It’s possible for the stock market only to grow because it externalizes costs

Sure, and ideally governments step in to return those costs to companies. For example, I think we’ve done an absolutely terrible job of managing climate change, and we’ve largely allowed companies to push those costs onto the people at large. That said, just because they are pushing off costs onto society at large doesn’t mean they’re a net negative, it just complicates the math a bit.

I’m a huge fan of Pigouvian taxes, and in the case of carbon emissions, that means carbon taxes (not credits or caps, but direct taxes based on carbon emissions). Those taxes should ideally equal the negative externalities of those companies, so if a competitor can reverse those externalities for less than it would cost the company to eliminate them, everyone wins (i.e. we now have two profitable companies). This has a two-fold impact:

• encourages companies to produce fewer negative externalities
• allows delay of expensive changes, with a short-term plan to compensate impacted individuals (or correct the externality, voter’s choice)

If we can put such a system in place, it makes it a lot easier to assess which companies are actually net positives for society.