damages. Now it’s up to investors to acknowledge this potential and direct the funds where they’re needed.

IPCC scientists also argue that, alongside tech applications to reduce emissions, we should be harnessing the carbon-sequestering powers of the planet itself. Despite broad recognition of the severe threats to the global economy posed by climate change, less than 5% of climate finance goes towards dealing with climate impacts, and less than 1% goes to coastal protection, infrastructure, and disaster risk management, including nature-based solutions.

Nature-based solutions — efforts like reforestation and ecosystem restoration — pay for themselves with a triple dividend, as they sequester carbon, boost biodiversity, and aid in human well-being.