The Predictable 'Unforeseen' Event
For decades, contracts in India have relied on 'force majeure' clauses to handle so-called 'acts of God'—events deemed unforeseeable and uncontrollable. But as climate change accelerates, what was once unforeseeable is becoming predictable. Extreme weather
events like floods, heatwaves, and cyclones are now more frequent and intense across the country. A recently inaugurated Mumbai metro line was flooded after heavy rains, while an under-construction highway in Kerala partially collapsed. These are not freak accidents; they are the new normal. Relying on vague clauses designed for a more stable climate is no longer a viable business strategy. It’s an abdication of responsibility that leaves investors, buyers, and the public bearing the financial brunt of predictable disasters. The total economic losses from just five recent extreme weather events in India exceeded INR 99,000 crore, with most of it uninsured.
A Ripple Effect Across Key Sectors
The failure to proactively disclose weather risk has tangible consequences across India’s most vital sectors. In infrastructure, projects are facing constant disruption. Monsoon-related delays can add 5–10% to project costs due to rework, equipment charges, and loan interest. For Micro, Small, and Medium Enterprises (MSMEs), which contribute nearly 35% of manufacturing output, the impact is severe. A recent survey found over 90% of MSMEs in flood-prone areas reported operational disruptions, yet only a small fraction have business continuity plans or access to emergency funds. In real estate, homebuyers are often left in the dark about a property's vulnerability to flooding or water scarcity. This information gap creates a foundation of uncertainty, where commitments are made based on incomplete and often misleading pictures of the future.
Moving Beyond Reactive Measures
Our current approach is reactive. We wait for a disaster and then argue over who is responsible. The legal doctrine of 'frustration' under the Indian Contract Act, which can void a contract if performance becomes impossible, is a blunt instrument ill-suited for the nuances of climate risk. While regulators like SEBI and the RBI are pushing for greater climate-related financial disclosures from large corporations and banks, these are top-down measures. SEBI's Business Responsibility and Sustainability Report (BRSR) now mandates the top 1,000 listed companies to report on environmental risks. Similarly, the RBI has drafted a framework for banks to disclose their climate-related financial risks. These are important steps for the financial system, but they don't yet translate into on-the-ground transparency for everyday contracts and projects.
A New Standard of Informed Consent
Making weather risk visible means embedding it into the very DNA of our commitments. Imagine a real estate listing that includes a flood-risk score based on hyperlocal climate projections. Consider an infrastructure tender that requires bidders to submit a detailed climate adaptation plan, factoring in risks like extreme heat and rainfall. This isn't science fiction. The tools are increasingly available. India has launched AI-powered weather forecasting systems to provide hyper-local data for farmers, helping them plan everything from sowing to harvesting. Integrating this level of data into business planning is the next logical step. It requires a shift from viewing weather as an external shock to treating it as a fundamental project variable, just like material costs or labour supply. This would transform 'force majeure' from an escape hatch into a true last resort, applicable only to events that are genuinely unforeseeable even with today's advanced modelling.
