The Graduate Baruchian

by Helen Serebin

Deep into Mr. Krosinsky’s PowerPoint presentation on March 21sts of Trucost, a company that calculates firms’ environmental impacts, he stopped at slide # 17 and said “This is the most important slide in this presentation.”   Here is this slide:

Why is knowing that GHGs and water use make up 70 % of the externalities produced by the top 3000 public companies important?  Combine this fact above with a second one:  If these companies had to pay for the cost of the pollution and ecological damage from these externalities it would decrease these companies’ profits by more than one third.

This is important because somewhere down the line we will have to pay for these costs.   The economic argument is that if we wait to take action we will see the GDP reduced by low double digits.  The social and climate change argument is that the human toll and habitat degradation will be even more costly, if not irreversible.

Another equally interesting point to emerge, which is well-known by now, is that companies that make it a priority to reduce their carbon footprint and externalities consistently outperform companies  that don’t.  And they outperform by a significant percentage.  So why is it that the top financial institutions do not consider sustainability in their investment strategies?   This is the answer to making headway with the first two points.