Trunk Economics | August 2024A New B2C: Business to Climate
Rivers are carrying a new B2C message
IT IS SOMETIMES SAID THAT rivers, like elephants, have a photographic memory. They remember their paths, to the exact detail. The visuals of bursting rivers hurtling down in furious currents leaving a trail of unimaginable destruction in Kerala, Himachal and Uttarakhand, perhaps, reinforces this hypothesis.
Amid the mounting losses of lives, and livelihoods, a question emerges again. Are the rivers reclaiming their paths? While this may sound theatrical at first sight, but the issue is real enough for anyone to ignore. It is no longer “their” problem. It is everyone’s problem.
Growth at all cost
While it is commonplace to be dazed by the impact of climate change that has reached our homes, it may be helpful to take a step back and understand why it is a problem.
The question is more complex than it appears. This is more so in the context of India. By all measures, India looks set to be world’s third largest economy within the next few years. It will also, even by the most conservative assessments, remain among the world’s most powerful growth engines.
The teeming millions of India’s all-consuming middle class will drive India’s growth. Rising income levels will spur households to spend more, prompting companies to add capacity lines to meet the rising demand for their goods and services, setting off a virtuous cycle of spending, investment, profits, and hiring. This is a classical growth economist’s delight.
Externalities and trade offs
Who could argue that its nothing but a great and golden period. But there is a catch.
The trade-off isn’t quite tangible in the balance sheets or the P&L statements. These are now becoming visible in the form of serious negative externalities.
In economics, an externality, broadly, represents an outcome of a given economic activity parties not directly related to that activity. For instance, building factories, hotels, and houses by clearing up forests or farm land could affect the local ecology.
In the final analysis, profit maximisation and sustainability will have to be reciprocally harmonizing boxes. This will require a decisive swing from the current attitude of P&L gains at all costs to climate compatibility as a non-negotiable component.
On a wider scale, the consequences could be debilitating, borne by people far removed from where the economic activity may have sparked the externalities.
Scientists contend climate impacts like heat/cold waves, floods, cyclones, heavy rains, melting of glaciers and resulting sea level rise will be worse if the guardrail of 1.5 degrees Celsius is breached.
In the final analysis, profit maximisation and sustainability will have to be reciprocally harmonizing boxes. This will require a decisive swing from the current attitude of P&L gains at all costs to climate compatibility as a non-negotiable component.
A fundamentally new model of industrial organization is needed to de-link rising prosperity from resource consumption growth – one that goes beyond conventional P&L gains and evolves into a new B2C approach - Business to Climate.
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