Paris Agreement in 2015 saw 195 countries commit to prevent dangerous climate change
The manufacturing industries and construction sector together account for
18.4%
of total emissions from the energy sector.
ROLE OF INDUSTRY IN EMISSION REDUCTIONS
The major share of emissions from various sectors under IPPU are shown in the pie chart.
The GoI voluntarily committed to reducing the GHG intensity of the country by 2025% by 2020 of 2005 levels; however, with the conclusion of COP 21 in Paris in 2015, the Government revised their GHG target and committed to a more ambitious target of reducing the GHG emission intensity by 33-35% by 2030 from 2005 levels. The corporate sector can play a crucial role in order for India to achieve these commitments, since most of the GHG emissions are directly or indirectly related to industries. As per India’s Second Biennial Update Report, submitted in December 2018,4 manufacturing industries and construction sector emitted 3,51,909 Gg CO2 e in 2014 that together account for 18.4% of total emissions from the energy sector. In addition, the Energy and Industrial Processes and Product Use (IPPU) sectors in India contributed to 2 Million GgCO2e,5 accounting for 8% of GHG emissions. Commercial & Industrial customers also consume more than 50% of electricity in India. 36.0%
6.6%
13.4%
44.0%
Sectors Iron & steel Cement
Non-specified
industries Others
NDCs have an impact on Indian businesses with respect to future market strategies and their repercussions on investments, R&D initiatives, and capacity-building. Businesses need to follow a step-wise approach to reduce their GHG emissions, starting with measuring their footprint based on their growth projections, setting targets, developing a roadmap for mitigation and then disclosing their emissions. Disclosures also help organizations measure, understand and communicate their economic, environmental, social and governance performance, and consequently set goals, and manage change more effectively. They provide a robust platform for a company to communicate its sustainability issues and impacts, while forming an important part of shareholder and stakeholder relations. This kind of transparency leads to better decision making, which helps build and maintain trust in businesses and related investments for investors, stakeholders, state and non-state actors. Businesses are not immune to climate risks. Extreme weather and shifting climate patterns pose physical risks to businesses leading to disruption of supply chains, labour issues, decline in productivity and direct loss of assets. Businesses are also exposed to several transition related risks, namely legal risks involving climate related litigation for failure to mitigate, adapt or disclose climate risks, market risks stemming from fluctuations in supply and demand of commodities, products & services, technology risks due to
4 INDIA Second Biennial Update Report to the UNFCCC 5 INDIA Second Biennial Update Report to the UNFCCC
technological disruptions necessary for a lower carbon economy, challenging established business models, reputational risks due to stakeholder pressure on corporate governance and climate change issues, and regulatory risks stemming from policy actions that mitigate climate change. Despite these climate-related risks, companies are also presented with an increasing number of market opportunities, by enhancing competitiveness, reducing input costs, innovating and maximizing outputs.
EMISSION REDUCTION INITIATIVES BY COMPANIES Data disclosed to CDP shows a steady rise in commitments and contributions by businesses. ‘Energy efficiency: Processes’ is the most deployed Emission Reduction Initiative (ERI). CDP 2018 data shows that out of the 52 reporting companies across sectors in India, the highest emissions of 2,06,550 GgCO2e came from the Materials sector, which includes companies from sectors, such as Chemicals, Cement & Concrete, Metallic Mineral Mining, Metal Smelting, Refining & Forming. GHG emission due to industry energy use has grown by 10%, between 2005 to 2013. Also, its share in the total industrial emissions has increased from 65% to 76% in the same period. This puts impetus on the sector to be the focus of India’s emission mitigation policy, and it is critical to devise ways for the sector to reduce dependence on fossil energy while ensuring rapid growth in production, reducing emissions intensity and enhancing international competitiveness.
