By Anjali Bansal, Founder, Avaana Capital & Shruti Srivastava, Principal, Avaana Capital
The year is 2050. Rising ocean levels have rendered erstwhile metros like Singapore, New York and Mumbai uninhabitable and destroyed port logistics globally. Extreme weather events have resulted in massive food shortages, leading to conflicts and war.
What seemed like science fiction, is now feared as ourpotential future. The last decade has seen increased awareness regarding climate change. COP26 saw governmentscommitting to strengthen efforts towards climate action. More consumers are assessing how their purchases impact the environment. Deloitte’s #GetOutinFront report showed climate risk as the top concern for ~60% respondents. Corporations and capital are committing towards “net zero” not as an obligation, but recognizing the business risk fromclimate change.
India’s transition for sustainability is complex as we cannot afford a trade-off between people, profits and planet. We needto continue to grow manufacturing, farm incomes, domestic consumption and bring critical goods and services to Indian masses, without creating further adverse impact on climate. This requires massive innovation in technologies and business models across the economy, ranging from how we grow our food to how we move people and goods.
Doubling food production by 2050 for our growing population’s needs, increases pressure on already stretched resources while agriculture’s vulnerability to climate only worsens matters. Moreover, a third of food produced is lost or wasted. On the flip side, agriculture is also a major emitter, contributing 19-29% of global GHG emissions. We need to build more climate resilient food production systems such as controlled environment agriculture. Precision agriculture enables improving yields with optimal use of resources. There is also need for product and market development in alternatives for high emissions value chains like dairy or paddy.
Consumption growth in fashion, durables, FMCG etc. strain energy and resources while also contributing to emissions. The farm to shop-ready water footprint of a pair of denims is about 7600 litres. Petroleum derivatives are raw materials in most daily items from personal care to packaging. Sustainability in consumption will require new businesses to implement and scale circular economy models. Product and process innovation can drive demand shifts towards more sustainably sourced and manufactured goods, while newer business models can drive adoption.
Transport emissions are growing and accounted for 30% of total emissions in 2019. Improvements in vehicle efficiency are more than offset by the increased miles that people and goods are traveling. Transitioning to zero emission transport will require initiatives such as electrification and clean fuels along with improved vehicle efficiency and performance. We need to solve for roadblocks in EV adoption such as charging infrastructure and financing. Localization of supply chains canreduce the miles that goods move to get from source to destination. Digitization can be a significant force in enabling supply chain sustainability, bringing efficiency, reducing wastage and optimizing movement.
Energy usage in India doubled the last decade, with growth upthe energy ladder and increased commercial activity. Demand is expected to grow fastest in the world, 3x the global average. Besides investments in renewable energy generation, we require solutions for enhancing generation and distribution efficiency. We also need tools and business models for efficient management of natural resources such as air, water, land and biodiversity. The “new climate economy” also requires re-skilling and upskilling of our current and future workforce. Additionally, the financial services ecosystem needs to evolve to support this transition through innovative products.
India, today, is seeing a convergence of factors to support creation of new unicorns in the climate economy. Climate andsustainability are becoming drivers in business strategy as well as consumer preferences. Affordable technology makeswider adoption of climate friendly alternatives possible, as seen with solar power and Li-ion batteries. There is support from policy tailwinds for this transition towards net zero. We are also seeing a new set of innovators and entrepreneurs emerge, who are building upon the learnings of their predecessors, determined to solve deeper challenges in climate and sustainability. Sustainability will be for the next 20 years what digitization was for the last 20. The case for investing in sustainability has never been stronger, as we areat the confluence of critical timing, ample opportunity, and a sector whose time has come.