India is transitioning fast. Its economic ascent - particularly viewed in context of its vast demography - is taking place at a time when the world is grappling with the rising global challenges posed by climate risks and resource scarcities. The decisions on sustainability made in emerging markets like India will have systemic consequences, not only for these nations, but for the entire planet. India's economic ascent will need to be economically, socially and environmentally sustainable. How India generates and consumes energy, how it manages its scarce water resources and deals with its fast deteriorating air quality are among some of the key factors that will determine the longer term sustainability of India's economic rise and its place in a world coping with the existential challenges of climate risks.
Air pollution in India is a serious health issue. Of the most polluted cities in the world, 21 out of 30 were in India in 2019. As per a study based on 2016 data, at least 140 million people in India breathe air that is 10 times or more over the WHO safe limit and 13 of the world's 20 cities with the highest annual levels of air pollution are in India. Air pollution contributes to the premature deaths of 2 million Indians every year. Emissions come from vehicles and industry, whereas in rural areas, much of the pollution stems from biomass burning for cooking and keeping warm.
Air pollution is a bigger killer than the Covid-19 pandemic and will continue to remain so unless there is strong and sustained policy action to tackle the problem, according to the Air Quality Life Index 2020 Annual Report published by the Energy Policy Institute of University of Chicago (EPIC).
"Though the threat of coronavirus is grave and deserves every bit of the attention it is receiving, embracing the seriousness of air pollution with a similar vigour would allow billions of people around the world to lead longer and healthier lives," in the words of Michael Greenstone, co-creator of Air Quality Life Index (AQLI) at EPIC.
Here is some data, that should wake up the citizenry and regulators. Air pollution has shortened lives by 9.4 years in Delhi and by 8.6 years in Uttar Pradesh, the most polluted states where nearly 250 million residents are affected, the report said.
A quarter of India's population is exposed to pollution levels not seen in any other country, with 248 million residents of northern India on track to lose more than eight years of life if the current pollution levels persist.
In the same way epidemiologists have been warning of a deadly coronavirus outbreak for years, climate scientists have been warning us for decades about the social and economic risks from rising sea levels, droughts, wildfires and air pollution. While we could not have predicted the exact timing of the coronavirus pandemic, many of us would readily admit we could have been much better prepared and responded more rapidly.
The Covid 19 pandemic has raised the bar on consciousness about many of these issues. We strongly believe that as more and more evidence builds, regulators all over the world will be compelled to, among other issues, focus on measures to regulate air quality. This will create both opportunities and challenges for investors.
Investors require high quality advice to help them prepare and position their investment portfolios to include sustainable investment opportunities. Investing in ESG funds, which have air quality as one of their focus areas, may create compelling opportunities to generate alpha while delivering a positive impact.
Authored by: Abhay Laijawala, MD and Fund Manager, Avendus Capital Public Markets Alternate Strategies LLP
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