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An “externality” is code in economics jargon meaning any cost of producing a product that can be omitted (i.e., externalized) from the producer’s balance sheet and passed on to taxpayers, the public or hidden in the environment for future generations to pay.
Responsible investors internalize these externalities in their “triple bottom line” ESG accounting in their financial decisions (SIF) as do institutional investors of the UN PRI with $32 trillion AUM.
Externalities are now too obvious and can no longer be the basis of business models. False “profits” and toxic sub-prime assets are being flagged in company accounts. They are becoming questioned in GDP, now a Grossly Distorted Picture of a country’s “progress.” New scorecards: Canada’s Index of Wellbeing, OECD’s Better Life Index, the UN’s Human Development Index, Bhutan’s Gross National Happiness, these new multi-discipline “dashboards” of quality of life. Going beyond money-based measures to account for health, education, poverty gaps and the environment helps clarify that money is an accounting unit – not the real human and resource wealth it tracks.
Agreed. They've also "externalized" their R&D so where is the issue here in what I stated? The funds for exploration come from us, the tax payer via tax credits or directly funded by congress.
reply to post by Bilk22
The reason those big oil company's have all that money is because they have consistantly externalitzed the cost of their operation - the polution of their operations, the degradation to the environment, the expense of clean ups, etc.
That is the whole point of the article. This so-called FACT of business "externalizing costs" can not be maintained.