Pollution: The Ignored Impact

A New Year is a time for resolutions. It is also a time of reflection, as we look back on twelve months of highs and lows for environmental policy – a subject closely intertwined with several of Future Planet’s core impact investment themes. In 2017 we witnessed a stream of headlines in this area but, for us, few left as deep a mark as The Lancet’s damning report on the impact of pollution. This is a sorely neglected subject, and a global killer: the new study linked it to 9 million premature deaths, a productivity loss of at least $66 billion and a welfare cost of $4.6 trillion in 2015 alone.

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Source: Institute for Health Metrics and Evaluation, WHO, Lancet Commission on Pollution and Health.

It was the year that President Trump’s withdrawal from the Paris Agreement sparked an international outcry, but also provoked a surge of domestic activism in the form of the #WeAreStillIn campaign. It was the year that China seized the reins on clean tech, committing a mountain of capital towards the cause and placing a curb on coal production. It was the year when Norway’s SWF decided to divest from fossil fuels and force banks to disclose the carbon footprint of their loans, while mutual fund giants such as Vanguard and BlackRock spoke (somewhat) more loudly on ESG risks.

It was a year of champions and villains, of hope and hypocrisy.

Amid these powerful news stories, the October 2017 paper from The Lancet Commission on Pollution and Health generated somewhat less fanfare: an intelligent article in the Guardian here, some coverage on CNN.com there. Yet its details were at once staggering and sobering. 

“Pollution is the largest environmental cause of disease and premature death in the world today,” said the study - by far the most thorough and detailed of its type. “Diseases caused by pollution were responsible for an estimated 9 million premature deaths in 2015 - 16% of all deaths worldwide - three times more deaths than from AIDS, tuberculosis, and malaria combined... In the most severely affected countries, pollution-related disease is responsible for more than one death in four.”

These numbers are almost too large to contemplate. They are heavily concentrated in low- and middle-income countries, while in developed economies they primarily affect minorities, marginalised communities and children.

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Despite the far-reaching effects, the subject of pollution has been neglected. “The health effects of pollution are underestimated in calculations of the global burden of disease,” say the authors, while the effects of industrial emissions, vehicular exhaust and toxic chemicals have “particularly been overlooked in both the international development and global health agendas.” Interventions against pollution are barely mentioned in the Global Action Plan for the Prevention and Control of Non-Communicable Diseases.

When it comes to investment decision-making, pollution is an aspect of environmental impact that is not fully considered by investors’ ESG policies or impact agendas. While increasingly sophisticated analysis has been applied to measure carbon footprints and greenhouse gas emissions, “responsible” fund managers have a weaker grasp on the broader polluting activity of the companies in which they hold stakes. On the reporting side, many companies are now at ease with preparing their carbon emissions data for investors to access but do little numerical reporting on other pollutants.

Carbon matters. But carbon is not the only thing that matters.

At Future Planet Capital, we are deeply concerned with ensuring that the companies that we invest in, partner with or recognise through our annual Awards are treating broader environmental pollution with the gravity that it deserves. Many of these firms are based on innovations that directly combat aspects of the pollution challenge.

 Giffen Ott, Co-founder & CEO of Synova Power

Giffen Ott, Co-founder & CEO of Synova Power

Synova Power is a fantastic example of a firm that makes a real, demonstrable impact on pollution, tackling landfills in poor countries with a radical new approach to processing waste. CEO Giffen Ott says: “Our mission is to eliminate landfills and fully convert the materials which otherwise turn fugitive or are wasted within them. In doing so, we cannot merely convert a solid waste issue into a water or air emission issue, so we pay a lot of attention to the removal of contaminants from the gas which could otherwise become air pollutants and we are zero water discharge.”

Yet even for a firm like this, the reduction of non-carbon pollution is not formally measured and communicated. “We have detailed methodology for and estimates of the CO2 greenhouse gas savings which flow from the use of our technology,” continues Ott. “We have not done this same analysis for other criterion pollutants, but collecting the data and doing it would be worthwhile.” It is an encouraging indication.

Broader pollution is also on the mind of the team at Sure Chill. Although their product – a fridge with a revolutionary cooling process – has a strong “climate change” flavour, due to the dramatically decreased energy usage involved, its invention was also inspired by concerns about the disposal of batteries and their toxic contents. “We recognised that people in Africa were having to use lead acid batteries to cope with power losses,” CEO Nigel Saunders recently explained to FPB. “But these batteries don’t like high ambient temperatures: they last a couple of years at most and then have to be replaced. In most parts of Africa, there simply aren’t appropriate methods of disposing of them properly, so they just go into landfill. That’s where we wanted to make a difference.”

 Nigel Saunders, CEO of Sure Chill

Nigel Saunders, CEO of Sure Chill

Yet investors should take care. It seems plausible that companies with an overt environmental mission do tend to be more naturally in tune with broader environmental responsibility than the average firm: at Sure Chill, for instance, 70% of the staff cycle to work. Yet broader commitment cannot be guaranteed. When buying our electric cars, it is important to keep an eye on the (often large) environmental cost beyond fuel usage: the production and transport of all the different materials, the sources of the electricity used to power the vehicle. In the same way, when buying into a “green” firm, we must keep an eye on the wider impact that may be harder to measure.

Saunders summed the problem succinctly: “When running a business, the inclination is always to look towards what is more cheap and efficient. If you purely look to costs and have no conscience, you can do some real damage.”

In 2018, let us all look towards the broader damage, and not simply the metrics that investors and marketers find most relevant to their current frameworks.