15 April 2013: The Economics of Ecosystems and Biodiversity Business Coalition (TEEB for Business) has released a report on environmental externalities of businesses, titled “Natural Capital at Risk – The Top 100 Externalities of Business.” The report concludes that the top 100 environmental externalities cost the world economy approximately US$7.3 trillion annually, around 13% of global economic output.

Authored by environmental data company Trucost, the report was released at the Business for the Environment (B4E) Summit convening in New Delhi, India, from 15-16 April 2013. It states that 38% of costs are from greenhouse gas (GHG) emissions, 25% from water use, 24% from land use, 7% from air pollution, 5% from land and water pollution, and 1% from waste. The report concludes that the highest impact sector is coal-fired power plants in Eastern Asia and Northern America, costing US$770 billion annually in emissions and other damage caused by air pollution.

The 83-page report uses environmentally extended input-output model, and estimates how inputs and outputs may flow through global supply chains to producers of consumer goods. The report’s analysis concludes that some business activities fail to generate sufficient profit to cover their natural resource use and pollution costs, and recommends that businesses and investors take account of natural capital costs in decision making to manage risk and gain competitive advantage.

The report includes recommendations for companies, investors, governments, and for the TEEB Business Coalition. Among other things, it recommends that businesses identify existing mechanisms to internalize natural capital costs. The report calls on investors to, inter alia, build natural capital risks, adjusted for the likelihood of internalization, into asset appraisal and portfolio risk models. It urges governments to develop policies that efficiently and effectively internalize these costs, avoiding sudden future shocks. It recommends the TEEB Business Coalition develop frameworks for companies and investors to apply standardized, systematic approaches to valuing the impacts of natural resource use and pollution based on standards consistent with the UN System of Environmental-Economic Accounting.

The TEEB for Business Coalition (TEEB) is a UN Environment Programme (UNEP)-backed biodiversity-appreciation programme, drawing together expertise from science, economics and policy. [UN Press Release] [UNEP Press Release] [TEEB for Business Coalition Website] [Publication: Natural Capital at Risk – The Top 100 Externalities of Business] [B4E Summit Website]