Report says 30% of India's top 1,000 firms have set climate action goals

Bengaluru: About 43 per cent of the top 1,000 companies of India Inc have begun understanding the importance of decoupling economic growth from greenhouse gas emissions and 30 per cent have set proactive action goals but large gaps remain in committing to a sustainable future, a new report said on Thursday.

The report, 'State of Sector: Climate Action by India Inc 2023' by cKinetics looked into the Business Responsibility and Sustainability Reporting (BRSR) reports filed by the companies as per the mandates given by the Securities and Exchange Board of India.

India emits 2.8 billion tonnes of carbon dioxide or equivalent greenhouse gases. The country has committed to reduce 45 per cent of the emissions (2005 level) by 2030. The government has promised to achieve this while maintaining GDP growth.

The 1000 companies account for 40 per cent of India's total emissions. The report said 43 per cent of Indian corporations identify climate change as a material factor with adaptation and mitigation measures rated as "highly material". They were followed by waste management, energy and water management.

However, there were gaps in recognising the importance of certain factors. "Top 100 firms by market capitalisation, despite contributing to a large proportion of total energy consumption in India, had relatively low emphasis on energy management," the report said, adding that only 24 firms identified energy as a major factor.

Water, a critical factor, was recognised as a major factor by 26 of the top 100 companies. Water consumption by corporates operating in water-stressed regions increased from 610.71 million kilo litres in 2022 to 850.32 million kilo litres in 2023. "This not only exacerbates existing water scarcity but also poses a risk to operations," the report noted.

The report said aligning and vetting goals with international standards can push companies for positive action. "However, the percentage of companies aligned with such international standards remains low due to low awareness, lack of technical expertise and financial constraints," it said.

Some companies -- especially those in real estate and communication sectors -- have identified negative financial impacts from emissions but are "conservative" in setting goals to mitigate that impact.

Nikita Mohite, an analyst with cKinetics, noted that gaps in data was still a problem in understanding the changes on the ground. "Despite the growing commitment to sustainability, data insufficiency remains a major obstacle in accurately assessing the impact of India Inc.'s efforts. This lack of clarity hinders informed decision-making for both companies and stakeholders. Notably, the top 100 companies, while setting more ambitious goals, also exhibit lower data assurance compared to smaller firms," she said.

As per the policy, the top 250 companies will be required to provide assurance on the 49 core BRSR key performance indexes. in 2023-24. By 2025-26, the rule will be applicable to 1000 companies. "This would ensure quantitative and standardised disclosures on ESG parameters and enable enhanced comparability across companies and sectors and also aid investment decisions," the report said.