Climate change impacts are perceived as a clear threat to business and there is a demand for investors in India to accelerate investments in carbon negative industries, said industry leaders from Maharashtra participating in a roundtable discussion on Friday.
The roundtable, organised by ClimateTrends, Sanctuary Nature Foundation and Bombay Chamber of Commerce, sought to enhance the understanding of climate risks among Indian industries and businesses and their roles in mitigation.
Findings of a survey titled, ‘Impact of Climate Change on various Businesses & Industries in Maharashtra’ were also released during the roundtable. The survey was conducted by ClimateTrends and implemented by market research agency, YouGov, to understand Maharashtra industries’ perception of risks, responses and requirements in response to climate change.
A sample size of over 400 businesses in Maharashtra were surveyed, covering MSMEs and large industries across 20 sectors – IT, financial services, retail, pharmaceuticals, real estate, electricals, telecommunications, automobiles, shipping, food processing, textiles, tourism, metalworks, steel and chemicals.
Large industries acknowledge the effect of climate change more
According to the survey, more than 70% of Maharashtra’s industrial sector believed that climate change is a real issue. The issue is acknowledged more by the industrial sector(78%) associated with large industries as compared to those in Micro Small and Medium Enterprises (68%) (MSMEs), it revealed.
To fill this gap, Aditya Agarwal, managing director at Morningstar emphasized that not only larger companies but also smaller companies need to be aware of the fact that they are also impacting the climate and they need to make efforts.
“I think we need more and more disclosures as investors. We just can’t be investing in something which we are not even aware of,” he added.
Who are helping businesses to manage the impact of climate change?
Industry associations(48%) and central government(45%) are stated as the key bodies helping businesses manage their business impact on climate/environment.
While large industries have better access to technical advisory and expert support from the government, the sector still seeks financial aid (loans, credit facility) as well as technical advice.
Real estate and infrastructure sectorsalso seek support in terms of tax deductions, it added.
“I think the challenge is not around entrepreneurs or for business people, but it is largely government-driven and purely on the implementation side,” said Shashank Randev, founder VC of 100X.VC and executive committee member at PIOCCI.
He pointed out that there are a lot of complications in terms of getting approvals from the government. It is one of the reasons that he invested in electric vehicle Software as a Service (SaaS) based software rather than an EV manufacturing company, he said.
Climate change impacts the sector ‘by a lot’
Industries felt that climate change has directly impacted productivity, expenditure & profits, and supply chains. Moreover, 65% of the industrial sector also ranked ‘de-risking business from climate change’ as one of their top priorities, it said.
Industries felt that climate change has directly impacted productivity, expenditure & profits, and supply chains. Moreover, 65% of the industrial sector also ranked ‘de-risking business from climate change’ as one of their top priorities, it said.
Over 50% of respondents for the survey believed that climate change impacts their sector, and 45% believed that it impacts their business as well.
In the technology sector “impact on workers’ health” also emerges as one of the top direct impacts of climate change. Large industries showed higher levels of concern relating to “increased time and effort on energy optimization and efficiency strategies without adequate support and guidance.”
Urgent decarbonisation needed
According to the survey, there is an urgency for decarbonisation to tackle the impacts of climate change on businesses.
However, decarbonisation cannot be equal to de-industrialisation stressed Aparna Khandelwal leading the Climate Risk programme at India Climate Collaborative, who added that this necessitated the need to find solutions in pathways that account for the costs associated with decarbonisation, and how industries can be supported to implement it.
“We need buyers, other stakeholders to come together. We feel that philanthropy will play a key role here because it can be flexible, can take risks and most importantly it can prototype solutions,” she stated.
Climate unpredictability is on the rise
According to a study published last year by the Council for Energy Environment and Water (CEEW), more than 80% of districts in Maharashtra are vulnerable to drought or drought-like situations. Additionally, there has been a six-fold increase in the frequency of extreme flood events in Maharashtra in the last 50 years.
These trends are a clear indicator of how climate unpredictability is on the rise, making risk assessment a bigger challenge with increased compound disasters and threats.
Maharashtra is India’s one of the most industrialized states, and also particularly vulnerable to climate change. It is critical for its industrial sectors to de-risk climate impacts for their own survival in the future, as well as support India’s climate action goals.
Non-state actors, especially the business investors are an important part of helping policymakers understand what the solutions are, said Jennifer Austin, Director of Strategy and Policy at UNFCCC COP High-level champions for climate action.
“By working collectively there’s an ability to do more,” she emphasized. According to her, the survey results have revealed that there is a strong and ever-growing awareness for climate action with a growing recognition worldwide.
The global economy is in need of an injection of growth and there are many studies around the world showing the potential for job creation in particularly low/zero carbon job industry services, stressed Austin.
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