Impact Measurement

Environmental Pollution: Job Growth at What Cost?


Globalization is often heralded as a positive force in the war against poverty. It’s easy to see bringing economic progress to developing countries, for example, as beneficial to those living there, helping them on their way up the socioeconomic ladder.

But a flurry of industrial activity can also lead to serious environmental pollution, potentially doing more harm than good to the societies globalization is purported to benefit.

Industry and Environmental Pollution

Take the Indian city of Tirupur. Frequently held up as an example of successful globalization, Tirupur has experienced massive economic growth thanks to its position as a hub for textile manufacturing. But as Newsweek reported, the city’s population also experienced a dramatic rise in “symptoms—including joint pain, gastritis, problems breathing, and ulcers—connected to waterborne diseases” due to environmental pollution related to that economic growth.

In October 2017, dengue fever broke out in the city. The disease is spread by mosquitoes, which rely on stagnant pools of water to breed. And, as Newsweek reported, the local groundwater is contaminated with commercial dyes and other manufacturing runoff.

The Impact of Water and Air Pollution

While Tirupur has suffered from severe water pollution, the city is only one example. Increased economic activity and development can also contribute to air pollution. That, in turn, tends to increase greenhouse gas effects. That’s bad enough for environmentalists—but worse for society.

Reporting on a study done by Harvard University scientists, the Los Angeles Times explained that there is in fact no safe level of air pollution for humans. That includes legal air pollution limits set by regulatory bodies like the Environmental Protection Agency that companies in the United States must adhere to. If infrastructure hasn’t kept pace with economic activity, areas seeming to benefit from globalization may not have such regulations at all. But again, the Harvard researched indicated that no amount of air pollution can be considered “safe” for society.

The health issues stemming from such pollution are grave. Air pollution alone is responsible for 6.5 million deaths globally each year and can lead to serious—and financially burdensome—illnesses like chronic kidney disease. In many areas of high-economic growth, air pollution is already creating crises. For example, air pollution in Beijing has gotten so bad that flights have been canceled and residents warned to stay indoors.

And while industrial growth may drive up the GDP, global warming is hurting other communities. A feature in the New York Times illustrated that global warming is making farming villages uninhabitable in Southern India. Ironically, these conditions cause the area’s youth to pack up for industrial hubs, whether they want to or not.

To Help Society, Think Beyond Economic Measures

Environmental pollution harms our planet and can impact all societies within it, but countries that have seen rapid industrialization with little regulatory oversight or control may be hit even harder by water and air pollution than citizens of more developed countries.

So what can investors do to support emerging economies without contributing to the negative impacts that so often result from efforts to fuel progress in these areas?

A long-term, holistic approach might help to capture the bigger picture. While straightforward economic measurements like income per capita, poverty levels, and unemployment rates can indicate the economic health of an area, these metrics don’t tell the full story. Investors may consider giving primary consideration to companies that issue sustainability reports and provide data on how their operations affect areas they’re working to industrialize. They may also find it important to reference supplementary third-party sources, like MSCI, that provide ratings on how well businesses meet ESG standards.

At the same time, making positive investments in areas that can preempt or combat the negative effects of industrialization may be another effective approach. In the context of the environmental issues mentioned above, for example, investors might use their assets to support companies making biodegradable textiles or pollution-scrubbing technology, along with funding organizations that aim to improve infrastructure systems.

Calculations of the real impact of globalization should consider not just the health of the financial market but the health of the workers and communities that inhabit and surround the new developments. With their long-term well-being at stake, the promise of sustained success and financial flourishing will prove empty.

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