Many of the world’s corporations may be responsible for climate damages far greater than their annual profits, a new study has found.
For the biggest polluters worldwide — the fossil fuel-dependent power industry — that means potential legal liabilities around seven times their annual profits, four economists from leading universities wrote Thursday in Science.
“The average corporate carbon damages [are] economically large,” the economists wrote.
Those climate damages result from a “choice” on the part of regulators, co-author Michael Greenstone of the University of Chicago told The Hill.
That’s because the key to bringing those emissions down is forcing firms to disclose them — and creating penalties for failing to do so, Greenstone said.
While agencies such as the Securities and Exchange Commission have proposed making such disclosures mandatory, “to date, that has not been a requirement,” he added.
It has also been politically controversial: The GOP has made a campaign against mandatory climate disclosure a key plank of its platform, as The Hill has reported.
In the absence of rigorous information, the researchers made use of publicly available data based on 15,000 companies’ voluntary disclosures. Then they multiplied those numbers by an estimated “social cost of carbon” — a metric of the damage done by every ton of greenhouse gas released into the atmosphere.
While most firms were responsible for a lot of damage, they write, culpability was not equal.
The team found a wide range of climate costs “across firms, industries, firms within industries, and countries.”
Among “companies who are basically doing the same thing, some emitted more than others producing the same product,” a sign that it’s possible “to produce the product without such heavy emissions,” Greenstone said.