Three ways India Inc can accelerate climate action

The latest greenhouse gas (GHG) emission data submitted by the Government of India to the United Nations Framework Convention on Climate Change through its third biennial update report (BUR3) reveals interesting trends about Indian industry. In 2016, the most recent year for which data is now available, emissions from Indian industry constituted 22% of the country’s total GHG emissions. This includes emissions from energy use by manufacturing industries and construction, and the emissions from industrial processes and product use. With a growth of 12% and 13% respectively between 2014 and 2016, this was the fastest growing emissions category.

Manufacturing industries and construction include GHG emissions generated by fossil fuel burning in industry, including burning for power and heat generation for captive use. Industrial processes and product use include GHG emissions produced by a variety of industrial activities that transforms raw materials to finished product through chemical and physical processes. These are hard-to-abate sectors as the use of fossil energy and fossil feedstock is deeply embedded in the production process and cannot be easily substituted using current technologies.

India’s BUR3 notes several voluntary actions adopted by India Inc. For instance, Mahindra Group became the first global signatory of EP100, Dalmia Bharat Limited became the first cement company to join RE100, and Tata Steel became the first Indian company to install a solar photovoltaic plant in an iron ore mine. On 5 November 2020, 24 industry leaders released a voluntary declaration under the aegis of the Ministry of Environment Forest and Climate Change (MoEFCC) to set GHG reduction and energy efficiency improvement goals. 20 Indian CEOs also committed to prioritizing business actions for green COVID-19 recovery under the CEOs for the Future initiative committing to 8 priorities for business activities to stimulate green recovery. This is a great start, but more companies need to come forward and adopt ambitious climate actions that contribute to India’s NDC goals. Here are three ways India Inc can help reduce GHG emissions:

Adopting Voluntary Ambitious Climate Actions

A 2020 CDP report, estimates the financial impact of climate risks to Indian corporates at ₹7,138 billion, and highlights that businesses cannot sustain in long run without addressing climate risks in their value chain. One of the ways to address climate risks is adopting climate actions aligned with the science.

Science-based targets are a company’s GHG emissions reduction targets that are aligned with the level of emissions reduction required to keep global temperature increase below 2°C compared to pre-industrial temperatures. As on April 2021, 57 Indian corporates have committed to science-based targets.

A three-step approach can be adopted by Indian corporates to meet such targets:

• Adopt circular economy models: India meets 97% of its abiotic and non-renewable materials demand domestically. The resource extraction per unit area in India is one of the highest (1579 tonne per acre) as compared to the global average of 454 tonnes per acre. Businesses need to adopt circular economy models that reduce resource use, emissions, and waste. For example, steel production using scrap as key input could reduce emissions by 50 – 60% and compared to the current scenario, a circular economy approach in the building construction would require 38% less virgin non-renewable materials and would emit 44% less GHG emissions in 2050.
• Implement the right incentives: The hard-to-abate sectors would require break-through technologies. Internal carbon pricing can help industry channel investments towards cleaner and efficient technologies and prepare for carbon-constrained regulations. Internal carbon price factors climate risks into business processes and enables climate-smart decisions. As on date, 25 companies in India have adopted an internal carbon price.
• Continuous dialogue with stakeholders: Responsible businesses align their vision to the expectations of their stakeholders such as suppliers, customers, surrounding communities. This requires continuous engagement with stakeholders to adopt cleaner production practices and minimize waste. For example, Mahindra’s farm equipment sector engages stakeholders in a sustainability drive through trainings to educate fellow farmers about best practices related to farming.

Investing in Nature-based Solutions

Nearly one-third of the Indian GDP is generated by nature-dependent sectors like agriculture, forestry and fisheries. Investing in nature-based solutions can yield major socio-economic benefits for nature-based livelihoods. For example, the cost-to-benefit ratio of preserving mangroves is estimated to be up to 1:10 in terms of avoided losses from coastal flooding and non-market benefits associated with fisheries, forestry and recreation. Studies from the United States estimate that restoring nature could create between 7 and 40 jobs per US$1 million invested. Examples of nature restoration activities in India include mangrove protection by Godrej & Boyce Mfg. Co. Ltd. in Vikhroli, Mumbai which sequestered 600,000 tCO2e so far in its standing stock and continues to sequester 59,000 tCO2e per year. The Coca-Cola Company invested in reforesting and revegetating lands upstream from bottling facilities and developed a water stewardship plan to improve watershed structure and function.

Cooperative Approaches

While individual commitments have been made, tackling climate risks will require cooperative initiatives that inspire bold climate actions. EP100 brings together companies that are committed to improve their energy productivity, lower their emissions and improve their competitiveness. Such initiatives can help companies adopt best practices. For example, Majid Al Futtaim group, a shopping mall company in the Middle East, installed flowmeters for efficient cooling and saved an estimated 3,600 MtCO2e annually by reducing energy use. Indian corporates can join initiatives such as 2050 Pathways Platform, Climate Neutral Now, RE100, EP100, EV100, Leadership Group for Industry Transition to spearhead bold climate actions.

The private sector has the potential and capacity to spur the disruptive changes that are required to achieve the objective of the Paris Agreement. It requires bold climate action across the value chain aligned with the science. Indian corporates will have to capitalize on enabling partnerships and think beyond the conventional ways to reducing GHG emissions by including nature-based solutions and strategies to finance implementation of low-carbon technologies.