Clearing the Air: Risks and Opportunities Linked to Air Pollution (newsletter feature)
Chronos helped produce ShareAction’s Breath of Fresh Air report this month and here consider the dangers of air pollution, not only to human and environmental health, but for companies and investors.
Greenhouse gases are not the only emissions that threaten the health of people and planet.
Air pollutants caused by sectors like transport, heavy industry and power generation - mostly invisible to the naked eye – cause millions of premature deaths and drive nature loss. And as air pollution regulations tighten globally to combat this, the issue also threatens to have profound implications for companies in sectors from cars to chemicals, and for their investors.
The social and environmental costs of air pollution
According to the World Health Organization (WHO) over 99% of the global population lives in areas where air pollution exceeds its Air Quality Guidelines.
Around 6.7 million premature deaths between 2021 and 2023 can be attributed to outdoor air pollution according to the Institute for Health Metrics and Evaluation (IHME), making it a larger risk to human health than tobacco use.
Fine particulate matter (PM2.5) — tiny particles released by activities such as road transport and fossil fuel combustion and which can penetrate deep into the lungs — are responsible for over 90% of premature deaths. Without intervention, exposure to PM2.5 is predicted to increase 50% by 2030.
Pollution is also the fourth largest driver of nature loss (after factors like changing land use, and overexploitation). Inhalation of airborne pollutants harms wild animals, while air pollutants settling on vegetation can hinder plant health and harm aquatic life when entering waterways.
Governments and courts are responding
In response to the substantial macroeconomic costs of ambient air pollution, we are seeing increasing regulation, including legally binding emission ceilings, reduction targets, and sector-specific controls.
According to a UNEP study nearly two-thirds (64%) of countries, including all EU countries, now have Ambient Air Quality Standards (AAQS) in place, and a growing number of nations are strengthening air quality regulations. There is also a clear trend toward tightening vehicle and fuel emission standards in line with European standards for road transport, particularly in Southeast Asia and increasingly in sub-regions of Africa and Latin America. The Breath of Fresh Air report presents a detailed analysis of air quality regulations.
Moreover, regulators appear to be increasingly willing to enforce these regulations, and to impose significant penalties for non-compliance
Examples of lawsuits that have imposed substantial penalties on companies for air pollution-related offences include the US$1.6 billion fine in the US for Hino Motors (2025) for fraudulent emissions testing, a US$64.5 million fine for Marathon Oil Company (2024) for violations of the US Clean Air Act and, most famously, Volkswagen’s $30 billion of costs for its ‘diesel-gate’ scandal.(source).
Sizeable economic risks
The potential economic implications of declining air quality are substantial.
The World Bank estimates that ambient air pollution leads to around US$6 trillion a year in healthcare costs, and rising.
Impacts on ecosystems have not yet been fully quantified, but they are likely to be substantial. For example, a 2025 report by the European Commission estimated the economic cost of crop and forest damage from outdoor air pollution at €13-18 billion.
The sectors most highly exposed to air pollution risks include transport-related industries such as automotives, logistics and freight. But also sectors such as manufacturing, energy and fuels, chemicals and materials.
The research suggests that relatively few companies, including in the most highly-exposed sectors, are currently taking steps to reverse these trends or adopt cleaner technologies. Similarly, relatively few investors are integrating air pollution into ESG screening and risk management for high-exposure sectors.
We are however seeing that these changes are having significant effects on business strategy, R&D priorities and capital expenditure decisions. For example, the Stellantis merger in 2021, which combined Fiat Chrysler and Groupe PSA, was partly driven by the need to share the financial and operational burden of complying with increasingly stringent EU emissions for passenger vehicles.
Some companies are starting to invest in low-emission and emissions capture technologies, smart transportation systems, and greener chemistry in manufacturing.
One example in the field of pollution control comes from The Tyre Collective, a UK-based clean-tech startup. Wear and tear on tyres and breaks releases large amounts of particulate matter into the air (including microplastics) that are harmful to human health. The Tyre Collective has developed a patented on-vehicle device that captures tyre particles at source usingelectrostatics and airflow, with significant potential to reduce Non-Exhaust Emissions (NEEs) from road transport.
However, the ShareAction report suggests that across global markets corporate action and investor readiness to respond to tightening regulation on air pollution is lacking.
What can investors do?
The ShareAction report suggests that investors need to focus more on managing the long-term risk of air pollution. And it suggests near term priority actions should include:
Identify exposure to high-risk sectors - using tools such as the Exploring Natural Capital Opportunities Risks and Exposure (ENCORE) database or Science-based Targets Network (SBTN) materiality screening tool.
Integrate findings into investment decision-making - including valuations, portfolio construction and capital allocation.
Engage to drive improvement - encouraging companies to monitor and disclose their air pollutant emissions, and to adopt robust air pollution management systems and reduction plans.
Support innovation in low-emission technologies - such as non-exhaust emissions (NEEs) mitigation, green chemistry approaches, in alignment with regulation and societal needs.
Air pollution as part of nature action
Breath of Fresh Air is an extremely important and timely report. Given that many investors have, in recent years, built their capacity and expertise on nature, many will already have the systems and processes they need to integrate air quality into their investment decision-making and their engagement with companies.
In doing so, investors can get ahead of the curve on global regulation on this issue and support the delivery of positive outcomes for biodiversity and for public health. Recognising these connections is essential for building resilient and effective responses.
Taken together the economic, social and environmental arguments to tackle air pollution are compelling, and clear ways forward are emerging.
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To find out more contact: Rebecca Drury, Biodiversity and Nature Manager
The full report: ‘A Breath of Fresh Air: the risks of air pollution and the opportunity beyond toxic assets’ was prepared by Chronos Sustainability in consultation with ShareAction.
