CDP India Disclosure Report 2022 showing an upward trend in environmental disclosures, holds promise and hope
Corporate India is becoming more aware of climate change and the risks it poses to their business, shows the CDP India Disclosure Report 2022.
“In 2022 alone CDP in India has seen a 40 per cent increase in environmental disclosures across CDP’s three themes – climate change, water security and forests by corporates in response to the request to do so from our investors,” says Prarthana Borah Director, CDP India.
Comparing this tremendous growth to the 28 per cent growth reported in 2021. Aside from the upward trend in overall disclosures, a number of other important trends have also shown a positive trend: higher (and more ambitious) targets, expanding board-level scrutiny of environmental-related issues, increased disclosure of overall climate transition plans, and meaningful climate, forest, and water security targets.
She reveals, “Six Indian corporates are leading the way in environmental transparency this year – Infosys, JSW Steel, Hindustan Zinc, Mahindra Lifespace Developers Limited, Tech Mahindra and Wipro.”
Of 122 companies that filed reports with CDP India in 2022, 97 per cent had board-level supervision of climate-related concerns (an increase of 35 companies from 2021), and 80 per cent had at least one board member who was knowledgeable about these issues. Up to 82 per cent of the businesses give the board a quarterly report on climate-related issues. In 2022, 58 per cent of the businesses that responded to CDP India's survey employed scenario planning to guide their strategy, and 52 per cent had a transition plan that was 1.5°C world-aligned.
104 have acknowledged that at least one of their core business areas - operations (86%) Investment in research and development (74%) Products and services (81%) Supply chain and/or value chain, is affected by climate-related risk and opportunities.
According to Indian enterprises responding to CDP, the financial effect of climate-related risk was projected to be INR 2,842 billion.
In 2022, Indian businesses reporting through CDP are expected to identify opportunities worth a combined INR 31,000 billion. This is a 10x increase over 2021, mostly as a result of the inclusion of the green hydrogen opportunity and the shift to clean energy.
A total of 1 million tonnes of CO2 e biogenic emissions were recorded by 23 enterprises.
Businesses are now beginning to recognise the significance of value chain emissions and are beginning to report on the same, as seen by the rise in the reporting of Scope 3 emissions among CDP disclosures from 15 per cent in 2020 to 41 per cent in 2022. Biogenic emissions are emissions that are released as a direct result of the combustion, decomposition, or processing of biologically based materials other than fossil fuels, peat, and mineral sources of carbon. Scope 3 emissions are likewise indirect, meaning they are not created by the company, but they differ from Scope 2 in that they include include emissions from clients utilising the company's goods or emissions from suppliers producing goods the company consumes.
Almost 37 per cent of the 122 companies who reported their information through CDP have intensity-based emission reduction targets, while 34 per cent have absolute targets and 9 per cent have both. Compared to 12 corporations who stated long-term net-zero absolute/intensity aims for them in 2021, there has been a 3 times increase in commitment to net-zero targets this year. The top three levers for organisations to reduce their emissions continue to be a dedicated energy efficiency budget, compliance with regulatory requirements and standards, and staff engagement.
Internal Carbon Pricing (ICP)
Globally, 1418 businesses reported using ICP in 2022.
In India particularly, 68 organisations are aiming to use ICP in the next two years (up 25 per cent from 2021) and 42 companies have already incorporated ICP (a 35 per cent increase from 2021). With this, there are now 110 businesses that either already use ICP or intend to do so in the next two years, which is a 30 per cent increase from 2021.
Science Based Targets (SBT10)
Approximately 35 per cent of the 122 companies that CDP was informed about have 1.5 degree aligned SBTi validated targets in place, while the remaining companies have targets that are in line with the WB2DS12/2DS13 target ambition, which requires more aggressive action to remain in line with the urgent need for alignment to the Paris Agreement 2015 goals.
Renewable Energy (RE)
A total of 122 companies responded to CDP’s climate change questionnaire. These businesses have reported a total electricity consumption of 195 Terra Watt hours (TWh).
These businesses have used roughly 18 TWh of renewable electricity.
64 businesses have recognised opportunities associated with switching from high-carbon energy sources to low-carbon ones across the value chain.These businesses have calculated that there is Rs. 93 billion worth of energy-related potential, such as switching to greener fuel and embracing energy efficiency.
Water security
Almost 67% of businesses disclosed to CDP that they were monitoring their water goals at the corporate level.
Reducing environmental effect was cited by 60 per cent of the companies that responded to CDP's water questionnaire as their main incentive for setting water targets, followed by water stewardship.
The report notes that 43 out of the 45 disclosing companies, or 96%, of those answering to the CDP India water security questionnaire periodically conduct internal risk assessments connected to water use in order to improve water security.
Physical hazards like floods, droughts, and rising water stress were mentioned by the majority of responding organisations (80%), followed by regulatory risks (15%), reputation & markets (3%) and technology risks (2%).
This suggests an unbreakable relationship between water risks and climate change-related catastrophic occurrences.
States and cities
Mumbai was added to CDP's 2022 A-list for climate action leadership, making it the first Indian and South Asian metropolis (among the 122 cities worldwide) to do so.
The annual report observes that green growth and decarbonization will mark the coming decade. Not only does it refer to the reduction of greenhouse gas emissions, but it also centres around the transition to low-carbon growth. Hence, we are looking at advancing and accelerating actions and measures by governments, corporates, investors, states, and cities alike to reach net-zero.
India has taken a vow to reach a non-fossil energy capacity of 500GW by 2030,
The country has also promised to derive 50 per cent of its energy needs through RE by 2030. It also seeks reduction of one billion tonnes of the world's estimated carbon emissions between now and 2030. At COP26 in Glasgow, PM Modi pledged net-zero emissions by 2070.