How will regulators respond to the air pollution crisis?
Environmental Risk Outlook 2019
by Will Nichols,
Driving the news
Worsening outlook for air quality impacts to health will drive legislative action.
Why it matters
Vehicle bans, industrial emissions caps, and other regulations will add to operational costs and supply chain risks.
Watch out for
Regulators making air quality a top priority. Across 2018, a host of reports highlighted the societal cost of air pollution, from respiratory illnesses to academic underachievement, crime, and premature death. These reports show the problem is global and by no means limited to Asia's industrial hubs. Our Air Quality Index in 2019 Q1 shows Europe is home to a fifth of the 1,211 world cities where annual fine particulate matter (PM2.5) levels exceed WHO safe levels.
European authorities are responding by curbing road transport, complicating urban supply chains and last mile delivery. In the past year, Madrid, Hamburg and Rome have implemented or announced bans on diesel vehicles. Brussels introduced a low emission zone with fines for polluting vehicles similar to London’s, and a host of French cities – as well as our UK home city of Bath – are set to follow suit in 2019.
In Asia, where urban air pollution is worst, the risk picture is confused. Coal plants continue to be built across the continent as a cheap energy source, but continued public outcry over the health impacts of air pollution means we expect more plant shutdowns, snap bans and the stricter enforcement of regulations that have characterised the past three years.
Spiralling urban populations will leave almost 300 million more people living in polluted areas by 2035 –around 230 million of which will be in China or India – and over a billion worldwide, raising the prospect of coordinated global restrictions on heavy industry and transportation.
Companies operating in polluted areas don’t even need to be big contributors – just the most visible – to feel the force of regulatory measures and public disapproval. Mitigating these risks will require granular data that helps companies understand and compare risk profiles of operations and suppliers.
How will regulators respond to the air pollution threat?
Our Environmental Risk Outlook 2019 covers some of the key and emerging environmental issues for the year ahead that investors and companies cannot afford to ignore if they want to mitigate their exposure to financial, reputational, and regulatory risks.