A Guide to Carbon ROI and External Costs
A Slice of Life in Montana by Calvin Servheen
Humans are all a little bit crazy. From the clothes we wear, to the things we buy to fill our homes, to the activities we spend our time doing, we all have some fascination with shiny objects. Our irrational desire to consume and profit stems in large part from this unhealthy intoxication with what philosopher David Whyte calls “the harvest of presence”.
It takes a lot to look past the empty promises that lie in the latest smartphone, the hottest electric sports car, or the flashiest crypto investment. It takes a lot to remember the bigger picture — to remember that consuming has so many negative consequences on the planet.
The crow who cocks his head with a mischievous glance and swoops down on some small piece of shiny trash doesn’t have the luxury to contemplate the merits of his consumption in the context of climate change and sustainability. However, we as humans do. We have the power to step back from the marketing and choose to spend our time and money on the right things.
The practice of choosing your purchases based on the amount of environmental damage a product will incur over its lifetime and how committed the company you patronize is to sustainability is at the heart of the eco-friendly movement. To embrace sustainable consumption, people can do two simple things:
- Factor in the Carbon Return on Investment (ROI) — There is an ineffable benefit to supporting companies that share your values. We must think hard before we give unsustainable and immoral companies our money in the form of purchases and investment. We have the power to help good companies succeed and to drive bad ones out of business.
- Look at the External Cost — There is a measurable cost associated with pollution and the other negative side effects of producing and distributing products which is not reflected in the price. We can think of this ‘external’ cost as a debt that will come due in the future as climate change worsens. If we account for the external cost, many seemingly cheap products are actually very expensive.
Most people know how to run the numbers and buy local organic food or to buy a more fuel efficient vehicle. However, there are a ton of other ways that we can use external cost measurement and ROI to live in better compliance with the Sustainable Development Goals. Each purchase or equity trade we make is an opportunity to affect a small reduction to the world’s total carbon output. While these acts are small drops in a large bucket, they are not futile as each purchase compounds year after year to make a meaningful difference. Here are some ways to start being a more conscious capitalist today:
1. Look at Your Vehicle — Fuel efficiency is only one way to make your car better for the planet and focusing on MPGs makes it seem ok to lust after the latest Tesla. Here are the facts:
- New cars of any kind can only be manufactured by releasing huge amounts of carbon (although some makes, like Subaru, are better than others)
- The batteries in electric cars are made from rare earth metals which are often extracted in dirty open pit mines
- Electric and Plug-In hybrid cars are often charged using electricity that still comes from coal and natural gas power plants. This could potentially change with a shift to renewable energy thereby making electric and plug-in cars that much more eco-friendly
- The most sustainable modes of transit are biking, walking, and public transportation. If you must drive, rideshare or buy an efficient used car.
2. Be Aware of Fast Fashion — Most clothing products are made using methods that incur huge external costs on the environment and people in the developing world. Here are the facts:
- Most clothing products are made using unsustainable petroleum products. Anything synthetic is very carbon inefficient.
- Some natural fibers like cotton are also problematic because of the large amounts of water they take to grow. Organic cotton is slightly more environmentally friendly
- Any company that uses sweatshops is not worth patronizing. Although their products appear cheap, the external costs not reflected in the price are high.
- The best way to improve your clothes buying is to purchase fewer, higher quality clothes made from natural fibers like wool or bamboo, domestically.
3. Buy Local — The grocery store is sometimes a tricky place to be sustainable. Non-local foods are everywhere and less sustainable for a number of reasons. Here are the facts:
- Big agriculture often uses unsustainable practices to make certain foods which leads to high external costs
- Transportation also accounts for a large percentage of some foods’ carbon footprints
- The carbon footprint of meat is very high. Do research on a case by case basis to determine what meats are best for you. Beef is especially damaging to the environment and the range land could be used far more efficiently.
All this suggests that the easiest way to cut down on the impact of the food you buy is to buy local from small operations that share your sustainable values.
4. Invest in Sustainable, Moral Companies — It’s easy for the average retail investor to make investments in organizations which profit off environmental damage. Here are the facts:
- When buying single stocks, one can easily research the mission statement and values of companies. This will help you choose sustainable ones.
- When entering a mutual fund, you can see a list of the companies that comprise the fund. Make sure there are no fossil fuel companies.
- There are also now a growing number of managers who offer green funds composed of only environmentally friendly companies
- Watch out for greenwashing, a phenomenon where companies market green initiatives without actually lowering their environmental impact
5. Take Action in Your Union or University — The endowments that universities and unions hold are often invested in immoral or unsustainable companies. Here are the facts:
- Some of the biggest holdings in fossil fuel companies are held by endowments and trust funds
- Divesting from fossil fuel companies, which are the business sector’s most responsible for anthropogenic global climate destabilization, could help drive them out of business
- As a union member or student, your dues and tuition can contribute to investment in fossil fuel companies
- Fossil fuel divestment is a movement that aims to reduce institutional investment in fossil fuels. They have great resources on how to speak up.
The hardest part of applying external cost measuring and ROI to your purchasing behavior is not researching what products to buy or avoiding greenwashing, but adjusting yourself to the simple fact that often the most sustainable thing to do is to buy nothing at all. Consuming less is difficult in a world where status and ego are linked to what possessions we have. However, with some discipline we can collectively shrug off the invisible hand. To borrow the dubious philosopher Macklemore’s words, “things are just things, they don’t make you who you are.”
WE DID IT!
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