For decades, the world has been aware of the damaging effects of carbon emissions, but without transparent reporting, the exact scale of the problem has been unclear. That looks set to change as US regulators are poised to follow their European counterparts and oblige corporations to disclose their carbon emissions, a move that could reveal the true cost of the damage and might prompt companies to reduce their emissions considerably.

Globally, the average cost of corporate carbon damages—the emissions that come from corporate production—equated to 44 percent of companies’ operating profits in 2019, according to a study by University of Chicago’s Michael Greenstone, Chicago Booth’s Christian Leuz, and Erasmus University Rotterdam’s Patricia Breuer. This figure was skewed by some big polluters, however: the median figure was closer to 4 percent.

In research that they describe as “a first-cut preview” of what reliable emissions reporting might disclose, Greenstone, Leuz, and Breuer analyzed 2019 data from Trucost, a subsidiary of S&P Global that calculates the “hidden costs” of companies using natural resources unsustainably. Trucost estimates greenhouse gas emissions from about 15,000 international public companies. Greenstone, Leuz, and Breuer focused on direct emissions from sources owned or controlled by a respective company. Using the US Environmental Protection Agency’s standard measure of the cost to society of carbon emissions—$190 per ton of CO2—the researchers calculated corporate carbon damages as a percentage of each company’s revenue and profit. In doing so, they made carbon damages comparable across companies.

They note that while the Trucost sample represented more than 80 percent of global public-market capitalization, it did not include private firms. Moreover, the data were disclosed voluntarily without penalties for misrepresentation or mistakes—underscoring the need for mandatory and independently verified emissions reporting.

But using this snapshot of the world’s public companies, the researchers project both a large average cost of corporate carbon damages and large variation—between countries, between industries, and even within industries. For example, companies in Russia, Indonesia, and India had the worst damages, the study finds, with Russian averages exceeding 129 percent of profits. Companies in France, the United States, and the United Kingdom came in toward the bottom of the scale; US damages were on average at just over 25 percent of profits.

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