India Inc Finally Moving To Combat Climate Impact, Says CDP India Report

CDP India has released a report entitled ‘BUILDING BACK GREENER: India Inc. Demonstrates Climate Resilience’ recently, which says that the imminent climate emergency is already manifesting itself through extreme weather events across the world. 

CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts by running a global environmental disclosure system. It began working in India in 2008 and was formally registered in 2012, working on disclosure and driving climate action. 

“2020 was a year of firsts for Indian corporate climate action. For the first time, Indian companies have featured on the CDP A-List. Of the 220 Indian companies that disclosed through CDP, four made it onto our A-List (Hindustan Zinc Limited, IndusInd Bank, Mahindra & Mahindra, and Tech Mahindra). We also witnessed the first Indian company disclosure on forests; a promising sign of increasing environmental ambition in the country’s private sector,” said Paul Simpson, Chief Executive at CDP. 

The report stresses how after Covid-19, investors are now more focused on risk exposure. In India, CDP witnessed a nearly 17% increase in corporate disclosure compared to 2019, with 220 Indian companies disclosing Climate change recorded a rise of 14 percent. 

The report declared that out of the 220 firms under the disclosure project, 67 were large businesses and the rest were micro, small, and medium enterprises. And, 66 out of 67 companies stated that climate-related risks and opportunities have had an impact on their organization’s strategy for financial planning. Of these 66 companies, 46 have also developed a low-carbon transition plan to minimize the losses to their bottom lines. 

Up to 118 of 122 companies report being exposed to substantive climate-related risks and opportunities. 93 percent of companies identified climate-related risks and 91 percent identified climate-related opportunities as having the potential to have a financial or strategic impact on their businesses. 

The Risk of Climate Change 

In terms of risk types, current regulation was deemed to be most relevant and always included in 97 percent of the organizations’ climate-related risk assessments, according to the report. In other words, corporates will act fastest when regulations demand it.

Indian companies put the total inherent financial impact of climate risks at Rs 7,138 billion with an average risk per company being Rs 92 billion. Up to 94 percent of reporting companies have identified climate-related opportunities as having the potential to make a substantive financial or strategic impact on businesses. 

Talking about the emissions and verification, the report says that in 2020, 50 companies reported third-party verification or assurance for Scope 1 emissions, 51 companies for Scope 2 emissions, and 39 companies for Scope 3 emissions, comparatively less than 2019. This indicates that Indian companies are becoming increasingly aware of their emission management/ accounting. 

The report highlights  how energy efficiency and clean energy generation have garnered the support of 71 and 68 percent of responding companies respectively. Mandatory carbon reporting and increased climate resilience have also found acceptance.

Mr. Ravi S. Prasad, Additional Secretary, spoke about “a coordinating structure for implementation of Paris Agreement which will incorporate internal carbon pricing”.

The Renewable Energy thrust works for climate change limitation as 67 companies have consumed about 16 TWh renewable electricity which is 6 percent of the total electricity consumption reported in 2020. The share of renewable electricity is 11 percent, which is 6 percent higher than the previous year. In 2020, 18 companies from India have reported various types of renewable energy targets.

Renewable energy plays an important role in the corporate value chain due to its zero-carbon intensity and ability to provide long-term energy security. About 34 companies have identified opportunities related to shifting energy usage towards low-carbon energy sources across the value chain. 

“India must begin focusing on phasing out coal for power generation by 2040,” the report suggests.