KPMG Says 'Hidden' Environmental Costs to Double Every 14 Years

KPMG Says 'Hidden' Environmental Costs to Double Every 14 Years

The costs of environmental impacts from businesses are on track to double every 14 years, according to an analysis of 10 global "megaforces."

Ranging from climate change to the growing middle class, these megaforces are expected to significantly affect corporate growth over the next 20 years, says KPMG International.

KPMG explains the megaforces, how they interact, how they apply to specific sectors and what businesses and governments can do about them in a new report, "Expect the Unexpected: Building Business Value in a Changing World."

report coverThe megaforces include climate change, energy and fuel, material resource scarcity, water scarcity, population growth, wealth, urbanization, food security, ecosystem decline and deforestation. KPMG culled those 10 trends from looking at more than two dozen forecasts from other agencies and think tanks.

Putting environmental impacts in dollar figures, KPMG says external environmental costs - which are typically not listed on financial statements since the costs are borne by society in general, non-monetary and difficult to quantify - have risen 50 percent from 2002 to 2010 for 11 industry sectors.

Over those eight years, costs went from $566 billion to $846 billion, and if they steadily increase, they'll be on target to double over a 14-year period.

"The resources on which businesses rely will become more difficult to access and more costly. There will be increasing strain on infrastructure and natural systems as patterns of economic growth and wealth change. Physical assets and supply chains will be affected by the unpredictable results of a warming world. And businesses will be confronted with an ever more complex web of legislation and fiscal instruments," say KPMG International chairman Michael Andrew and KPMG special global advisor Yvo de Boer in the report.

Climate change can affect all of the other trends, which also could influence one another. For instance, growing populations and the global middle class, especially in cities, will put intense strain on resources and food.

But the outlook for all the trends isn't completely bleak. Each issue also includes a range of opportunities. "Such opportunities range from developing and maintaining low-carbon, zero-waste cities and infrastructure to improving and managing biodiversity, ecosystems, lifestyles and livelihoods," the report says, "Enabling these changes can also create opportunities for finance, information and communication technology and partnerships."

Aside from urging businesses to look for opportunities and to make sustainability core to their operations, KPMG calls on governments to take more steps to support sustainability through regulations, incentives, energy-efficient product standards and lowered barriers to investment.

KPMG released the report to coincide with the start of its summit in New York, "Business Perspective on Sustainable Growth: Preparing for Rio+20."

City skyline photo via Shutterstock.