CDP releases its annual India report ‘Building Back Greener: India Inc. Demonstrates Climate Resilience’
New Delhi: Climate change’s financial impacts are facing India Inc. and may limit its ambitious growth plans. 42 of the companies responding to investors through CDP’s environmental disclosure system reported a staggering ~₹714000 crores at risk from climate change.
Growing disclosure requirements are prompting an increasing number of Indian businesses to wake up to the threat of climate change and commit to urgent climate action. Despite 2020’s catastrophic economic climate, 220 Indian companies responded to investor requests and disclosed climate data through CDP, an environmental non-profit. Out of the companies requested to disclose by investors, 60 of the Top 200 on the BSE (Bombay Stock Exchange) responded (out of a total 69). The rest were requested to disclose through CDP’s supply chain program by their corporate customers.
Out of these, four Indian companies have made it to the prestigious CDP A List for the first time and are amongst the 16 that have secured the Leadership Band in recognition of their bold climate action. The findings were released today in CDP’s annual India report, “Building Back Greener: India Inc. Demonstrates Climate Resilience”.
Five years on from the Paris Agreement, and months away from COP26, India Inc. is ramping up environmental action to help the country build back a green and resilient economy. Findings indicate that investor driven increased market pressure is compelling companies to embed climate concerns into their economic decision-making processes – 88% of responding companies report incentivizing top management for climate related issues; 66 companies, a whopping 99% of the responding sample have board level oversight of climate-related issues.
Damandeep Singh, Director CDP India, said: “Data shows that Indian companies have really upped their game on climate action. This bodes well future-proofing India’s ambitious growth plans which are manufacturing centric.
Environmental disclosures by leading companies via CDP’s reporting platform feed data across capital markets to help investors and customers make informed decisions and push businesses towards ramping up environmental action. With an ever-increasing number of companies being called to opt for greater transparency, the first step toward their climate-safe journey, India Inc’s climate leaders hold out massive hope for their counterparts – by incorporating a climate focused approach into their business strategy, despite the COVID-19 induced economic distress, these businesses have moved a step closer to a climate resilience future. With a focus on good governance and on sustainable business practices, they will also play a pivotal role in strengthening the country’s transition from a grey to a low carbon, green and resilient economy as we recover from COVID-19.”
CDP’s findings elucidate that a growing number of top businesses are factoring in climate risks to evaluate and inform their business strategy, with 87% (58) of reporting companies stating that climate related risks and opportunities have impacted their operations. While 84% (56) of those who responded claimed that climate related risks and opportunities led their company to change plans for products and services, 93% (62) of companies were able to identify climate-related risks and 91% were able to identify climate-related opportunities with potential to make a substantive financial or strategic impact on their business.
CDP’s recent global supply chain report highlights the increased engagement between companies and their suppliers on climate related issues. It underscores the critical role value chains play in a company’s attempt at decarbonization. Indian suppliers have reported a staggering US$3.2 billion in extra costs by 2026 from environmental risks.
Additionally, by 2020, 52 Indian companies have prepared themselves for possible policy and regulatory changes in the future by voluntarily committing to the Science Based Targets initiative, registering a significant growth of 37% (14) from 2019. This has put India in a leadership position among emerging economies: second in Asia Pacific and sixth globally for being home to the most SBTi committed companies. Remarkably, 22 out of these 52 companies have their SBTs approved this year (up from 10 in 2019), registering another achievement.
Mr. R. Mukundan, Managing Director and CEO Tata Chemicals and CDP India Board member, said: “Consciousness, Commitment and collaboration are the emerging cornerstones of successful delivery of Climate outcomes in the Indian context. More than ever the Indian companies are moving forward in proactive action which involves stakeholders including community, supply chain, customers and employees as the way forward”.
While climate conscious investors continue to pressurize companies to improve sustainability by disclosing data, 13 Indian companies have taken a big leap forward by aligning their climate goals with the most ambitious aim of the Paris Agreement – limiting global temperature rise to 1.5°C above preindustrial levels. Two carbon-intensive sectors, automobiles & components and real estate have emerged as leaders, and all Indian companies in the real estate sector now have approved targets that align with the 1.5 degrees scenario.
Indian companies are also beginning to take proactive action to safeguard precious water resources. In 2020, 25 of the 28 companies that responded to investors through CDP’s water security questionnaire stated that they undertake water-related risk assessment. Remarkably, 24 of these 28 companies have also set water related targets.