What’s the right climate for targets? 🎯

India is busy handling Covid and thinks emission-reduction deadlines can wait

This is edition 339 of Beyond The First Order, a premium daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia

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Good morning,

Thailand’s covid response is more about curtailing media than doubling down on vaccination. On the Indian stock market, though, one entity is doubling down. A spate of food companies are looking to IPO as the conditions are ripe for such listings. But for emission targets that India needs to set, the climate is anything but ripe. 

India’s climate-targets conundrum

First came the news on Saturday that China and India have missed a deadline to submit revised emission-reduction targets to the United Nations Framework Convention on Climate Change. 

The world’s two most populous countries are among dozens that failed to provide an update on their targets for curbing the release of planet-warming gases to the U.N. climate change agency by July 31.


Under the 2015 Paris climate accord, countries set their own emissions reduction goals but are required to be transparent about them and jointly raise their targets over time to ensure that global warming remains at agreed acceptable levels.

Then came a swift rebuttal from India. 

Dismissing the report, Environment Secretary R P Gupta said, "India has no such commitment of making and declaring fresh targets. We have not signed any such agreement."

So why is India averse to stricter targets? 

Two reasons: 

First, the targets India set as part of the Paris Agreement—slashing emissions per dollar GDP to levels 33-35% below those of 2005 by 2030, and having 40% of its electricity capacity based on renewable sources—were hardly onerous. 

As we noted in a story in December, India is already 14% below 2005 levels on the first target. 

As for the second target,

While India wants 40% of its energy to come from renewable sources, we’re already almost there with a decade left to go. Renewables make up 37% of the total energy capacity today, thanks to a good chunk of hydroelectricity, which itself had seen a push in post-Independence India. Today, solar holds the hydroelectricity seat.

Much has changed since 2015. Commitments based on the Paris Agreement’s target of restricting global temperature rise to 2 degree Celsius this century above pre-industrial levels just won’t be enough. Limiting warming to 1.5 degree Celsius may no longer just be ideal; it may be necessary.  

But the target would require a rapid reduction in emissions and targets that India cannot boast of achieving. 

And that leads us to the possible second reason for India’s reluctance to revise its commitments: Covid-19. 

The second wave of the pandemic put the brakes on India’s recovery hopes. The International Monetary Fund expects India’s economy to expand 9.5% in the year ending March 2022, down from a projection of 12.5% in April. On the other hand, the estimate for global growth in 2021 was unchanged at 6%, and for advanced economies, revised up by 50 basis points to 5.6%. 

A possible third wave will set India back even further. So, as much as India would like the optics of being in lockstep with other major economies on new climate change commitments, it has more immediate concerns. 

Finger-lickin’ good IPOs?

The chatter around foodtech company Zomato’s IPO in India still hasn’t quite died down. In The Nutgraf on Saturday, my colleague Praveen wrote about what going public could mean for the identities of young product tech companies in India. But this story isn’t about Zomato; it’s about another company in the food (non-tech) space that’s going public this week—Devyani International. 

It’s the parent company that runs the KFC and Pizza Hut franchises in India. Also, Costa Coffee. 

For a long time, India did not have enough representation of food companies on the stock exchange. There was Westlife Development, the company that runs most of the McDonald’s franchises in India. While it was listed on the BSE in 1983, it appeared on the more popular NSE (National Stock Exchange) only in 2019. Then there was Jubilant Foodworks, which manages Dominos and donut brand Dunkin; it went public in 2010. Speciality Restaurants which owns Mainland China went public two years later, in 2012. 

Now, there is a spate of food companies going public, with Burger King India testing the IPO waters in December 2020 and Barbeque Nation in March 2021. And now Devyani International. 

These newer IPOs are a start and more representative of the kind of economy that India is growing into. 

It’s not just India. The US is seeing a spate of food companies going public too, with those like donut maker Krispy Kreme back to being a publicly listed company (second time lucky?) and Chinese chain PF Chang’s, salad chain Sweetgreen, and coffee chain Dutch Bros all eyeing IPOs.

Why are restaurants suddenly eyeing the public markets?

The simple reason could be that the stock markets are hot. Investors are willing to lap up anything, especially if it resonates with them. And what better to resonate with everyone than food! It’s about capturing all this attention before investors lose interest and it all closes back again. 

And investors are showing quite a bit of love. As Teresa Rivas pointed out in Barron’s, despite being one of the hardest hit by the pandemic, the stock performance of restaurants in the US reveals that there haven’t been any real losers in the past year.


While retail stores have continued to shutter in the face of online competition, restaurants are still finding the opportunity to grow their physical spaces. “There’s still no Amazon disruptor for restaurants,” says Sean Dunlop, an equity analyst at Morningstar.

Restaurants are also part of what everyone likes to call the ‘re-open trade’. As more people get vaccinated and economies open up, dining out is the preferred activity. Restaurant sales in the US are higher than pre-pandemic levels. 

Companies such as Starbucks are even using that in how they’re positioning themselves now

...CEO Kevin Johnson is optimistic about 2021. "We have positioned Starbucks for the inevitable great human reconnection that we see unfolding in the U.S. and will propagate in every market around the world, where people once again connect with others face-to-face," he said in the fiscal Q2 earnings release.

(In India, Starbucks is managed and run by Tata Consumer Products)

Maybe Devyani International should add some marketing spiel for their IPO—“sharing a pizza/bucket of chicken is all about rekindling that ‘great human reconnection’!”

Even investment research houses are turning more bullish and changing the lens through which they’re evaluating some food businesses:

“We believe high-growth consumer companies are the appropriate peer group for Krispy Kreme as the company is expected to generate greater than 10% sales growth annually over the next few years, versus traditional food & beverage companies, which typically grow 1%-to-3% annually."

With Zomato and restaurants both listed, who knows, maybe food is likely to be a staple diet in investors’ stocks buffet. 

Thailand turns on media critics

Thailand is in the middle of a Covid crisis, and things are about to get nastier.

The country is battling a vaccination shortage even as the number of cases are surging. Record daily cases passed 15,000 at the end of July, up from less than 5,000 one month prior, all while Siam Bioscience—the royal family-owned business that’s AstraZeneca’s sole vaccine producer in Southeast Asia—continues to struggle with production. Now is not the time for the government to push back on the media. But that’s exactly what has happened. 

Prime Minister Prayut Chanocha, who initially took power through a coup in 2014, last week ordered a ban on media publishing information that undermines the government’s efforts and causes public fear or misunderstanding. The government claims it is motivated to prevent rumours, such as recent claims that a vaccination drive would close down due to overcrowding.

But it is feared that those broad terms used will allow the government to clamp down on media outlets that provide work to offer clarity and information on Thailand’s opaque vaccination strategy. The country aims to vaccinate 70% of its 70 million population this year. Numbers from Our World in Data show 18% have had one vaccination, and just 5% have received two doses.

Online outlets like Thai Enquirer have pledged to continue unaffected, but Thailand does have a history of high handedness with critics. Critical outlet Voice TV had its online platforms closed last year. Popular opposition party Forward Future was dissolved in February with its executives banned from politics for a decade.

But the struggle isn’t just about Covid. Anti-government protests continue in the capital city of Bangkok despite Covid lockdown measures. On Sunday, protesters took to the roads in car convoys to express resistance to Prayut’s government, the royal family and the country’s poor response to Covid. Thailand has arrested high-profile protesters, even firing rubber bullets at gatherings two weeks ago—that sparked the irony that it doesn’t apply the same rigour to securing vaccines.

That’s it for today. If you have thoughts about any of the topics we covered, we’d love to hear from you.

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