53 companies estimate climate-related risks with financial impact at Rs 1.434 trillion: CDP report

The latest edition of the Carbon Disclosure Project (CDP) India’s 2021 Annual Disclosure Report, which was released on Saturday, reveals both positive and less positive developments in India’s corporate sector with respect to carbon emissions. In the context of the IPCC report earlier this month, the CDP report gains importance. Based in different countries, the non-profit organization helps companies disclose their environmental impact.

Starting on a positive note, 88 Indian companies disclosed information on the 3 CDP themes – Climate Change, Water Security and Forests in 2021 compared to 69 in 2020, marking an increase of 28%. The report notes that several business leaders are already playing key roles in the fight against climate change, due to growing customer and investor focus on sustainability and increased regulatory and disclosure requirements. He adds that some large companies are on track with clear net-zero goals, determined by growing investor pressures, consumer perception and regulatory compliance requirements to conduct their operations responsibly.

Climate change

Corporate climate governance is a concern for several Indian companies. The report points out that it has in fact become a central part of the company’s internal management system in all companies responding to the CDP’s climate change questionnaire. In 2021, 98% of companies surveyed have board-level oversight and 71% report to the board at least once every three months on climate issues.

ACC, Infosys Limited, Mahindra & Mahindra, Tech Mahindra, Wipro, Ambuja Cements, ITC Limited, JSW Energy, JSW Steel Ltd, Mahindra Lifespace Developer Limited, Mindtree Ltd., Reliance Jio Infocomm Limited became climate change leaders with scores ranging from A to A-.

According to the Global Climate Risk Index 2021, India is the 7th most climate vulnerable country.

Fifty-three companies identified 77 acute physical hazards, that is, extreme weather events that directly threaten the livelihoods of people and organizations.

These climate-related risks with financial impact have been assessed at Rs. 1,434 billion. Regarding emissions, responding companies reported total carbon equivalent emissions of approximately 1.2 billion tonnes. There is a 39% increase over 2020 figures due to an increase in the number of companies responding this year.

water safety

Author Mridula Ramesh in his book Watershed: how we destroyed India’s water and how we can save it which was published last year warned that “given India’s increasing population, urbanization and affluence, about half of India’s overall water demand may not not be satisfied by 2030”. This implies not only a serious shortage of water, but a loss of 6% of the country’s GDP.

The 37 companies that responded to CDP’s water questionnaire reported withdrawing, consuming and discharging 10.4 million, 1.6 million and 9.6 million megaliters of water, respectively. The report observes that in 2020, these figures stood at 7.9 million, 1.4 million and 6.6 million megalitres, respectively (for 25 companies). While the number of companies reporting has increased by 48%, the volume of water consumption has increased 59% of companies surveyed rated water as “vital” to their operations, while 73% ranked it in the “material risk” category.

The report also reveals that inaction costs 12 times more than action. While the total water risk amounts to Rs. 4,527 million, the total risk response cost would only cost Rs. 365 million.

Hindustan Zinc, Ultratech Cement and Dr. Reddy’s Laboratories, Ambuja Cements, Mahindra & Mahindra and Tech Mahindra are emerging as leaders in water safety.

Forests

According to CDP 2021 disclosure data, three out of five companies reported an estimated financial impact of Rs 6.1 billion due to forest risk commodities – this in all cases relating to palm oil, and in two for food and beverages and another for chemicals or materials.

The CDP report also mentions renewable energy disclosures, which is relevant given the country’s ambitious goal of 500 gigawatts (GW) of renewable energy by 2030.

In 2021, 85 companies headquartered in India reported a total electricity consumption of 271 TWh. Of this total, the total renewable electricity consumption would be 13 TWh, or only 5% of the total electricity consumption declared in 2021. In total, 47 companies have identified opportunities to transition to low energy consumption. carbon emissions in 2021, compared to 34 companies. in 2020.

Cities

The CDP also assigned ratings to three cities: Surat – A-; Bangalore-D; Bombay – D.

In 2019, the Ministry of Housing and Urban Affairs (MoUHA) launched a reporting initiative called Climate Smart Cities Assessment Framework (CSCAF) as a toolkit for cities to assess their climate situation. Of 14 cities that reported their environmental and climate data in 2021, Kolkata, Chennai, Surat and Kochi allocated special budgets, focusing on green initiatives in their recovery plans.

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