Climate Action – Priority Areas for ESG and Sustainability in India

The article will discuss how companies in India should take climate action more seriously and what can be important in this direction. 

By Rusen Kumar

Globally, climate action has become a popular term, as it has been included in the SDGs. Multinational companies have incorporated climate action to a large extent in their ESG and Sustainability management. After reading the annual reports of many multinational companies, I have realised that the concept of climate action has been included in the programs of environmental management by almost all multinational companies. In this article, I would like to talk specifically about Climate Action in the Indian context. This article will discuss how companies in India should take climate action more seriously and what can be important in this direction. 

There are many multinational companies in India. Undoubtedly, these companies would be seriously considering including their Indian business arm in their ESG priorities. If this happens, obviously they will start ESG activities in India. In such a situation, ESG projects to have an impact on Indian companies. 

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Larger MNCs have started preparing their CSR and Sustainability reports keeping in mind the goals of SDGs. This has made it easier to understand the management and economic and social activities of companies.

India as a growing economy, has been making strides towards achieving the social, economic and environmental goals covered under SDGs. In 2015, India had announced its first Nationally Determined Contribution (NDC) under the Paris Agreement. Prime Minister Narendra Modi delivered a national statement at the 26th Conference of the Parties (COP 26) in Glasgow in November 2021. Prime Minister has announced ambitious targets to be achieved by 2030 to enable further reduction in emissions. India’s overall score on the NITI Aayog SDG India Index & Dashboard has improved to 66 in 2020-21 from 60 in 2019-20 and 57 in 2018-19.

The genesis of climate action

With the Paris Agreement, signed in Paris in December 2015, the transition to a new climate system and a low-carbon model for the world economy began. In August 2019, the United Nations Intergovernmental Panel on Climate Change (IPCC) published the ‘Special Report on Climate Change and Land’. The report warned that climate change will impact biodiversity, human health and food systems to the extent that some regions will face a crisis at an unprecedented scale. The IPCC called for an urgent global response.

To understand the importance of the concept of climate action, we need to look at SDG 7 and SDG 13. Sustainable Development Goal 7 (SDG 7) calls for affordable, reliable, sustainable and modern energy for all by 2030. Sustainable Development Goal 13 (SDG13) is about climate action. It has certain targets which are to be achieved by 2030.

Let’s look at what these two goals consist of:

Goal 7: Ensure access to affordable, reliable, sustainable and modern energy for all

7. 2 – By 2030, increase substantially the share of renewable energy in the global energy mix

7.3 – By 2030, double the global rate of improvement in energy efficiency

7. a – By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy 

efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology.

Goal 13: Take urgent action to combat climate change and its impacts 

13.3 – Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning.

Here are some recommendations for Indian companies to act on climate action:

• Take action to tackle the issues of climate change.
• Identify environmental-related issues, analyze risks, and establish and implement counter-strategies.
• Regularly discuss climate actions through committees and councils.
• Manage Greenhouse Gas (GHG) emissions (Scope 1 and Scope 2) at all worksites every month through the Global Environment, Health, and Safety System (G-EHS). 
• Work with suppliers-related departments to reduce other indirect GHG emissions (Scope 3).

While preparing an action plan on climate action, Indian companies should keep the following in mind: 

• Climate Action Governance 
• Climate Change Strategy 
• Climate Change Action 
• Reduce GHG Emission at Worksites
• Apply IoT technologies to Infrastructure Facilities
• Expand Renewable Energy Use
• Reduce External GHG emissions
• Risks and Opportunities
• Metrics

Let us try to understand these things in brief:

Climate Action Governance 

Every business management must consider climate change as an important challenge. The Board of Directors – the top decision-making body – needs to receive regular reports on issues related to climate change. CFO, Chief Risk Officer (CRO) must operate risk councils with the chief executives of various functions, such as environment, public affairs, legal, and communications. The Environmental Safety Committee must be held every year to review environmental management, climate change issues, and response activities. To respond to climate change, businesses should operate a company-wide council composed of executives in the environmental sector. 

Climate Change Strategy

To efficiently respond to climate change, businesses need to analyze related risks and opportunity factors and design effective counter-strategies. This includes consideration of various scenarios to identify the impact of climate change on our business over time. 

Climate Change Action

Climate change risks and opportunities affect almost every aspect of businesses from products and services to manufacturing processes, supply chain, research and development, and other sales activities. 

Businesses must think about the impact on product development and manufacturing to be especially significant. This can help businesses to develop innovative energy-efficient products and services while working hard to reduce GHG emissions. In the short-term, companies can consider carbon prices (carbon credit prices), extreme weather conditions, and changes to stakeholder and consumer behavior as the leading potential risks, and recognize the development of energy-efficient eco-friendly products and services as an emerging opportunity. 

In the mid-term, companies can expect changes to consumption patterns and participation in the Certified Emission Reduction market as opportunities for the company and its businesses.  In the long term, a business must consider the efficient reduction of GHG to be critical, acting as both a risk and an opportunity.

Reduce GHG Emission at Worksites

While planning an expansion of facilities and production volume, think of GHG emissions which are expected to increase gradually. Every year, each worksite is required to project their GHG emissions, identifies GHG reduction tasks optimal for its manufacturing processes, and develop and promote suitable action plans. 

Apply IoT technologies to Infrastructure Facilities

Every worksite should apply IoT technologies and establish the foundation for a monitoring system. Also, an energy-active control environment can be established. Every business needs to have Smart Factory technology that enables optimized control of infrastructure facilities by applying energy-saving algorithms that take into account outdoor conditions, air conditioning loads, and device performance, etc. By applying such technologies, companies can be able to reduce their energy consumption in air conditioning. 

Expand Renewable Energy Use

Businesses must show long-term commitment to sourcing renewable energy for 100% of all their worksites in India. Companies can pledge to install solar and geothermal facilities in parking lots, roofs, and new buildings.

To support such commitments, they can establish and implement optimized regional action plans, including solar power generation facility installation, renewable energy certificate purchase, power purchasing agreements, and green pricing. Businesses can have a plan to continue expanding the use of renewable energy in regions where renewable energy can be secured.

Reduce External GHG emissions

Indian businesses can develop and launch energy-efficient products to reduce GHG emissions during the product use stage. Through various reductions, tasks can be implemented concerning the transportation of the product, including transportation route changes, loading efficiency improvements, and transportation management efficiency improvements. 

In addition, to reduce emissions generated by business travel, companies need to increase the use of video conferencing. Furthermore, companies also need to monitor and manage GHG emissions generated by their suppliers. Companies can work closely with suppliers for GHG emissions reduction.

Risks and Opportunities

Businesses must regularly monitor issues related to climate change, such as GHG and renewable energy use at worksites in India. 

The person in charge at each worksite can be asked to immediately report any issue that may arise to the business headquarters. Environmental Safety Committee or the GHG management Council, should regularly check these issues and discuss further actions to be taken before relaying decisions to the related departments. Businesses must analyse the risks and opportunities related to climate change and prioritizes issues based on materiality and impact.

Metrics

Businesses may use various metrics, such as GHG emissions, GHG emissions intensity and energy expenditure and savings, to measure and determine risks and opportunities related to climate change. Specifically, businesses can use the internally determined carbon price to guide their decision-making process in terms of energy-efficient facilities, power generation, carbon credit settlement, and renewable energy project investment.

Conclusion 

In short, the main objective of Climate Action is to conduct business keeping in mind the environment. The environment is for all, so we should take care that it is least harmed. We need to raise mass awareness in our communities on climate action.

About the Author

Rusen Kumar is a well-known thought leader in Corporate Sustainability & Responsibility (CSR in India. The is the managing editor at India CSR. He can be reached at editor@indiacsr.in

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