Air Pollution - should it matter to your business?

Air Pollution, like climate change, is a major environmental risk factor to public health.  It is estimated to be responsible for 8.1 million deaths annually around the world and is the second global risk factor for death after high blood pressure [1]. Most companies have engaged with the debate around climate change, estimating and reporting their GHG emissions and setting targets to reduce them, but what about air pollution?  Is it something your business has considered and should it?

Businesses will be familiar with the risks related to climate change and the benefits of tackling GHG emissions from the impacts of adverse weather patterns on business operations to being less dependent on volatile fossil fuel markets.  Below we discussion some of the issues you should be considering when it comes to air pollution.

What are the financial risks to your business from air pollution?

Air pollution is primarily a public health issue being a major contributor to poor health linked to respiratory problems, cancer, stroke and heart disease.  This wider public health aspect can have ‘systemic risks’ for your business which include:

• Worker-absences due to ill air pollution related ill heath for both the employee and their dependants.  The OECD estimated some 1.2 billion working days are lost to air pollution related ill health[2].
• Reduced productivity which can affect workers who are ill but still able to work and air pollution is more generally shown to reduce cognitive function.  For example Dalberg estimated that in 2019 employee productivity reduced by 8-10% on high pollution days in India[3].
• Reduced consumer spending – poor air quality and the quality of place can reduce footfall for businesses, and there is evidence it can also directly affect consumption patterns
• Staff recruitment and retention – like consumer behaviour when you operate in a low pollution environment with a better quality of place you are more likely to attract and retain staff.

There are also what we might call ‘enterprise risks’ that are direct risks related to the regulation and operation of business.  They can be broadly categorised as:

• Compliance risks - related to the costs of compliance or non-compliance with air pollution related regulations be they industrial or planning regulations directly on the business or indirect regulations such as Low Emission Zones.
• Nuisance or reputational risks related to public action over concerns or perception of air pollution being related to a specific business activity.  This could be smoky vehicles, dust from construction sites or odours from industrial processes.  This can lead to legal cases, or simple bad publicity and consumer action against a business.

These risks can impact the bottom line of your business and also investor confidence. So is it something you can afford to ignore?

How could your business be contributing air pollution?

Like climate change all businesses will contribute to air pollution.  This may be obvious if you have industrial processes that produce emissions, but also like climate change the combustion of fossil fuels in heating appliances or vehicles will produce emissions. In fact when you consider all the energy use at industrial and commercial premises, the transport of goods and the travel by staff for and to work business activity can be responsible for nearly 2/3^rd of pollutant emissions in a country such as the UK.

But understanding your impact is not just as simple as understanding you fuel use, which can make it more complicated than understanding your GHG emissions.  There are other factors that need to be considered:

• The technology in which the fuel is burnt will affect emissions as vehicles and combustion appliances will have different levels of emission control technology;
• There could be other sources of emissions such as construction dust or process emissions that might be import;
• The health impact that emissions will have is also linked to where they are emitted, with emission released in urban areas where more people are exposed giving rise to the greatest harm.

This last point is important as it means that business that operate in urban areas such as urban logistics, retail or construction will have the highest potential risks from air pollution, both in terms of the impact of their own emissions, but also the impacts on their staff and customers.

How can Ricardo help?

Understanding your contribution to air pollution is a key starting point to understanding the risks to your business and how to manage them.  It will also help you identify your key sources of emission and so where to focus your effort on reducing them. The approaches to estimating emissions are well developed for GHG emissions but less so for air pollutant emission although they are strongly linked in relation to the use of fossil fuels. 

Ricardo has developed an iniative - the Air Pollution Footprint Partnership – that provides an approach and support for linking the estimation and reporting of air pollutant emission to your GHG emissions reporting activities, as in many cases the key underlying data needed is the same.

There are wider benefits of this integrated emissions reporting approach, as many of the actions that you are taking to reduce your carbon emissions will also reduce air pollutant emissions.  By estimating and reporting both your GHG and air pollutant emissions together you will be able to quantify the added benefits in terms of air pollutant emissions of your progress in reducing GHG emissions.  Also working with Ricardo the tools developed by the Air Pollution Footprint Partnership you can calculate the benefit of your net zero plans going forward on air pollution, and put a monetary value on those using environmental damage costs.

So in conclusion

Air pollution does present risks to your business, but by working with schemes such as Ricardo’s Air Pollution Footprint Partnership and thinking about air pollution and climate change holistically, you can reduce financial risks to your business and its investors, whilst also being part of the solution to cleaner air. 

If you’d like to find about more about the Air Pollution Footprint Partnership or Ricardo’s work on air pollution more widely we’ll be visiting UKREiiF and will be happy to meet up for a discussion to exchange ideas.