Time for a new climate target?

Welcome back. I’ve been enjoying The Big Con, a new book by Mariana Mazzucato and Rosie Collington, which accuses the giant consulting industry of “warping” the global economy and weakening both businesses and governments.

Readers in the consulting business may consider this attack unfair (see this wounded response from the head of the UK’s Management Consultancies Association). But the book’s warning of governments’ excessive reliance on external consultants (as Mazzucato described to me last year) is worth taking seriously.

This week we got new details of a troubling scandal in Australia. PwC is accused of taking confidential information gleaned by helping the government with its tax plans — and then using this to tout for business with companies. Google was among the companies that received information (it said this had no impact on its handling of tax matters).

As Mazzucato and Collington suggest, the atrophying of governments’ internal capacity is probably the biggest reason to worry about their massive use of global consultancies. But their warnings of the latter’s conflicts of interest are also important — and harder to dismiss after the disgrace of PwC Australia.

For today’s edition, Kenza caught up with Sumant Sinha, the head of India’s biggest renewable electricity producer ReNew Power. And I look at an underexploited way for companies to boost both worker welfare and their bottom lines. Have a great weekend. — Simon Mundy

‘You can pretty much bury’ 1.5C, says Indian renewables boss

It is something of a taboo to question the landmark commitment that countries and investors made in Paris in 2015 to strive to keep global warming to 1.5C above pre-industrial levels.

But as this target starts to slip out of reach — the world registered the hottest day on record earlier this week — tongues have started to loosen and Moral Money’s contacts have been expressing more scepticism.

One renewable energy boss did not hold back when I met him in London recently alongside my colleague Rachel Millard.

“You can pretty much bury that target,” Sumant Sinha, the chair of India’s ReNew Power, said of 1.5C. And even 2C is “looking a bit dicey”.

So what is the alternative? A single global target for the annual installation of renewable energy could be more effective than a “woolly” temperature goal, Sinha argued.

“At the very least, we should say that any future demand growth anywhere in the world has to come from renewables,” he told Moral Money.

Western countries, where energy demand is growing more slowly, should be held to a tougher commitment to replace existing energy sources with renewables, he added.

As the boss of India’s largest renewable energy provider, Sinha has skin in the game. He aims to lead India’s drive to install a massive 50GW of renewable energy a year, and says 95 per cent of India’s increased energy demand is already being met by renewable companies like his own.

One way the government is going about this is by auctioning grid capacity contracts with an explicit requirement for providing both wind and solar energy at the same time — so-called “sculpted bids” that reduce problems with battery storage capacity and on-off energy provision.

India played a key role in scuppering a plan to “phase out” coal at the Glasgow climate conference in 2021, which the British president of COP26 Alok Sharma famously fought back tears when announcing.

Despite this, Sinha defended Prime Minister Narendra Modi’s climate record, arguing he had a “soft spot” and “innate desire” for renewables. At the Sharm el-Sheikh COP27 last year, India offered to phase out all fossil fuels, he claimed, but was met with disdain by western countries which had been pushed into reliance on gas by the war in Ukraine. “Everybody said ‘how on Earth can you expect us to live without oil and gas?’ So there is a bit of hypocrisy there.”

Low take-up of renewable energy in the global south is partly due to a perception that it is expensive, Sinha argued. “They need to understand how renewables works, how to get it installed, how to manage it in the system and so on . . . There’s a transmission problem of translating this experience from places like India to the other parts of the developing world.”

He drew parallels between this sense of historic injustice and the position India adopted nearly a decade ago in relation to developed countries: “You guys all used fossil fuels to get here . . . it’s my turn.”

ReNew has been prolific in raising money through green bonds, most recently in a $400mn issuance in April that it said was four times oversubscribed. But another controversial position by Sinha is that such forms of green finance are not hugely useful. None of these issuances saved more than one 20th of a percentage point on the cost of debt. “Maybe it broadens the pool of investment . . . but nobody is willing to cut you any slack on the financials.” (Kenza Bryan)

An opportunity hiding in plain sight

Over several months in 2017, an international team of academics ran a study to see what would happen if they distributed eyeglasses to tea pickers on a plantation in Assam, north-eastern India.

The results were striking. For workers who needed them (which was most of those aged over 40), glasses improved productivity by more than 20 per cent. “Among all the things we can do medically to help someone be more productive, vision interventions beat pretty much everything else that’s out there,” Nathan Congdon, a Queen’s University Belfast professor who led the study, told me.

The human welfare impact of vision correction, of course, should be reason enough to do it. But for companies seeking ways to boost worker wellbeing and profits at the same time, this looks like an easy win.

A growing number of international companies appear to be waking up to this opportunity. Clothing producers Levi Strauss and VF Corporation are among the businesses that have partnered with VisionSpring, a US-headquartered social enterprise, to roll out vision interventions for workers in their supply chains.

For workers in many developing countries, getting a pair of glasses would normally involve taking time off work and travelling to an optician or hospital, and paying more than a week’s wages for a vision test and a pair of glasses. VisionSpring offers free vision tests and sells glasses for as little as $0.80, paid either by the user or by their employer.

In the first quarter of this year, VisionSpring sold more than 480,000 pairs of glasses, mostly in India, Bangladesh, Uganda and Ghana. To drive further growth, it is hoping to persuade multinational companies of the economic logic — beyond the humanitarian grounds — behind its work.

For agricultural workers in the tea and coffee industries, or in manufacturing sectors such as garment production, the value of the increased productivity from vision correction dwarfs the cost, VisionSpring chief executive Ella Gudwin told me.

Smart investors “would take that trade all day long”, she said. “Then the question is, why hasn’t it happened yet? One of the things is eyeglasses are often considered a health intervention. And if eyeglasses have to compete against maternal mortality or malaria, it will not get the resources.”

In its partnership with VisionSpring, Levi Strauss’s company foundation has funded free eye tests for about 50,000 workers in its supply chain in India, Bangladesh and Vietnam, and bought glasses for those who needed them, said Kim Almeida, director of programmes at the Levi Strauss Foundation. Factory managers have reported improved levels of performance, she said.

Factories can also enjoy major benefits in staff retention, Gudwin added, noting that experienced workers are forced out of their positions in huge numbers as their vision deteriorates with age. “So you have the cost of recruiting new sewing machine operators — when all you needed was $5 to get your senior operator to stay with you,” she said. (Simon Mundy)

Smart reads

• Would you show up to a beach holiday or a business trip with only the clothes on your back? That’s what Japan Airlines is suggesting, as it promotes its new clothes rental service as a means of making travel more eco-friendly. FT readers pointed out in the comments that travelling light and using the self-service laundry common in Japanese hotels might be less stressful than arriving with no luggage.

• A couple of months ago we wrote that a group of major insurers committed to net zero had started to implode under the threat of competition law attacks from Republicans in the US. The group has now responded by scrapping rules that would have required its members to set emission reduction targets.