By Anand Nair and Ravi Ramamurti

On October 5, 2024, D'Amore-McKim's Center for Emerging Markets organized a Global Sustainability Summit at which three distinguished speakers—from the World Bank, an Indian think tank, and a social enterprise—focused on an important region of the world—South Asia, which is home to eight countries, including India. This report summarizes1 the day's presentations and discussions on this topic. A companion piece does the same for the presentation by Jean-Pascal Tricoire, Chairman Schneider Electric, on how his multinational firm views the climate change challenge. The Summit Agenda and videos of all sessions are also available.

The World Bank Perspective

Franziska Ohnsorge, Chief Economist, South Asia, at the World Bank made several interesting points about the situation in the region.

  1. . The pressure to create jobs will be very high: The South Asia region has over 2 billion people with a median age of 27 years, which means millions will be added to the working-age population each year. At the same time, the region's labor participation rate is lower than in other developing countries, partly because women's participation rate is especially low. India alone is estimated to add 10 million people to the labor force each year. To clear the backlog of unemployed and underemployed, and to absorb the annual additions to the labor force, the region will be under a lot of pressure to accelerate growth.
  2. Pressure to accelerate growth: Dr. Ohnsorge noted that the South Asian region is a bright spot in today's global economy. Since 2021 the region has been growing faster than other developing countries, but that growth rate is still well below what is necessary to achieve the countries' aspiration to become upper-middle income or high income country in the next 2-3 decades—and to create enough jobs to keep the population productively occupied. India, for instance, would need grow at 8% per year (vs. current rate of 6-7% per year) for next few decades to become a middle-income country by 2047, the centennial of its independence. But faster growth will accentuate environmental challenges.
  3. India is very inefficient in energy use: The growth in South Asia has come with major environmental impact. South Asia consumes twice as much energy for one unit of GDP than the rest of the world. The region is the most polluted in the world (even more than China was at its peak in 2013). Nine of the world's ten most polluted cities are in South Asia, along the Indo-Gangetic plain. If energy is used efficiently, the region could grow faster while also emitting less. The region is ahead of other countries in its use of basic technology (e.g. LED lighting) but it is quite behind in using advanced technology (e.g. programmable thermostats for HVAC systems). One serious impediment is that power supply is unreliable and power cuts are commonplace. As a result, businesses use back-up diesel generators, which is one the least efficient and most polluting technologies. There is a lack of trust about the electric grid, even more so than in lesser developed countries such as Ethiopia or Georgia.
  4. Possible policy remedies: The World Bank is working towards making firms become more proactive in adopting advanced technologies. It is facilitating access to finance, because there is increasing evidence that access to finance helps. The World Bank is also focusing on the issue of regulation, which can help in bringing down pollution, without side-effects of reducing productivity, if they are market-based solutions. Gujarat, a state in India, has come up with a market-based regulation that has been very effective. The World Bank tries to help with knowledge transfer and by rotating its own staff across regions helps to diffuse good ideas from one part of the world to others.
  5. Green jobs versus polluting jobs: Franziska Ohnsorge noted that the South Asian region does not have enough green jobs. About 9% of jobs in South Asia are in polluting industries such as mining and tanning. Hence, with a move towards sustainability, many of these people will be looking around for other jobs. Green jobs include such things as bicycle repair, trash collection, car repair etc.
  6. The most important need for this region is climate-change adaptation: This region is the most vulnerable of all regions to climate change. Between 20-60% of area of major countries in this region experience drought in any given year, affecting 60 million people. Climate shocks are recurrent. The region is already 6% warmer than other regions. By 2050, it will be too hot for farmers to work during eight hours of the day, forcing them to farm at night. The burden to adapting to climate change will be with the private sector. We know from research that households cope with climate change either with government subsidies—which the region is not fiscally strong enough to expand in the future—or they look for jobs elsewhere. This brings us back full circle to what we started with: the government needs to create millions of jobs outside of agriculture.

An Indian Expert and Government Advisor's Perspective

Dr. Arunabha Ghosh, Founder-CEO of Council on Environment, Energy, and Water (CEEW) and an advisor to the Government of India, provided a detailed overview of how India is trying to balance the need for growth and safeguard the environment. Some of his key points are summarized below.

  1. Faster growth is being accompanied by climate challenges: In the next few years, in US-dollar terms, India is expected to be third largest economy in the world. Therefore, what happens in India will affect not just Indians but the whole world. Despite economic success, India remains highly vulnerable to the effects of changing climate. Three-fourth of districts of India are at hotspots that face multiple, overlapping hazards. They are vulnerable to natural disasters. In the last decade (as compared to previous three decades), there has been intense rainfall in half of the districts, while in about 10% of the districts rainfall has decreased. The irony is that these environmental fluctuations occur when it matters the most, i.e. when the farmer is about to sow seeds.
  2. India's 5-Pronged Panchamrat Initiative: To address these challenges and balance sustainable development with the quality of life for citizens, the Panchamrat (five nectars) initiative have been undertaken. One of its goals is to reduce the emission intensity of GDP by 33% between 2005 and 2019, and by 2030 to reduce it to 45% of the levels prevalent in 2005. The second is to ensure that 50% cumulative electric power is generated from non-fossil sources by 2030; currently, this stands at 45.5% of the installed generation capacity. The third goal is to increase non-fossil fuel power generation capacity from current levels of 203.19 GW to 500 GW by 2030. The ultimate goal is to become carbon neutral and achieve net-zero emissions by 2070. Achieving these goals would amount to the fastest reduction from peak levels of emission by any country in the world, and would put India's emissions at 59% lower than China's and 58% lower than America's.
  3. India will also need to make lifestyle changes: None of the Panchamrat goals can be achieved unless Indians change their lifestyle—which is the fifth element of that initiative. There has been shift in patterns of energy demand as the population in India has moved from rural to urban areas. Urban India is already the third largest population of the world, with more numbers being added daily. The kind of innovation that will be needed would be different from what has worked in developed world. For instance, in urban India the prevalence of four wheelers is quite low. Hence, it is important for India to determine the kind of electric transport that is most likely to help achieving the balancing act. 93% of the new registrations in India are two- and three-wheelers. India recently signed the world's largest e-bus procurement globally as part of the “Grant Challenge” tender . On the industrial side, the dramatic growth in renewable energy has to augmented by a massive expansion of green hydrogen production that substitutes for coal.
  4. Despite constraints, the transformation can happen: While many of the Panchamrat programs are already underway, how much more is possible? In a study, CEEW mapped out all of India and layered it with population, social, water availability, solar and wind potential, seismic risk, etc. After taking into account all these constraints, there is still a huge potential for further transformation. One particularly challenging area is industrial decarbonization, in sector such as steel, cement, aluminum, and fertilizer. It is conceivable that the bulk of decarbonization is going to come from technologies that are not yet established.
  5. India will need to deepen its production capabilities: Given India's aspiration to be a fast-growing economy, certain emerging risks and roadblocks are worth noting. For instance, to develop resilient renewable energy supply chains, India must contend with the reality that the manufacture of solar photovoltaic and lithium-Ion batteries is concentrated in few countries.2 Only 5 countries hold the key patents that can limit the adoption of these technologies in India. To deal with this, it is important to not shift the concentration of power from one set of countries to another set; instead, the global supply system must become more geographically diversified.3
  6. Financing the transformation: To achieve the objectives set for sustainable development and maintaining the quality of life of citizens of India, Dr. Ghosh noted that substantial financial resources would be needed. Importantly, it is not only the amount of money, but also the nature of money. Compared to China, US, and EU, the actual growth of investment in India is not rising as much (even though there has been much progress). On one hand, equity finance is available from many sources, such as sovereign funds, private equity, public equity, and public funds on renewables and heavy-industry decarbonization. But this is not enough for the equity to grow. Additionally, there is the question of the cost of finance. Initiatives in India, such as GIFT (Gujarat International Financial Tech) city for sustainable finance, are aimed at addressing this challenge.
  7. Improving the quality of life: The balancing act will not be complete if consideration is not given to improving the quality of life for citizens. Between 2001 and 2020, there has been a significant increase in air pollution in India. In 2001, 90% of the population was breathing air within acceptable standards, but today that has come down to only 30%. It is not only a health problem but also an economic one as it reduces productivity. Most of the air pollution is not caused by farm fires but by households. Clean air should be viewed as an asset for India's development. Sustainable mobility and urban planning go hand in hand. From India's perspective, water sustainability is probably the weakest link. There is huge potential to recycle and reuse water. A study reports that just by recycling, retreating and reusing water, an area nine times larger than New Delhi can be irrigated.4 Similarly, sustainable agriculture, drawing on agroforestry, precision farming, integrated pest management, organized farming etc. has great potential in India.
  8. The Implementation challenge: While India has made impressive progress in some areas, such as going from 20 MW of solar power to 80,000 MW in a matter of years), the challenges are more serious when we look at things a more granular level (e.g., district, district town, etc.). In such contexts, many departments need to collaborate to implement reforms. Bureaucrats and government officials need to change their mental models. It is quite common for civil servants to see flash flood in districts that were traditionally prone to drought. It becomes critical for these officials to change their mental models and underlying assumptions regarding what would work in achieving sustainable development while managing the quality of life. Similarly, with regards to clean public transportation, questions such as who will be running the system and how it will be managed will require some fresh thinking about collaborative arrangements among different departments.

The dominance of public sector has traditionally been a constraint in India; however, most of the renewables is private. To engage private organizations, India designed reverse auction – starting with solar and then to wind. Typically, it is not who is developing the capacity that is the constraint but the financial health of the distribution companies that presents a hurdle.

A democracy like India must come up with innovative steps to encourage its citizens to take certain decisions, e.g. whether to buy a new car. The country is trying to follow a model – avoid, shift and improve. For instance, Dr. Ghosh mentioned how he walks to work through a 2000-acre forest in New Delhi. The sign of a developed country, he says, is not how many poor people use cars but how many rich people use public transport. City planning is important.

An Indian Social Entrepreneur's Perspective

More than 20 years ago, Anshu Gupta co-founded the social enterprise, Goonj, with his wife Meenakshi, to “upcycle” (not recycle) urban waste. He sought to build a movement where items discarded by one segment of society could be used by other segments of the society. The infrastructure he created for this purpose has proven useful for helping communities dealing with natural disasters, including climate disasters.

Material donations from urban areas go through a rigorous process of sorting, cleaning, and bundling into multi-product kits meant for specific users, e.g. families. Nothing is wasted, and everything donated is reused in some fashion. About 1200 people are paid in cash for doing activities such as sorting. The kits are then given to villagers who work on projects that benefit their communities, giving them the opportunity to earn in kind. Goonj has touched 80,000 to 100,000 villages in this way.

Anshu Gupta notes that it is important not to consider the giving of discarded items to others as charity. In fact, one should be thankful for those who are using the discarded product and extending its useful life. While one-time charity is fine, sustained charity destroys the dignity of recipients. In keeping with this philosophy, Goonj lets each community make decisions about which of its problems it wants to solve and how. The most valuable resource is “human.” In Goonj's case it is the “dignity” of humans, although the organization believes that nobody can give dignity to anyone. The first thing is to accept people as they are and recognize that everyone has something to offer. Goonj's recipients may not have money, but they have local wisdom, e.g. they are more likely to realize that reviving mangrove trees is a better defense against tsunamis than constructing a wall.

Almost all developmental work in poor countries is done top-down; however, Goonj operates in a bottom-up model, letting the users to decide what they need. It has established Goonj Alliance for Rapid Response for Disasters (GARRD) with an understanding that many of the solutions don't work because we are “killing mosquitoes rather than working on malaria.” Goonj works with 700 partners, ranging from local NGOs, the army, and so on.

Anshu Gupta believes that Goonj's recipients are the biggest victims of climate change, even though they had no role in causing it. The impact on marginalized community is disproportionately high. Natural disasters are sporadic crisis, but poverty is a permanent crisis. If you are in the business of eradicating poverty, there isn't a night-and-day difference between that and dealing with natural disasters.

  1. This summary presents the authors' understanding of the three speakers' views. Readers can view the three presentations in their original form (video) on CEM's website. ↩︎
  2. CEEW, 2023 – Developing resilient renewable energy supply chains for global energy transition ↩︎
  3. (Warrior, Dhruv et al. 2024. Strengthening India's Clean Energy Supply Chain/CEEWs). ↩︎
  4. (Gupta, Nitin et al. 2021) ↩︎