Our entire progress and growth has been due to our ability to harness energy to do various tasks. Cooling, heating, cooking, travel, manufacturing—everything depends on energy. Moreover, GDP growth has been directly correlated to energy consumption as during the past five decades while global GDP has quadrupled, energy consumption has increased 2.5 times. An increase in energy usage is also directly correlated with the use of natural resources too as global extraction of minerals has increased 3.4 times.
Climate change is caused because human activity, such as burning of coal and oil, is causing excessive amount of greenhouse gases to enter the Earth’s atmosphere, causing our climate to heat up dramatically. This is the highest they have ever been since at least 800,000 years. A recent IPCC report has suggested that man-made causes are the primary cause of climate crisis. To avoid the worst climate impacts, global greenhouse gas (GHG) emissions will need to drop by half by 2030 and then reach net-zero around mid-century. Sustainable business plans that are compatible with a 1.5°C future are now being adopted as decisions makers realize that climate risks are here to stay. The bigger transformations and investments though lie in the vast growth opportunities ahead in the global transition to a decarbonized economy by 2050.
India will reach Net Zero Emissions by 2070. This was announced at the COP26 – UN Climate Change Conference in Glasgow. With this India joins an increasing number of countries that are committing to a low carbon, sustainable future. Prime Minister Modi announced 5 key action points to tackle climate change:
- By 2030 non-fossil fuel generation to increase by 500 GW
- By 2030 India will increase 50% renewable energy
- Carbon emission to be reduced by 1 billion tonne by 2030
- Economy’s carbon intensity will reduce by 45% by 2030
- Net zero emission by 2070
While India will reach Net Zero by 2070 the transition will begin now to achieve the short term 2030 targets that have been laid out. This will have a huge impact on energy, agriculture and manufacturing as we find new ways to grow, make, transport and consume things.
The 9th edition of the Responsible Business Rankings addresses this issue. The rankings started in 2014 as a collaboration between Futurescape, IIM Udaipur and Economic Times with a focus on Sustainability and CSR. This year we have shifted our focus to look at companies’ readiness to meet the challenges posed by the climate crisis. For companies to help achieve these goals requires them to take necessary action to reduce the impact on climate. For this they need to measure their emissions, and chart a path to: (a) reducing their own emissions; (b) reducing emissions within the supply chain; (c) integrating climate into business strategy; and (d) influencing climate action in other stakeholders.
Reduction of GHG emissions is the key to fighting climate crisis and the first step is understand the extent of the problem. This is done by measuring and reporting GHG emissions. The study shows that 75% of the top companies report on Scope 1 and Scope 2 emissions. Reporting on Scope 3 emissions is gaining ground with 48% of the companies reporting these. Our study of India’s top companies finds that 58% of them aspire to be either carbon neutral or wish to achieve net zero. Most of the companies plan to achieve these targets by 2040. Given India’s commitment to achieve net zero by 2070, the results indicate that we are moving in the right direction.
The study also looked at strategies adopted for climate readiness. Within strategy, the study looked at three aspects what companies are doing presently (maintenance), how they are innovating to address climate change (innovation) and if they are collaborating with others or not (collaboration). The study finds that companies focus heavily on maintenance. Disclosure on climate-change related innovation was weak. Moreover disclosures on collaboration are rather weak as well.
While these trends are useful in understanding how companies are readying themselves to act on climate crisis the study uses a range of proprietary parameters to assess the overall measure of a company’s climate readiness. Companies are around 50% climate ready. They are mostly ready in terms of climate related strategy, followed by measures to reduce their own emissions.