Businesses in India are increasingly aligning with Paris climate goals by setting targets to reduce emissions and by putting an internal price on carbon as a risk mitigation tool
Corporations in India are increasingly setting targets to reduce emissions by using energy more efficiently and deploying the use of renewable energy for business operations, which is expected to help India meet its commitments made under the Paris Agreement on climate change.
Over 80% of the 51 companies responding to CDP India Climate Change programme have reported one or more types of emissions reduction targets and initiatives in 2017, according to the latest report of the global non-profit organisation previously known as Carbon Disclosure Project. About 40% companies are committed to renewable energy production and consumption targets, CDP India said on October 24.
Three Indian companies — Infosys, Tata Motors and Dalmia Cement — have committed to 100% renewable power and have joined the RE100 campaign, boosting the country’s clean energy ambition, said the CDP India Climate Change Report 2017, which CDP India has prepared in collaboration with ERM India. RE100 is a collaborative global initiative uniting more than 100 influential businesses committed to 100% renewable electricity.
For the 2017 report, 51 firms responded to CDP’s questionnaire. Of these, 43 were among the top 200 companies on the Bombay Stock Exchange. The total reported emissions from the 51 companies amount to 275.92 million tonnes of carbon dioxide equivalent.
As many as 40 of the 51 reporting companies have an internal price on carbon, or intend to put one in place within the next two years, CDP found through voluntary declarations by Indian companies. These firms have declared a price ranging from USD 2 by Shree Cement to USD 29 by Ambuja Cement.
The international cement industry, responsible for as much as 5% of the world’s carbon emissions, requires significant innovations to bring itself in line with the objectives framed at the climate change meeting held in Paris in December 2015. India’s three large cement makers have significantly reduced emissions among the top 12 producers of the building material in the world, CDP’s June 2016 report had revealed, pointing the way for this heavily polluting sector to make structural changes to shrink its carbon burden. See: India’s cement firms emerge as top emission performers
Risk mitigation tool
An increasing number of companies are deploying the internal price on carbon as a risk mitigation tool. In 2017, 40 reporting companies declared an internal price on carbon or intend to put one in place within the next two years, CDP said. They are showing increasing awareness on data quality and assurance, it reported. Encouragingly, this year’s global climate A-list includes Infosys, one of India’s largest software services company.
The number of Indian companies that have already adopted an internal price of carbon increased from two in 2015 to eight in 2016 and 14 in 2017. Another 26 have said they will incorporate a carbon price in the next two years. Mahindra & Mahindra and Infosys are the first few trendsetters from India. Mahindra & Mahindra is the largest tractor maker in the world.
“Carbon pricing makes the invisible, visible,” said Paul Simpson, CEO of CDP. “We’re seeing a significant rise over last year in the use of companies pricing their own carbon pollution in China, Mexico, Japan, Canada and the US. Changing regulation is working on a global scale and in all regions we are seeing many businesses fast track the low carbon transition into their business plans.”
China, the world’s top greenhouse gas emitter, has started implementing a national carbon-trading system that will cover roughly a quarter of the country’s industrial carbon dioxide. The National Development and Reform Commission (NRDC), China’s macroeconomic planning agency, has said it intends to start a nationwide market in November.
“No sooner had the Chinese authorities announced setting up of carbon markets in several regions, CDP witnessed a 40% jump in companies reporting an internal carbon price,” said Damandeep Singh, Director of CDP India. “With the Indian government too exploring regional carbon markets, it is only a matter of time till we see exponential growth here as well.”
CDP India has also produced a handbook to help companies understand this important tool and adopt it to better manage their climate risk. The handbook was developed in collaboration with the Energy Research Institute (TERI).
Carbon emissions targets
Business corporations globally have started initiating climate action. According to CDP, nearly 90% of the world’s biggest companies that have the most impact on the environment now have carbon emissions targets, with a fifth planning low-carbon into their futures to 2030 and beyond. This is substantiated by the world’s biggest annual tracker, the second edition of which released on October 24, on how these firms are responding to climate change.
Fourteen per cent of the global high-impact sample of 1,073 responding companies have future-proofed their growth by committing to set science-based targets through the Science Based Targets initiative (SBTi). These are emissions reduction targets in line with the level of decarbonisation required to keep global temperature increase below 2 degrees Celsius, the central aim of the Paris Agreement signed by nearly 200 nations.
An additional 317 companies, which comprise 30% of the sample, aim to set science-based targets within two years. Existing targets take the sample almost one third (31%) of the way to being consistent with keeping global warming below 2 degrees, a notable improvement since last year (25%), reflecting the rise in science-based target-setting, CDP said.
In India, Wipro, Tech Mahindra, Hindustan Zinc, Mahindra Sanyo Steel and Aditya Birla Chemicals have committed to SBTi.