For over two decades, global warming and climate change have been hot topics among international climate organizations, geopolitical discussions, and environmental activists. Unfortunately, our love for fossil fuels, deforestation, and livestock is increasingly influencing climate change and global warming.

Climatic features of various countries have been changing drastically for the past few years. Cold-weathered countries are experiencing frequent heatwaves while recurrent rainfalls and floods wreak havoc in dry and arid lands. Seasonal cycles are slipping from the hands of Mother Nature.

On top of all these desperate atmospheric conditions, human health is also being threatened like never before – vector-borne diseases and pandemics are doing a frenzy death dance over our wellbeing and survival.

One more bad news: India is the third largest carbon emitter in the world.

Besides, the looming threat of global warming and climate change stresses the global economy and potentially leads to negative economic growth.

Here is the formula for the impact of climate change on the global economy.

Climate Change = Lower Productivity = Lower Economic Growth = Lower Investment Returns

Yes, you read that right. Lower investment returns are the by-product of climate change.

Investing constantly has a shade of uncertainty smeared on it. Climate change does nothing but darkens that shade. Climatic disasters and diseases bring chaos and unforeseen costs. For example, recovery from floods, heat waves, cyclones, viral infections, water scarcity, rising sea levels, and other climate-related hazards takes a heavy toll on economic growth.

Suppose proper measures have not been taken, our dependency on fossil fuels will not be reduced, or we procrastinate using green energy. In that case, various economic sectors will face a massive loss of around $35 trillion by 2070. This financial disaster would be worth 12.7% of India’s Gross Domestic Product (GDP). Over the next 50 years, climate change will likely hit the top five industries: services, manufacturing, retail, tourism, construction, and transport. Currently, all these sectors cover 80% of India’s GDP.

Anyway, it’s not necessarily all doom and gloom. Indian regulators, including financial market regulators, have begun policymaking and implementing regulations to address climate change. Moreover, the climate change threat also offers better investment opportunities in the green energy sector: solar energy, wind energy, waste management, gasification, and electric automobiles, to name a few.

Happy Investing!

Neeru Seal

Alpha Research