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TEEB For Business Coalition Study Shows Multi Trillion Dollar Natural Capital Risk Underlining Urgency of Green Economy Transition

Click here to read the report 

Click here to download press release

 

London & New Delhi, 15 April 2013 - The report, “Natural Capital at Risk – The Top 100 Externalities of Business”, estimates the global top 100 environmental externalities are costing the economy world-wide around $4.7 trillion a year in terms of the economic costs of greenhouse gas emissions, loss of natural resources, loss of nature-based services such as carbon storage by forests, climate change and air pollution-related health costs. This was released today from The TEEB for Business Coalition during the Business for the Environment summit in New Delhi.

 

Headline findings are:

  • The primary production (agriculture, forestry, fisheries, mining, oil and gas exploration, utilities) and primary processing (cement, steel, pulp and paper, petrochemicals) sectors analyzed are estimated to have externality costs totalling US$7.3 trillion, which equates to 13% of global economic output in 2009.
  • The value of the Top 100 externalities is estimated at US$4.7 trillion or 65% of the total primary sector impacts identified.
  • The majority of environmental externality costs are from greenhouse gas emissions (38%) followed by water use (25%); land use (24%); air pollution (7%), land and water pollution (5%) and waste (1%).

The highest impact sectors by region globally include:-

  • Coal-fired power in Eastern Asia and in Northern America rank 1 and 3, respectively estimated at US$ 453 billion per annum in Eastern Asia and US$ 317 billion in North America. These consist of the damage impacts of GHG emissions, and the health costs and other damage due to air pollution. In both instances, these social costs exceeded the production value of the sector.
  • The other highest impact sectors are agriculture, in areas of water scarcity, and where the level of production and therefore land use is also high. Cattle ranching in South America, at an estimated US$ 354 billion ranks second. Wheat and rice production in Southern Asia rank fourth and fifth respectively.
  • Iron, steel and ferroalloy manufacturing ranks 6 at US$225 billion. Cement manufacturing globally accounts for 6% of CO2 emissions, and Eastern Asia produces an estimated 55% of the world’s cement, so it is not surprising that it comes in at # 7.

 

The report assessed more than 100 environmental impacts using the Trucost environmental model which condenses them into six eKPIs to cover the major categories of natural capital consumption: water use, greenhouse gas (GHG) emissions, waste, air pollution, water and land pollution, and land use. These eKPIs were then quantified by region across over 500 business sectors. The method used has limitations and is only designed to give a high-level indication of the priority sectors and regions where natural capital risk lies. Limitations in the method are outlined in the report to support ongoing development of this type of analysis.

Alastair MacGregor, Chief Operating Officer of Trucost, who conducted the study states, “Recent soft commodity price volatility due to drought, and its impacts on company profits, nation’s trade balances and inflation has underscored the dependency of investment returns on natural capital. This trend will accelerate in the future on a number of fronts .”

Dr. Dorothy Maxwell, Director of the TEEB for Business Coalition states, “Understanding natural capital risk and opportunities is essential for businesses to position themselves in an increasingly resource constrained world.”

Quotes on the report from TEEB for Business Coalition board and advisory group members:

Pavan Sukhdev, Chair of the Advisory Board of TEEB for Business Coalition states, ”We need undoubtedly to change how we do business, but we cannot manage what we do not measure – and at present only a handful of businesses measure their externalities. Resolving this is at the heart of the green economy and sustainability itself.”

Achim Steiner, UN Under-Secretary General and Executive Director, UN Environment Programme (UNEP) states, “Forward-looking companies are already recognizing that the key to competitiveness in an increasingly resource-constrained world will hinge in large part on escalating natural resource efficiencies and cutting pollution footprints—the numbers in this report underline the urgency but also the opportunities for of all economies in transitioning to a Green Economy in the context of sustainable development and poverty eradication.”

Peter Bakker, President World Business Council for Sustainable Development comments, "Now that we have this high-level assessment of where the priority areas are, we need to encourage companies to increasingly consider the value of nature in decision-making, and ultimately accounting and reporting. The results of such company assessments should also be shared so we can fit the pieces of the puzzle together to develop a standardized approach to account for nature."

Commenting on the study Michael Izza, chief executive of ICAEW explains, “This study highlights that the disciplines of accountancy and economics need to evolve to recognise that the limiting factors to production and growth are no longer just labour, capital and technology. As our economies, populations and our consumption have grown exponentially relative to nature, which once seemed so abundant and limitless, we now have to face the fact that this is not so.”

"Sound natural capital management goes hand in hand with benefits for companies, investors, communities, and the environment," said Usha Rao-Monari, Director, Sustainable Business Advisory, IFC, a member of the World Bank Group. "This study makes the business case for companies and investors to take natural capital into account if they wish to save on resource use, access markets and financing, and mitigate major environmental and social risks," she added.

“Incorporating the use of natural capital into a business’ sustainability strategy is something that every company must do to understand their real sustainability issues in order to engrain them into day to day operations and overall planning. This is no longer an option and now more than ever it is critical for reporting requirements to include natural capital accounting and government legislation to address corporate transparency and accountability,”states Jochen Zeitz, Director of Kering and Chairman of the board’s sustainable development committee and Co-Chair, The B Team.



Example Key Press Items:

Putting environmental impact on the balance sheet
Oliver Balch, Guardian Sustainable Business

Environmental Cost of Business Estimated at $4.7T Annually
Bloomberg

Coal and cattle lead business damage to nature
Reuters

To see all news items - please click here


Media Contacts:

Charlotte Masiello-Riome, Senior Communications Strategy Advisor
communications@teebforbusiness.org

Sarah Wainwright, Head of Marketing, Trucost
sarah.wainwright@trucost.com

Patrick Schulze, Director, Strategic Engagement, Global Initiatives B4E Summit
patrick.schulze@globalinitiatives.com


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