Climate Change

Study reveals how much carbon damage would cost corporations if they paid for their emissions

Published

1 year ago

August 25, 2023

The world’s corporations produce so much climate change pollution, it could eat up about 44% of their profits if they had to pay damages for it, according to a study by economists of nearly 15,000 public companies.

The “corporate carbon damages” from those publicly owned companies analyzed — a fraction of all the corporations — probably runs in the trillions of dollars globally and in the hundreds of billions for American firms, one of the study authors estimated in figures that were not part of the published research. That’s based on the cost of carbon dioxide pollution that the United States government has proposed, the Associated Press reported.

Nearly 90% of that calculated damage comes from four industries: energy, utilities, transportation and manufacturing of materials such as steel. The study in Thursday’s Journal Science by a team of economists and finance professors looks at what new government efforts to get companies to report their emissions of heat-trapping gases would mean, both to the firm’s bottom lines and the world’s ecological health.

Earlier this year, the European Union enacted rules that would eventually require firms to disclose carbon emissions and the United States Securities and Exchange Commission and the state of California are looking at similar regulations.

Study co-author Christian Leuz, a finance and accounting professor at the University of Chicago, said the idea “of shining the light on corporate activities that have costs to society is very powerful, but it is not enough to save the planet.” An earlier study of his found that after fracking firms disclosed their pollution rates, those contamination levels dropped 10% to 15%, he said.

The idea is consumers and stockholders would see the damage and pressure firms to be cleaner, Leuz said.

Outside economists agreed.

Leuz and his colleagues used a private analysis firm that finds or estimates carbon emissions of some publicly owned companies and analyzed the carbon pollution from 14,879 firms. Then they compared them to company revenues and profits.

That calculation shows “which activities are particularly costly to society from a climate perspective,” Leuz said. Still, he cautioned that “it would not be correct to just blame the companies. It is not possible to divide responsibility for these damages between the firms that make the products and consumers who buy them.”

The calculations are for only a fraction of the world’s corporations, with many public companies not included and private firms not listed at all, Leuz said.

The economists didn’t identify or tease out single companies but instead grouped firms by industry and by country. And they only used direct emissions, not what happens downstream. So the gas in a person’s car does not count toward an oil company’s emissions or corporate carbon damages.

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. Only when asked by The Associated Press did Leuz estimate it in the trillions of dollars.

At $190 a ton, the utility industry averaged damages more than twice its profits. Materials manufacturing, energy and transportation industries all had average damages that exceeded their profits.

On the opposite end, the banking and insurance industries averaged climate damages that were less than 1% of their profits.

When looking at companies based on countries, Russia and Indonesia were the top for corporate climate damages, while the United Kingdom and the United States were the lowest. Leuz said that reflects the age and efficiency of the companies and which type of industries were based in countries.

Several outside experts said the study made sense within certain limits, while a few found faults with some of the choices of what to count, saying not counting downstream emissions is a problem. Because it doesn’t count those it “does not provide an incentive to reduce these to the level needed,” said Bill Hare, CEO of Climate Analytics, which studies global emissions and reduction efforts.

“The results are important but perhaps not that surprising,” said Stanford University economist Marshall Burke. “The bigger take-home is the number of caveats that are needed to do this analysis, indicating what a mess our emissions accounting systems currently are.”

Appalachian State University’s Gregg Marland, who helps track global emissions by country, said “good numbers do allow us to know who is producing the products that consumers want with the least contribution to climate change.”

Nobel prize winning economist Paul Romer, formerly of the World Bank and now at Boston College, said the damage estimates are useful but need to be interpreted accurately, “without the moralistic framing and induced urge to punish.”

Romer used the example of his move from New York to Boston. The initial move would go under the moving company’s corporate carbon damage, but when he took some books from his home they would not. Misusing corporate carbon damage figures could put the moving company out of business and he’d drive his stuff instead, so total carbon emissions would not be changed. Shifting to zero carbon fuel makes more sense, he said.

Related Topics:#Carbon Business Climate featured

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Climate Change

Kandahar’s Takhtapul district hit hard by ongoing drought

Afghanistan has experienced three consecutive years of drought, including the most devastating drought in 30 years in 2021 and 2022.

Published

4 days ago

December 18, 2024

Ariana News

Residents of Takhtapul district of Afghanistan’s Kandahar province say they are struggling to survive amid an ongoing drought that has devastated their crops.

This rural community mainly relies on agriculture to survive but climate change has virtually ended any hopes of farming.

Afghanistan has experienced three consecutive years of drought, including the most devastating drought in 30 years in 2021 and 2022.

Climate experts predict that by 2050, 90% of its territory will be affected by drought.

Afghanistan is one of the ten countries most vulnerable to climate change. It's also ranked fourth in overall disaster risk.

Takhtapul residents have spoken out about their plight and said they have sustained extensive losses due to the drought

They said in the past they had made a living off farming, but now due to the severe lack of water, their land has become barren.

They also said this is forcing their youth and younger generation to find work in other provinces or outside the country.

Abdullah, a resident of Takhtapul district of Kandahar, said: "Our youths have gone to Pakistan and other provinces in search of work due to unemployment and drought. There they have wheelbarrows [for day labourer work] or they do other jobs."

On the other hand, local officials say that they are trying to reduce unemployment by launching development projects in this district.

Along with droughts and lack of work for young people, the breakdown of roads, lack of health centers and lack of suitable places for education are among the problems that the residents of this district want to solve.

Climate Change

EU pledges €15 million to WFP to help mitigate climate crisis impact on Afghans

Published

2 weeks ago

December 5, 2024

Ariana News

The United Nations World Food Programme (WFP) has welcomed a €15 million (US$15.8 million) contribution from the European Union (EU) for its climate related activities in Afghanistan.

According to a statement issued by the EU on Thursday, this contribution will help local communities prepare for natural disasters and face the devastating effects of climate change, and support farmers for more productive and sustainable agriculture.

So far this year, more than 160,000 people have been affected by flooding in Afghanistan. Floods have destroyed almost 20,000 homes, and thousands of hectares of agricultural land.

“The European Union is committed to assisting the people of Afghanistan in adapting to climate change, which is severely threatening food security and livelihoods notably of rural communities, said the EU Chargée d’Affaires to in Afghanistan, Veronika Boskovic Pohar.

“Climate-related shocks also exacerbate host communities’ capacity to support internally displaced people and returnees from neighboring countries, and they discourage farmers in poppy-cultivating areas from sustainably shifting to licit crops.

“This latest contribution increases the European Union’s steady support to WFP’s resilience programme in Afghanistan to a total EUR 85.1 million since 2022”, she said.

Harald Mannhardt, WFP Deputy Country Director in Afghanistan, said: “This latest funding from the European Union comes at a critical moment as WFP earlier this year was forced to halt projects across the country due to a massive funding shortfall.”

Afghanistan is currently ranked seventh on the Notre Dame Global Adaptation Index of countries most vulnerable and least prepared to adapt to climate change.

Climate Change

Malaysia records six months of rain in just five days

One of the worst hit areas was Kelantan which recorded 1,442mm of rain between November 26 and 30

Published

3 weeks ago

December 3, 2024

Ariana News

Six months worth of Malaysia’s average annual rainfall fell within five days across the east coast of the country last week, Prime Minister Datuk Seri Anwar Ibrahim said early Tuesday.

One of the worst hit areas was Kelantan which recorded 1,442mm of rain between November 26 and 30.

Ibrahim said the high rainfall led to flooding that forced a large number of people in Kelantan and Terengganu to be evacuated.

The recorded rainfall at Irrigation and Drainage Department stations in Tanah Merah and Tumpat, exceeded 1,167mm in just five days.

“According to the Malaysian Meteorological Department (MetMalaysia), the reading (in Kelantan) was at 1,442mm, an extraordinarily high level of rainfall. In Terengganu, MetMalaysia’s Besut station recorded 1,761mm of rain during the same period.

“Overall, the (average) rainfall was 1,349mm, far beyond our expectations,” Anwar told the Dewan Rakyat (Parliament) on Tuesday.

He also said the government is preparing for the forecast monsoon surge as announced by MetMalaysia, expected to start after Dec 8.

By Tuesday, some residents in the town of Tumpat were returning to submerged homes and shops as deadly floodwaters eased in some areas.

People who returned to their homes found many had collapsed, with parts of walls, roofs and broken furniture lying scattered in pools of water.

Muhamad Alim, a 56-year-old shopkeeper whose food store was inundated, recalled fast-rising waters in his home and his grandchildren crying as the flood surged on Saturday night.

"Electricity was cut off, and there was no water supply. So, we were stuck, sitting there as if we were in the middle of the sea, surrounded by water," he told Reuters.

"You could hear the sound of water rushing cutting through the silence of the night."

Six people have died in Malaysia and more than 150,000 were evacuated during the height of the floods last week, government data showed.

In Thailand, the death toll is 25, and more than 300,000 households were still affected, the interior ministry said.

The number of people in temporary shelters in Malaysia fell to just under 95,000 on Tuesday morning, though the authorities remain on guard for a second wave of floods this week.

Malaysia's Meteorological Department expects a wind convergence to begin on Tuesday, potentially bringing heavy showers, with a monsoon surge to follow on Dec. 8.

In Thailand, the Meteorological Department warned people in the south of the country to beware of heavy to very heavy rains and possible flash flooding and overflows from Dec. 3-5.