New study reckons environmental damage carried out during 2008 resulted in financial costs equivalent to 11 per cent of GDP.

Global environmental damage resulting from human activity resulted in an
economic cost of $6.6tn (£4.2tn) during 2008, equivalent to 11 per cent of
global GDP, and is set to cost $28tn a year by 2050.

That is the stark warning contained in a major new report from the UN
Environment Programme (UNEP) and the Principles for Responsible Investment (PRI)
initiative, which will be released later today.

The flagship study aimed to put a monetary value on environmental harm caused
by the business community and assess the possible future consequences for
investor portfolios.

It concluded that the world’s top 3,000 public companies are responsible for
a third of all the global environmental damage carried out in 2008, running up
unaccounted costs equivalent to $2.2tn.

It also warns that as environmental damage worsens and governments
increasingly begin to apply the polluter-pays principle to regulation,
investors and businesses are likely to be impacted by higher insurance premiums,
increased green taxes, inflated resource prices and rising environmental
clean-up costs.

Paul Clements-Hunt, head of the UNEP Finance Initiative, said that the report
highlighted the urgent need for businesses to account for environmental
externalities.

"This report sends a powerful message that the environment is also the
business of business," he said. "Polluters must pay. Cohesive policy and
regulation is required to fully account for externalities and speed up the
integration of material environmental issues into investment decisions. The
bottom line is that if we are to achieve a sustainable global economy, then we
must stop drawing down our natural capital."

His comments were mirrored by James Gifford, executive director at the PRI,
who said that growing numbers of investors were recognising the long-term risks
to their portfolios associated with environmental damage.

"An increasing number of large investors are recognising that environment
externalities generated by one company are likely to come back and hit their
portfolios in another place or time," he said. "This report provides an
important rationale why investors need to exercise leadership and responsible
ownership by acting together to reduce corporate externalities."

The report echoes much of the work currently being undertaken by the
UN-backed The Economics of Ecosystems and Biodiversity (TEEB) initiative, which
earlier this year
released
a report showing that the annual economic impact of biodiversity loss stands
at between $2tn and $4.5tn, equating to up to 7.5 per cent of global gross
domestic product.

The TEEB group is preparing to release a full version of its report ahead of
the up-coming UN biodiversity summit in Nagoya, Japan this month, where
diplomats are expected to discuss renewed measures and targets for protecting
biodiversity.