Rising temperatures put 30% of agricultural loans at risk of default by 2030, fall in per capita income due to climate change

Due to rising temperatures and the growing threat of climate change, 30% of the agricultural and housing sector loans are expected to default within the next five years i.e. by 2030. An analysis report by BCG has warned that the average global temperature has risen by about 1.2 degrees Celsius since pre-industrial times. Due to this, the coastal areas are underwater and farm output is declining. As a result, the per capita income of the people affected by the rising frequency of extreme weather events has fallen.

The report states that nearly half of the scheduled commercial banks' loans are heavily dependent on nature and its ecosystem. Therefore, any natural disaster affects their profits. According to estimates, by 2030, the temperature in 42 percent of India's districts can rise by two degrees Celsius. In the next five years, 321 districts can be affected by temperature rise, which can affect the earnings of people.

BCG Managing Director and Partner Asia Pacific Abhinav Bansal said India is fully committed to moving away from coal and crude oil and adopting renewable energy. India will have to invest $ 150-200 billion annually to bring about this change. In contrast, climate finance in India is between $ 40-60 billion, creating a gap of $ 100-150 billion. Bansal said this change will create a landscape of opportunities. However, we are far from the target and can see it happening by 2030-40, which is about to start. Leaders will take maximum advantage of this opportunity. From the banking context point of view, we can achieve great success.

The physical risks of climate change are becoming important for businesses. This is also affecting their revenue. To deal with this impact, banks need to work systematically to raise awareness about this issue and advise their customers to adopt green technology, said Matteo Coppola, Managing Director and Senior Partnership Global Leader (Risk and Compliance Practice), BCG.

The report said that increasing climate risks are already affecting the global economy. In such a situation, the business need for collective action is clear. It further said that climate change also provides banks with an opportunity of $ 150 billion annually to meet the country's energy transition needs, as public funding is too low to achieve the net zero emission target by 2070.