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AIR POLLUTION and Its Impact on Business

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AIR POLLUTION and Its Impact on Business AIR POLLUTION and its impact on business THE SILENT PANDEMIC Contents Acknowledgements 4 Foreword 5 Executive Summary 6 Air pollution costs Indian businesses USD 8 95 blllion or 3% of India’s GDP every year India’s missing employees Lost labour productivity 14 costs Indian businesses USD 30 billion Case Study • IT sector loses USD 1.3 billion 18 due to pollution-induced productivity loss per year India’s suffocating consumer economy Decreased 20 consumer footfall costs the economy USD 22 bilion Case Study • Reduced tourist footfall costs the sector 23 USD 1.7 billion every year India’s burgeoning health crisis Premature mortality 24 Image credits costs the economy USD 45 billion Page 1 : Amit kg/Shutterstock.com India’s lost assets Air pollution diminishes the lifespan 25 Page 8,9 : Nastya Dubrovina/Shutterstock.com and productivity of various business assets Page 10 : Anuradha Sarup/Shutterstock.com Page 11 : 2p2play/Shutterstock.com Understanding how air pollution undermines 28 Page 14 : Saurav022/Shutterstock.com Page 18 : ArnavIG/Shutterstock.com the competitiveness of Indian cities Page 20 : ArnavIG/Shutterstock.com Case study • New Delhi loses 6% of its GDP to air pollution 30 Page 22 : PhotographerIncognito/Shutterstock.com Page 24 : Thaiview/Shutterstock.com Case study • Kolkata loses 4% of its GDP to air pollution 32 Page 25 : Bangprikphoto/Shutterstock.com Page 26 : Saurav022/Shutterstock.com Call to action 33 Page 28,29 : Towering Goals/Shutterstock.com Page 31 : Almazoff/Shutterstock.com Page 36 : Towering Goals/Shutterstock.com Annexe | Summary of methodology 34 2 3 Acknowledgements Foreword This is an independent report commissioned Sharma from CII, for their research input, guidance, India faces a serious air pollution crisis. Over puzzle at the level of individual firms or sectors by the Clean Air Fund (CAF) and developed in and feedback to prepare this report. The Clean Air the last decade, India has emerged as the world’s in other geographies, this is the first report to partnership with Dalberg Advisors, Blue Sky Fund (CAF) is a leading philanthropic initiative that fifth most polluted country and is home to 21 estimate the business cost of pollution for India Analytics and the Confederation of Indian Industry brings together funders, researchers, policymakers of the world’s 30 most polluted cities. While comprehensively. (CII) from November 2020 to March 2021. and campaigners to tackle the pollution crisis the government has taken ambitious remedial worldwide. steps, such as the launch of the National Clean This study ultimately aims to motivate A first of its kind study for India, this report seeks Air Programme and its target of reducing PM2.5 businesses and policymakers to become more to quantify the impact of air pollution on Indian The report also draws on inputs provided by a pollution by 20-30% by 2024, the discourse on active advocates for clean air by showing businesses using three primary methods. First, wide range of experts and stakeholders, including air pollution in India and around the globe has how much the economy and society stands it synthesises existing research on the effects of academic experts in air pollution, business heads tended to focus on its public health implications. to gain. The report is premised on the principle pollution on economies and companies globally and HR managers within the IT and tourism that the private sector can and should join forces and extrapolates for the Indian context. Second, sector, and service providers across different This study’s primary purpose was to add with government, researchers and civil society it leverages extensive data macro analysis that sectors. We are grateful for their insights and another dimension to our understanding to improve air quality successfully. We hope correlates movements in air pollution, captured their time. of air pollution: its impact on businesses this report’s findings can augment collaborative by Blue Sky Analytics’ BreeZo dataset, with top- and the economy. This study undertakes a efforts to move towards a less polluted and more level indicators that impact business; namely, This report was prepared by an independent rigorous quantitative analysis of four pathways prosperous India of the future. deterioration in health and reduction in the advisory team from Dalberg Advisors. The team through which pollution decreases businesses’ movement of individuals to avoid air pollution. comprises Gaurav Gupta, Aditi Singh, Siddhant profitability; premature mortality, presenteeism, Third, it takes a bottom-up view of how individual Damani, Rohit Bhatnagar, Sarthak Goyal, and absenteeism and consumer footfall. It uses sectors and cities experience air pollution, Gauraang Biyani. various data sources, including air pollution focusing on the IT and tourism sectors. data, historical traffic data, pharmacy sales data We welcome your feedback on this report and and data premature mortality, to paint a holistic We would like to thank Reecha Upadhyay, Sue encourage you to reach out to the Dalberg team picture of pollution’s business cost. While previous Wixley and Amy Hooper from the CAF, and Mohit with your comments through www.dalberg.com studies have looked at isolated pieces of this 4 5 4 Premature Mortality “medical tourism” comes under question, with 64000+ cases of respiratory ailments being Air pollution contributes to 18% of all deaths registered in a single hospital in 2015 Executive Summary in India. India lost 3.8 billion working days in 2019, costing USD 44 bn. to air pollution e Kolkata, the gateway to the east, has seen caused by deaths. Not only premature mortality air pollution suffocating its transport system. devastate our current workforce, but also Air pollution-caused low visibility causes 13% India is in the midst of a pollution pandemic. and the elderly, who are more vulnerable to air the workforce of the future, with children of all flights to be delayed and shipping and According to the World Air Quality Report of pollution. 98% of this cost is borne by India’s under the age of 1 contributing to 34% cargo handling delays. Kolkata’s MSME and 20191, India ranked 5 out of 98 countries in 2019 northern and eastern part, where AQI levels of the total impact. As India’s population’s manufacturing base sees its productivity based on weighted average PM2.5 concentration cross 300+ frequently. The survey conducted as median age increases from 27 in 2019 to 32 hit due to the high exposure to outdoor air levels, behind Bangladesh, Pakistan, Mongolia, and part of this study reveals the cost to be much in 20302, its susceptibility to air pollution will pollution required from workers. Afghanistan. Twenty-one of the world’s 30 cities lower than what it should be, as even sick increase, raising the question of a sub-optimal with the worst air pollution are in India. New Delhi employees come to work, given the need to workforce. It is time to address the elephant in the room has the poorest air quality among cities globally, earn and support their families. – air pollution. India has already made strides in with PM2.5 concentration levels nearly ten times These effects, while devastating on their own, its commitment to the Paris Agreement on climate the WHO target. PM2.5 levels have remained 2 Labor Productivity (Presenteeism) become even more so combined. It changes change and its commitment to the environment. alarmingly high over the last five years. Employees’ physical and cognitive performance across sectors as well as cities: With the USD 95 bn. of cost figure attached take a hit due to air pollution. Business heads to pollution, the experience of the pains of a Conventional wisdom considers air-pollution a IT sector USD 1.3 bn or 0.7% of its GDP to air estimate that employee productivity decreases pandemic, and the short period during which we an unavoidable by-product of economic pollution, saw a 10% decrease in attendance by 8-10% on high pollution days, costing saw beautiful blue skies in our cities, we now know growth, thus limiting the intensity of response on bad air days, 3% reduced productivity and USD 24 bn. in 2019. Workers often make what’s at stake. Business advocacy and support will to it. In existing literature and publications, GDP even faced 28% higher hiring challenges. up for these by working long hours. This loss be a must for India to tackle this head-on. It is time per capita and growth rate are often linked to These effects impact growth. An Indian IT is equivalent to the production of the entire businesses start seeing air-pollution on the cost emissions levels, one predicting the other. This has company in Delhi loses 33% of its competitive pharmaceutical industry in India. As employees side of profit statements. framed an understanding, with many businesses, advantage over a company in the Philippines work overtime to cover up for lost productivity, that growth and good air-quality are always in due to air pollution. the cost continues to exist but in the forms of conflict, which has led to an entrenched perception burnout, attrition, and increased difficulty on b Tourism saw a 1% decline in GDP, costing of environmental regulations as being a cost that HR managers to attract talent. The decreased USD 2 bn. International tourists increasingly holds back companies. cognitive functioning of pollution means re-consider travel plans to India, with pollution a 7x higher impact for cognition-intensive being a top concern. This translated to In reality, air pollution costs Indian businesses sectors such as investment banking, software 820,000 jobs lost in tourism and ancillary 7 lakh crore (USD 95 billion) every year, ~40% development, sectors where the dependency industries. of the cost of tackling the COVID-19 pandemic. on complex mental tasks for output is highest.
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