Why air pollution is becoming a material investment issue

Lauren O'Leary, Ethical, Sustainable and Impact Researcher

Why air pollution is becoming a material investment issue

Air pollution is often viewed as a public health challenge. Yet for long-term investors, it is increasingly becoming a material financial issue, with implications for economic productivity, business resilience and the long-term value of investment portfolios. The World Health Organisation estimates that 99% of the global population lives in places where air pollution levels exceed its guideline limits, and that exposure to household and ambient air pollution contributed to 6.6m deaths in 2021. Research published by ShareAction and Chronos Sustainability also highlights the economic dimension: ambient air pollution is estimated to cost US$6 trillion a year, equivalent to 4.6% of global GDP, through healthcare costs, lost productivity and wider economic disruption.

For investors, the significance lies in how these health and economic impacts increasingly flow back to company returns and portfolios. Air pollution can affect workforce health, operational performance, supply-chain resilience, licence to operate and regulatory exposure. It also sits at the intersection of other long-term sustainability challenges, including climate change, nature loss, public health and human rights.

Within our sustainable investment approach, we have treated air quality as a systemic issue for several years through our participation in ShareAction’s Long-Term Investors in People’s Health, Clean Air Initiative. This engagement programme has included supporting investor statements to raise awareness of the issue in an investment context, participating in dialogue with companies and providing input to policy and standards discussions regarding air pollution disclosure and reporting frameworks. Greenbank’s work on air pollution reflects a broader belief that healthy societies, thriving ecosystems and resilient economies underpin long-term investment returns. Through research, stewardship and policy engagement, we seek to understand how sustainability challenges may create risks and opportunities for the companies in which we invest and, ultimately, for our clients' portfolios.

The investment case for cleaner air

While perhaps not as widely recognised as other systemic risks such as climate change and nature loss, air pollution is increasingly recognised as a potential impact on long-term investment returns. The health, environmental and economic costs of poor air quality are becoming harder for companies to externalise, as regulation tightens, litigation grows, and stakeholders demand greater transparency. This shift is particularly evident in sectors such as transport, logistics, construction and manufacturing, where evolving emissions standards and disclosure requirements are creating new expectations around how companies identify, manage and report pollution-related risks.

One challenge for investors is that air pollution remains significantly underreported compared with other impacts, such as climate change. While most companies now disclose greenhouse gas emissions, reporting on pollutants such as particulate matter, nitrogen oxides and ammonia is often inconsistent, making it difficult to assess exposure, compare performance or understand the real-world impacts of corporate activity. 

This is why Greenbank has supported collaborative investor initiatives focused on improving corporate transparency around air pollution. We believe that investors need decision-useful information that reflects not only the volume of emissions produced, but also where those emissions occur and who may be affected. 

These themes were echoed at a recent Clean Air Fund policy roundtable in Brussels, which we attended. This brought together investors, policymakers, companies and standard setters to discuss the future of pollution reporting in Europe. One message came through clearly: when it comes to air pollution, context matters. 

"For investors seeking to understand long-term risk, location and exposure can be just as important as the overall volume of emissions."

Headline emissions figures alone can mask important differences in exposure and impact. The same level of emissions can present very different risks depending on where they occur, the communities affected and the pollutants involved. For investors seeking to understand long-term risk, location and exposure can be just as important as the overall volume of emissions.

Better disclosure can therefore help investors move beyond broad sustainability commitments and towards a more nuanced understanding of business resilience and management quality. It can also support more effective stewardship by helping investors identify where engagement is needed and track whether companies are making meaningful progress over time.

A balanced investor approach should recognise both risks and opportunities. Companies that measure and reduce pollutant emissions may be better positioned for tighter regulation, public procurement requirements, urban delivery restrictions and changing customer expectations. In some cases, action on air pollution can also support climate objectives, operational efficiency and healthier communities. Importantly, reducing carbon emissions does not automatically address all forms of air pollution. Investors, therefore, need to look beyond climate metrics alone when assessing how companies are managing environmental risks.

Looking ahead

Air pollution is becoming harder for companies and investors to ignore. For long-term investors, impacts on health, productivity and economic resilience are not simply externalities. They affect the social, environmental and economic systems upon which sustainable long-term returns ultimately depend.

In our research and engagement activities, we aim to consider how air pollution interacts with wider themes such as health, climate change, nature loss and corporate resilience. This means continuing to support better disclosure, engaging companies where risks are most significant, contributing to the development of reporting standards and encouraging greater market transparency. 

Cleaner air is a public health imperative, but for long-term investors, it is also a reinforcement that long-term value creation depends on healthy people, well-functioning ecosystems and resilient economies.