Shipping firms count cost of new emission curbs

Monday 23 February 2009

Internalising the health and environmental costs of air pollution would reduce the profitability of major shipping companies by more than two-thirds, according to a new study released on Monday by research group Trucost and the European Sustainable Investment Forum.

Ship emissions of carbon dioxide, particulate matter, sulphur dioxide and nitrogen oxides from 11 companies in the MSCI world index, which measures equity performance in developed markets, cost an annual E7.7bn in external damage, estimate the authors.

If these costs were internalised, six companies would face a loss and the overall profitability of all of them would plummet by 69 per cent.

"Given the announcement of plans to set new emissions caps by the International Maritime Organisation (IMO) and the European commission, these environmental impacts present a significant risk to valuation for many shipping companies," said Richard Mattison, managing director of Trucost (EE 13/10/08 http://www.endseurope.com/15620 and EE 18/12/08 http://www.endseurope.com/20248).

Carbon dioxide is the biggest contributor to external damage costs. Carbon-efficient ships stand to gain from shifting freight away from carbon-intensive air transport, the report says.

But lack of environment disclosure by shipping companies in Europe makes it hard for investors to assess risks and opportunities. Only four of the 11 companies analysed, including one of six based in the EU, report emissions to air, according to Trucost.

Follow-up: Trucost http://www.trucost.com/ and Eurosif http://www.eurosif.org/ plus press release http://www.endseurope.com/docs/90223a.doc and report http://www.endseurope.com/docs/90223b.pdf.

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