Sustainability in corporate India: Still a work in progress
Namrata Rana, CISL Network Ambassador – India
6 January 2017
Today Delhi and most parts of Northern India are covered in a thick blanket of smog. Unchecked crop burning, coal fired power plants, diesel cars and a general apathy to change are major causes. However, India ratified the Paris Agreement on climate change this year and has vowed to lower the carbon emissions intensity of GDP by 33 per cent to 35 per cent by 2030 within its Nationally Determined Contribution.
High pollution could be affecting productivity in Indian companies too, through lost working days due to ill health. This is exacerbated by unreliable transport and congestion is not only bad for public health – it has frictional cost for industry and its commuting workforce.
This cannot be ignored by corporate India much longer. Corporate India is not new to climate risk. Floods in several parts of the country, drought in others and extreme pollution in almost all our cities, are important signals that ‘business as usual’ is no longer an option.
A thorough analysis of sustainability reports of India’s top companies reveals three interesting insights on how companies are dealing with these changes, although only about half the companies presently release sustainability reports. (Reference: India's Top Companies for Sustainability and CSR 2016.)
Corporate disclosure of GHG emissions is very limited
Only 36 per cent of India’s top ~200 companies disclosed data on GHG emissions while 54 per cent participated in carbon specific initiatives such as the Carbon Disclosure Project (CDP). This is despite the fact that India is among the largest emitters in world, accounting for almost 7 per cent of all global carbon emissions.
Some key carbon specific initiatives that companies participated in were: CDP (70 per cent IT companies), GHG accounting & inventory (67 per cent energy companies), Clean Development Mechanism – CDM (67 per cent utilities companies) and carbon specific financial indices (80 per cent telecom companies).
Some 89 per cent companies participated in programmes to reduce GHG emissions from operations in the year. These involved energy/power management, use of renewable energy, and sustainable/green buildings among others.
Only a third of manufacturing companies had programmes for sustainability in the supply chain
32 per cent (up from 23 per cent in the previous year) of the companies give specific targets to their suppliers to reduce their carbon footprint and conduct environmental audits of new suppliers before they are brought on board, or conduct ongoing periodic audits of existing suppliers on their environmental impact.
Around 80 per cent of companies offered or had programmes for sustainable products and services
Green products in manufacturing sectors (led by utilities at 92 per cent) comprised those that were low on emissions, were energy/fuel efficient, used less raw materials, deployed renewable energy, used hybrid materials, were safe (lead-free, eco-friendly dyes, etc), enhanced consumer health (fortified packaged food, sulphur-free sugar), and had sustainable manufacturing processes. Some consumer discretionary, diversified and staples companies undertake life cycle assessment (LCA) studies of their products to identify, assess and reduce their environmental footprint.
Service companies (consultancy, IT, etc) offered sustainable solutions to their customers to help the latter reduce their environmental footprint. Banks (80 per cent) and other financial service companies (64 per cent) offered a range of services including sustainable finance services, by according preference to projects that accrue environmental/social benefit, extending loans at lower rates, and assessing loan applications on environmental and social parameters.
The implications of the Paris Agreement and tackling climate change raises questions about how Indian businesses will be run five, ten and fifteen years from now. The cost of environmental damage can no longer just be passed on to the community and it is likely businesses will increasingly be expected to bear this cost and in fact, undo the damage. The Paris Agreement will have a significant impact on the availability of climate finance and enabling technology as well. Indian companies need to significantly gear up to make adjustments as the challenges that face the world today call for collective action and changes in how businesses and governments function.