How to be green – cost your externalities

20130910-080934.jpg Following on from my post yesterday about moving to the Ecological Model (don’t forget the free book competition) and how we need to shift from our current economy to an ecological economy and what does that mean for the property industry, I thought this was quite interesting. A UK firm called TruCost specialises in calculating the cost of the externalities of companies and products.

Their services are targeted at organisations who want to understand the financial impact of the future risk of legislation that will cost externalities ie put a price on pollution. Now, in Australia you might not now see a risk because our current government wishes to ‘abolish’ the carbon tax. But the rest of the world is still wanting / needing to understand the costs and risks.

TruCost have offices in the UK and the US and work all over the world. The organisations that have used TruCost services vary from product manufacturers, service organisations and local governments.

The basic methodology that TruCost use is to take the overall impact of something like CO2, or water pollution and calculate the cost to health, food production, soil degradation and so on. Then look at the cost of effect of that pollutant on a local and global level, creating a $ cost for each tonne of pollutant that is a result of your product or supply chain.

As an organisation you can then get an understanding of what that does to your bottom line, your competitiveness and your brand. As with our almost defunct carbon tax it allows you to see the impact of your pricing if you were to pass those costs onto the consumer.

It’s a good move towards the recognition that the economy sits inside the contains of our environment and that our economy needs to reflect the true cost of our products and services.

What would the true cost of your product or service do to your competitiveness?

One Comment on “How to be green – cost your externalities

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