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Air pollution affects everyone and almost every living thing: children, adults and even babies in the womb. Children, the elderly and poorer sections of society are most at risk. Globally, 93% of all children breathe air that contains higher concentrations of pollutants than levels considered safe by the World Health Organization’s (WHO). The facts are undeniable - the levels of disease caused by air pollution are soaring and are expected to rise yet further. In addition to being a big risk to human well, air pollution has also massive environmental and economic repercussions.
What is air pollution?
Air pollution is a term that refers to the presence of many different contaminants in the air that are harmful to human health. The best known of these is the carbon emissions from industrial, transportation and agricultural activities.
Why is tackling air pollution
important at this juncture?
Fully 92% of the world's population now breathes polluted air - only 1 person in 10 lives in a city that complies with the World Health Organization's (WHO) air quality guidelines. Also, according to WHO statistics, a staggering 7 million premature deaths occur annually due to harmful health impacts. Therefore, it should come as no surprise that air pollution continues to be one of the most severe environmental risks to health.
Air pollution:
reclaiming the right to clean air
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This page contains financial analysis which reflects the opinion of the Cross-Asset Research department of Societe Generale, at the date of its publication. It does not necessarily reflect the views of the other departments of Societe Generale nor the official opinion of the Societe Generale group. This content has been prepared for use by institutional and professional investors and is not intended for retail investors. Investors should consider this report as only a single factor in making their investment decision.
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Our deep-dive into air pollution management efforts focuses on which industry sectors?
In the study, our ESG analysts focus on the available data on air pollutant emissions. From this work, they arrive at meaningful conclusions that investors can use in their portfolio decision making processes. They aim to provide investors with an up-to-date and succinct overview of the current state of air pollution management in the seven most polluting industry sectors.
Much has been written on carbon emissions and their direct correlation with climate change, but the detrimental effects of non-carbon air pollution on climate have garnered less attention.
This study focuses on four other widely dispersed air pollutants: nitrogen oxides (NOx), sulphur oxides (SOx), volatile organic compounds (VOCs) and particulate matter (PMs). In some way these noxious gases are even worse than carbon dioxide - so this report takes a deep dive to check how industries are responding to the challenge of combatting them.
With recent disastrous events such as the historic wildfires in Australia, the US West Coast, the Amazon and Indonesia - the effects of which spread across thousands of miles - it is no surprise that air pollution is now entering the public arena as a new significant threat to our survival. Air pollutants exacerbate climate change and contribute to global warming, as they are often the ‘precursors' of ozone.
Based on the exposure trends, sectors found to have high exposure (from highest to lowest) are:
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As both greenhouse gas and air pollutant emissions share the same origins, tackling air pollution would curb climate change and vice versa. To achieve net zero emissions by 2050, as per the Paris agreement, and remain within the 1.5 degree temperature cap, all sectors and industries need to act now. The IPCC reports that the effort to limit global warming to 1.5ºC demands sharp cuts in CO2 and non-CO2 emissions - including these air pollutants.
Metals & Mining
Paper, Packaging and Forest Products
Chemicals
Energy
HIGHTLIGHTS: AIR POLLUTANT EMISSIONS MANAGEMENT
Major positives noted: Some (heavily exposed) companies have indeed begun to tackle emissions in their product and service sustainability strategies (41%), and they have also begun to set targets. Some companies have also developed innovation strategies which evidence their sincere commitment to addressing the threat from emissions (56%).
Scope for improvement: Elsewhere our analysts identified companies that need to take more concerted action to eliminate their emissions. In the main they do acknowledge that air pollution is a significant environmental risk in their ‘materiality matrix’ documentation (59%), they address it through their corporate policies (68%), and they report their sustainability performance using the appropriate standards (88%). But in all other aspects, such as under the broad categories of ‘Governance’, ‘Implementation’, ‘Product sustainability strategy’ and ‘Disclosure’, they all fell short in our view.
Key takeaways
Major red flags noted: A particularly poor performance was noted in eight of our key performance indicators:
Transportation & Infrastructure
Utilities
Building & Construction
a link to executive remuneration (none have that)
in all products being subject to Life Cycle Analysis (LCA) (none have done that)
in setting targets for our four air pollutants in their operations (a very few do this)
in their air pollutant emission profiles (some companies have done a little)
in supply chain initiatives (some have done a little)
in verification/assurance (a few have done a little)
board oversight (15% have no board oversight at all)
Then, they attempt to uncover and rate the management of these air polluting emissions in 34 companies selected only as representing current industry practices. They note that four out of the 34 companies are better positioned, being in both the ‘good management' and the ‘low/moderate risk exposure' categories.
in dealing with transportation/logistics emissions (only 21% have done anything here)
Share of population exposed to air pollution levels above WHO guidelines, 2016
Source: World Bank (OurWorldinData.org/outdoor-air-pollution)
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This page contains financial analysis which reflects the opinion of the Cross-Asset Research department of Societe Generale, at the date of its publication. It does not necessarily reflect the views of the other departments of Societe Generale nor the official opinion of the Societe Generale group. This content has been prepared for use by institutional and professional investors and is not intended for retail investors. Investors should consider this report as only a single factor in making their investment decision.
© Societe Generale 2020
Cookies Policy
Legal Information