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Blog 4 April 2024

How can investors drive action on air pollution?

Ammar Khan, ShareAction
Investors are primely positioned to drive corporate action on critical sustainability issues. Investors can play a key role in improving air quality through where they invest capital and stewarding companies towards reducing emissions.

Growing up in Lahore, I’m no stranger to the risks of air pollution – blankets of thick, toxic smog are a depressingly common sight across major cities, where industrial areas and densely packed residential areas collide. Low- and middle-income countries often bear the disproportionate brunt of poor air quality. The State of Global Air reports that 58% of global deaths attributed to air pollution in 2019 came from India and China alone. And within high-income countries, low-income and ethnic minority communities are more vulnerable to air pollution.

But no one is immune from the impacts of air pollution. I’ve now moved from Pakistan to London, and, while the acrid smog clouds may not be a regular feature, air quality remains a major risk to our health. Globally, air pollution is the leading environmental cause of premature deaths. At least 7 million people die prematurely a year – equivalent to one in eight deaths worldwide.

Private sector pollution puts companies and investors at risk

Commercial activities, such as energy production, agriculture and transport, contribute to around 40% of particulate matter (PM2.5) emissions. These activities also emit toxic pollutants such as nitrous oxide, sulphur dioxide and ammonia. 54% of outdoor air pollution was caused by the world’s 3,000 largest companies, according to a UN report. However, while commercial activities are relatively heavily scrutinised when it comes to their greenhouse gas footprint, the same does not exist for toxic air pollutants.

The economic implications of air pollution are catastrophic. The World Bank puts health-related damages from PM2.5 exposure at $8.1 trillion per year, or 6.1% of global GDP. This figure would be significantly higher if all the toxic pollutants were accounted for.

Air pollution presents material commercial risks for companies and investors at a systemic and enterprise level. Air pollution makes workers and their families sick, increasing rates of absenteeism and lowering workers’ productivity. Research shows that air pollution reduces productivity of people in diverse settings, from a farm in California, to a garment factory in India and call centres in China worldwide.

Poor air quality is also significantly linked to decreased consumer spending with a marked effect on people’s willingness to venture outside. An analysis of credit card transaction data in Spain revealed that for every 10% increase in particulate matter pollution, consumers spent between EUR 20-30 million less per day.

At the company level, regulation should be a critical concern for polluting companies held by investors. More stringent air pollution standards and stricter enforcement regimes are likely being introduced. More countries are expected to adopt international standards on corporate disclosures. The European Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) should lead to stricter air pollution standards.

Tackling air pollution requires a concerted effort from businesses

Companies can effectively tackle air pollution. The Alliance for Clean Air works with companies to benchmark air pollutant emissions, establish reduction targets and build cross-sectoral support. A first-of-its-kind guide for businesses helps companies to quantify their air pollutant emissions along their value chains.

ShareAction is helping build a financial system that serves the needs of people and planet. Health is a key challenge that we’re addressing via the Long Term Investors in People’s Health (LIPH) programme. The programme is underpinned by a coalition of 45 investment institutions, with over USD $5 trillion in assets under management, which is elevating the importance of health as a key environmental, social and governance (ESG) theme.

Using our experience in building investor action on critical sustainability concerns, we’re working with Clean Air Fund and others to establish an investor initiative on clean air. Our recent investor briefing, Clearing the Air, sets out the first ever investor case on tackling air pollution. We also engaged with major investors to understand where they see the opportunities and challenges to making progress. The process underscored that air pollution is a relatively unknown and undervalued issue, which desperately needs more attention. Investors and the finance sector are in a prime position to help drive the solutions.

What role can investors play?

Investors hold significant power, influencing company strategies, priorities and behaviours, while shaping the direction of industries and economies worldwide. There are real-world examples of investors actively challenging companies to help tackle a range of sustainability issues, including climate change, ultra-processed foods and tobacco. Investors need to use their stewardship to hold companies accountable on air pollution.

Both asset managers and owners can work to incorporate air pollution into their policies. They can also engage with companies to encourage them to reduce emissions and promote value chain disclosure. Recommended actions include:

  • Recognising air pollution as a material ESG issue in investment policies
  • Incorporating the business risks of air pollution into investment strategies
  • Engaging companies to integrate air pollution into their own policies and pushing for comprehensive air quality management processes and reporting
  • Investing in innovative technologies to increase future returns
  • Collaborating with peers and across sectors to foster systemic stewardship
  • Influencing and lobbying for stronger corporate regulation

Take action

Working together, we can use our collective influence to promote clean air for all, help create long-term value for companies and investors, and build a stronger economy. If you’re an investor and would like to discuss air pollution in more detail, please get in touch with us at health@shareaction.org.

For more information, you can read our briefing on air pollution and view the recording of our recent webinar on the issue, featuring talks from Ikea, Clean Air Fund, Global Action Plan and Pogust Goodhead.

See more

Trailblazing corporate progress on clean air: a sea change for the private sector?

Large multinationals are joining the Alliance for Clean Air to reduce their air pollution to build a sustainable future. This group of trailblazers are demonstrating the benefits of reporting air pollutant emissions and setting reduction targets for their businesses and climate change.


All businesses, regardless of size and location, engage in activities that contribute to air pollution. Be part of the solution.