Climate will change every economy, CFO News, ETCFO

Dear Readers,

I had a quick trip to a small village near western ghat in Maharashtra last weekend. The sun was pouring heat and it wasn’t easy for anyone to work on farms. It’s the season of mangoes, grapes and pomegranates and I was waiting to see those farms. But what I observed is wherever there was a crop, it was wrapped in old sarees, dhotis and available clothes. When asked, I was told this is how the farmers are protecting their crops from the scorching heat. About 45 degrees Celsius temperatures have damaged the crop across states. Many farmers have found pomegranates cracked up and vegetables dried up due to the heatwave.

The situation is almost the same across the country. There is a shortage of wheat production of 10-20 per cent this Rabi season. Since the crop is very sensitive to heat the farmers in the northern belt of India have found their crop damaged, Similar is the case with other fruits and vegetables. This summer has been terrible. According to India Meteorological Department IMD, March was the hottest month in the last 122 years and the average temperature during a day is 33.1 degrees Celsius.

The story is not limited to farmers. Soaring temperatures anywhere between 40 and 49 degrees Celsius are hitting hard in the major metros like Delhi and Mumbai. Earth is just not getting hotter but it’s also being filled with plastic. So much so, that we are not just using plastic but also consuming it to some extent. Many reports have explained that there are high chances that plastic particles can be found in the food that we consume. Climate change is rapidly happening and we are way behind in controlling it.

This week: WEF and India

This week, at the World Economic Forum, Climate and Nature were one of the major themes that policymakers and global leaders deliberated upon. In fact, India in collaboration with WEF launched the Climate Action Platform this week itself. The Alliance will continue efforts to achieve the vision outlined in the white paper released last year, Mission 2070: A Green New Deal for a Net Zero India, on India’s low-carbon transition by 2070.

The world leaders, and institutions have been preparing a framework to combat climate change but while they craft their strategies, a lot that individuals and companies can do together. I have two examples here.

Banks and Finance – Climate change

Bank of America announced something very unique recently. On World Earth Day the bank rolled out a challenge to encourage its employees to commit to a net zero lifestyle, under ‘Sustainable living challenge’. The challenge includes replacing plastic use, efficient use of water, planting a tree, recycling old stuff, etc. BoA has decided to award $10,000 to the winning team, which will donate it to the qualifying environmental charity of their choice.

Even Uday Kotak, Founder, MD & CEO of Kotak Mahindra Bank, decided to banish plastic water bottles from his office and replace them with reusable cups and glass jars. According to his estimates, by doing this 430,000 bottles can be saved.

Climate will change every economy

I think such small efforts will help in some way to achieve climate change else temperature is rising and the environment is going to take a big toll on us.

Climate impact on the economy

The first and foremost impact on the economy is inflation and the second is on health. The shortage of commodities due to climate change will add to inflation which will hurt every economy. Currently, major economies are struggling to tame inflation. Apart from these, heat waves will dehydrate people, increase in heat and gas emissions and carbon emissions will take a big toll on human lives.

Businesses won’t be normal during warm temperatures. According to the Swiss Re Institute, if the global temperature rises by 3.2 degrees Celsius, 18% GDP of the global economy will be wiped out by 2050. Climate disasters such as hurricanes and wildfires have cost North America $415 billion in the last five years.

Challenges before the industries

While banks, finance companies and corporates are trying in their own way there are many challenges. The major challenge is the lack of technology and financing. While financial institutions are finding it difficult to assess the risk and support the companies who are actually going to net-zero target. Because risk parameters will be certainly different. On the other hand, India Inc is finding it difficult to source the talent and technologies to craft their strategies for carbon neutrality.. In fact, at our ETCFO event on sustainability, many CFOs said the same. Hence, the alliance that India has formed this week is a remarkable step… but it’s not going to be an easy journey.

Like always I am adding here the top five stories of the week that you shouldn’t miss. If you have any thoughts or feedback, please feel free to share them with me at

1. KPMG India’s Audit Chief says auditor independence will always be a difficult balance

2. Don’t see any blurring of roles between statutory and forensic auditors: BDO Partner Amit Meher

3. India Inc signed 183 deals in April, but inflation may likely cloud near-term prospects: GT Report

4. Does SC ruling on GST Council shake up one nation one tax idea? In conversation with Mukesh Butani

5. Inflation high but India not heading towards stagflation: Economists

Happy Reading, Happy Weekend

Amol Dethe

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