India’s electricity demand crossed a record 260 GW on June 3, forcing distribution companies in Uttar Pradesh and Haryana to ration supply to industrial feeders just as air‑conditioners whirred into overdrive. At the same time, the Gurugram administration ordered mandatory afternoon breaks for construction crews, while diamond‑polishing units in Surat shifted entire shifts to the night to spare workers the heatwave.
These episodes reveal the same truth: thermal stress is already rewriting profit‑and‑loss statements across corporate India. Treating temperature as a footnote rather than a line item is now as reckless as ignoring malware. Firms need temperature‑adjusted accounts and heat‑stress audits with the same urgency that pushed cyber‑risk protocols into every board agenda.
READ I India’s urban housing crisis is a ticking time bomb
The balance‑sheet heat drag
Early results for the June‑quarter show revenue and profit growth at listed companies slowing to the weakest pace in nine quarters, a trend analysts partly attribute to soaring cooling costs, supply disruptions and lost shifts during the spring heatwave.
The Confederation of Indian Industry has warned that peak‑season output in energy‑intensive clusters such as Faridabad and Tiruppur fell by “double‑digit percentages” when wet‑bulb temperatures crossed 32°C. Grid operators, meanwhile, burnt costly gas and imported coal to avoid blackouts, lifting variable generation costs and squeezing margins for power‑hungry manufacturers.
The invisible productivity tax
Micro‑data make the macro pain visible. An OECD study covering 2.7 million firms finds that ten additional days above 35°C trim annual labour productivity by 0.3 %—a hit comparable to a 5 % spike in energy prices. National evidence is starker. A panel of Indian factories shows output falling two percentage points for every extra degree Celsius above the local average, even after accounting for capital deepening.
Climate Transparency estimates that heat cost the Indian economy $159 billion in 2021 — about 5.4% of GDP — through lost work hours in manufacturing, construction and services. Productivity losses are not fleeting. The OECD finds they persist for up to two years as firms divert cash from growth to cooling and equipment repairs.
Small businesses bear the brunt. Where large conglomerates can install HVAC retrofits and shift logistics to cooler hours, micro‑enterprises often operate in tin‑roofed sheds with no capital buffer; the same study shows the smallest Indian firms suffer almost three times the productivity hit of their larger peers.
Because heat rarely flattens a factory overnight, it evades catastrophe‑oriented risk screens. Indian fund managers focus on flood maps and cyclone tracks, yet overlook the slow bleed from chronic heat. McKinsey warns that unmitigated heat exposure could shave 4.5 % off India’s GDP annually by 2030, eroding enterprise valuations long before physical assets are stranded. Bank treasuries model cyber breaches down to minutes of downtime; they have no equivalent metric for labour hours lost when Delhi issues a red‑alert heat bulletin.
Companies needs temperature‑adjusted P&L
A temperature‑adjusted account would recast ambient heat from a background nuisance into a quantifiable cost centre. At the level of each plant or office, finance teams would (i) record the number of production days breaching the local heat‑stress threshold, (ii) apply peer‑reviewed coefficients to translate those degrees into lost value added, and (iii) tag the incremental expenditure on mitigation—extra electricity for cooling, shift allowances, water provisioning, even replacement of heat‑damaged machinery. Expressed in rupees, not degrees, the information becomes intelligible to investors and credit analysts.
The benefits mirror the cyber‑revolution of the past decade: transparent metrics force boards to budget for resilience, unlock insurance products calibrated to verifiable losses, and give rating agencies a basis to price thermal risk into debt spreads.
Heat‑stress audits: The operational counterpart
Metrics without verification tempt green‑ or cool‑washing. Independent auditors — much like penetration testers — should score each facility’s resilience: exposure to temperature, humidity and wind; cooling capacity per square foot; availability of shaded rest areas; ability to reschedule shifts; and existence of emergency protocols. OECD evidence shows high humidity doubles productivity damage while brisk winds halve it, reinforcing the need for location‑specific assessments.
India’s patchwork of Heat Action Plans highlights the gap. Delhi’s 2025 plan promises 3,000 water coolers and staggered work hours, yet less than one per cent of coolers were installed before the city endured 11 consecutive “red alert” days this June—a failure that exposed both workers and corporates to avoidable losses.
Mandate, measure, monetise
SEBI should require listed companies to disclose temperature‑adjusted reconciliations and publish audit scores in annual reports, just as it mandates cyber‑incident reporting. The Reserve Bank of India must fold facility‑level heat scenarios into supervisory stress tests; chronic productivity erosion is a solvency risk no different from a commodity shock.
The Centre can accelerate depreciation for heat‑mitigation capital — reflective roofing, industrial chillers, automated sun‑breaks — and channel SIDBI credit lines to SMEs that adopt certified adaptation plans. Labour ministries could expand Gurugram‑style afternoon work bans into a national code, aligning occupational‑safety rules with climate reality.
High‑resolution thermal forecasts from the IMD should be integrated into GST e‑invoice systems so companies can automatically flag heat‑linked production shortfalls—creating a live database for insurers and financiers.
National Heat Action Plans must become enforceable instruments with ring‑fenced budgets; OECD research confirms that productivity losses are smaller in countries that back plans with funding and monitoring.
Climate models project that today’s “historic” heatwaves will be the norm by the 2030s. Boards that still view temperature as an externality will find it compounding silently through slimmer margins, supply‑chain delays and higher cost of capital. The remedy is not rhetorical commitment but accounting precision: measure degrees the way accountants measure rupees, audit plants for heat the way they test firewalls, and publish the numbers.
Companies that embed temperature‑adjusted accounting today will not merely survive India’s scorching ascent; they will seize strategic clarity on where to site plants, how to schedule labour, which suppliers can endure, and what premium their resilience commands in the marketplace. In a warming world, transparency about heat is the ultimate competitive advantage—and the deadline for adopting it passed with the last record‑breaking summer.