BETTER BUSINESS BETTER WORLD

The numbers involved are immense (Exhibit 12). In 2012, a major analysis of unpriced
environmental costs in the global economy looked at every primary production and
processing sector – from agriculture, forestry, fisheries, mining, utilities and oil and
gas exploration to cement, steel, pulp and paper, and petrochemicals. 146 Across these
sectors, it found total environmental externalities of US$7.3 trillion were unpriced in
2009 (the last year for which complete data was available), equivalent to 13 percent
of global GDP in that year, or nearly half of US GDP at the time. 147 The truth about
social and environmental costs is also concealed by price subsidies. Economies across
the world continue to subsidise fossil fuel consumption, in direct conflict with the
urgent need to tackle climate risk. 2014 fiscal fossil fuel subsidies were estimated at
US$550 billion, around 20 percent of the net cost of financing the Global Goals. 148 In
addition, local air pollution is costing the equivalent of between 2-10 percent of GDP
across G20 countries, based on the most recent estimates of the WHO and IMF. 149
"$7.3 trillion in environmental externalities went unpriced in 2009,
13% of GDP."
Some CEOs accept that an explicit carbon price of US$50 a tonne within the next
five years, and up to US$100 a tonne by the second half of the 2020s, is essential to
keep global warming below two degrees. The most forward-looking business leaders
are anticipating the impact on their business costs when the true environmental
costs of other activities is reflected in prices, for instance, the real cost of using
unsustainable fresh water, sending waste to landfill, wasting food, polluting the air
or ground and producing the most resource intensive foods. (See Box 7: Sustainable
development scenario drives Telefonica’s energy strategy.)
Box 7: Sustainable development scenario drives Telefonica’s energy strategy
Major telco Telefonica has decided to source 50 percent of the company’s energy
consumption from renewable energy by 2020 and to grow that share in the longer
term. 150 Telefonica has pursued ambitious energy efficiency and emissions targets
for many years largely because energy forms a large chunk of any telecommunication
company's operating expenses. But new drivers lie behind its new energy strategy.
First, clean energies are becoming more and more competitive as energy markets
respond to mounting regulatory pressures arising from the Paris Climate Agreement
commitments and reinforced by the Global Goals. Second, Telefonica’s customers are
demanding that the company reduce emissions linked to the services it provides.
Setting medium- and long-term targets for renewable energy allows the company to
set itself science-based emissions targets, effectively decoupling company growth
from emissions growth. It is also protecting itself from future regulatory shocks,
64