CLIMATE and BUSINESS Partnership of the Future CDP India Annual Report 2019
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DISCLOSURE INSIGHT ACTION CLIMATE AND BUSINESS Partnership of The Future CDP India Annual Report 2019 Written on behalf of 525 investors representing US$96 trillion in assets January 2020 CONTENTS CEO Foreword 2 Introduction 3 Is India Inc Cognizant of Climate Challenge 7 How Climate Risk Assessment Builds Resilience in Businesses 9 Why Companies Need to Deal With Value Chain Emissions 13 Emissions Trend and Verification 15 Targets and Performance 19 Science Based Targets 21 Internal Carbon Price 27 Renewable Energy Use: The Sign of A Strong Corporate 31 Why Water Security Makes Sound Business Sense 35 Why Forests 39 Cities, States and Regions 41 Endnotes 42 Annexures ANNUAL REPORT 1 CEO FOREWORD Climate change is not a distant, And we are already seeing great potential threat. It is here right now, and examples of environmental leadership, already affecting millions of lives across with forward-thinking companies the globe. The Australian bushfires, proactively taking action. The Science which started raging in late 2019, Based Targets initiative has snowballed have affected nearly 10 million people, into a global phenomenon, with including at least 28 human lives that more than 750 of the world’s biggest have been lost. This is just one example companies setting emissions reduction of recent extreme weather events made targets that are grounded in climate more likely by climate change. science. Likewise, corporate demand for renewable power is rapidly growing with The most devastating impact of climate 220+ companies now working towards change and extreme weather is always 100% renewable electricity. going to be loss of human life, but its impact on ecosystems, communities Transparency is the foundation and the global economy can be dire too. for meaningful climate action. In In 2019, CDP analysis found that 215 of 2019, more companies than ever “Governments must urgently step the biggest global companies estimate before – 8,400+ representing over up their ambition to give business the financial implications of climate risks 50% of global market capitalization the clarity and confidence they to be close to US$1trillion, including – disclosed through CDP, enabling need to invest in the zero-carbon US$250 billion worth of ‘stranded them to comply with the Task Force transition.” assets’, at potential risk of being on Climate-related Financial Disclosures made economically unviable. (TCFD). Disclosure of quality data leads to smarter decisions and informs The cost of exceeding a temperature investors, companies and governments rise of 1.5 degrees Celsius – the of the actions they need to take. It’s proposed “guard rail” of safety by the encouraging to see more companies Intergovernmental Panel on Climate setting longer-term targets; our data Change (IPCC) – could be catastrophic. will be key to seeing how they are It would have grave implications on performing against these over time. water and food security, living standards, the economy and human health for our But growing corporate action is not generation, and generations to come. In enough. Governments must urgently economic terms the difference between step up their ambition to give business 1.5 and 2 degrees is estimated at $15 the clarity and confidence they need to trillion in damage. We cannot afford to invest in the zero-carbon future. Those dither and delay substantive action any who act first on climate will seize the longer. benefits of the transition. CDP will play its part by continuing to set the 2020 is a critical year. Five years on standard, and providing the tools to help from the Paris Agreement, the time us achieve it together. 2020 must be has come for national governments the year we all play our part to ramp up to upgrade their ambition to reduce worldwide ambition on climate without emissions through their national plans. delay. This year needs to herald the start of a super decade of climate action, cutting – Paul Simpson, CEO, CDP emissions in half, to give any chance of limiting global warming to 1.5°C. 2 ANNUAL REPORT INTRODUCTION Time to speed up along the green pathway The failure of the world’s governments Achieve Paris Agreement Goals to come to a meaningful agreement Accelerate private sector at the Conference of Parties (COP25) investment into low carbon in Madrid clearly underscores the transition enormity of the task – How to fashion Commit to improve climate-related a global agreement in the time of hyper financial reporting nationalism? Unfortunately, progress has been excruciatingly slow, with most Climate change, now increasingly important decisions being conveniently being acknowledged as a climate crisis shelved for next year. and even climate emergency, is an enormous economic and policy problem, In this grim scenario emerged two sometimes positing two different sets of unlikely heroes – the world’s narratives -- environmental integrity schoolchildren who led huge marches versus development imperatives. While and the growing band of investors who this debate rages, the world is losing are now determined to take action to valuable time. As of December 2019, safeguard their investments. Many top Nationally Determined Contributions corporates too have expressed deep (NDCs) have over 90% probability concern and asked for consistent policy of exceeding 2°C; the current policy response to address the climate crisis. pathways have a higher than 97% probability of exceeding 2°C.2 The Friday for Future protest led by Greta Thunberg from Sweden According to World Bank3, even if --anchored by Ridhima Pandey in India preventive measures are taken along CDP India Climate Change Rising -- surprised many so-called responsible the lines of those recommended by Stars 2019 adults by highlighting the concerns the Paris climate change agreement young people feel for their future. So Indusind Bank A- of 2015, India’s average annual much so that Greta has been nominated Infosys Limited A- temperatures are expected to rise the Time magazine person of the year. by 1-2oc by 2050. “These weather Mahindra & Mahindra A- changes will result in lower per capita On the other hand, a record 631 Tata Consultancy Services A- consumption levels that could further investors managing over US $37 trillion Tata Global Beverages A- increase poverty and inequality in under the banner of “The Investor one of the poorest regions of the Tech Mahindra A- Agenda1” signed the Global Investor world, South Asia,” warns the World Statement to Governments on Climate Wipro A- Bank.4 Additionally, the Global Climate Change, which called on world YES BANK Limited A- Risk Index 20205, released by the governments to: ANNUAL REPORT 3 631 investors managing over US $37 trillion demand climate action environmental think-tank Germanwatch including Dalmia Cement, DSM, during the COP25 meet in Madrid, Heathrow Airport, LKAB, Mahindra ranks India as the fifth-most vulnerable Group, Royal Schiphol Group, Scania, country in the world in terms of SpiceJet, SSAB, ThyssenKrupp and experiencing extreme weather events. Vattenfall -- a new Leadership Group for Industry Transition was announced. Even though COP25 did not result in This group will drive the transformation addressing key carbon market issues, in the hard-to-decarbonize and energy- the private sector called for more intensive sectors. ambitious efforts from governments to tackle climate change with all focus The Indian Prime Minister, Narendra on 2020 – when climate action will Modi said that “each one of us has to actually count. Upto 177 companies discharge climate responsibilities based have committed to set 1.5°C-aligned on our situations and capacities. I hope science-based targets across their that work under the industry transition operations and value chains, as the track will facilitate early diffusion of climate movement doubles in size since technology and support to developing September 2019.6 UN Secretary-General countries in this journey”.8 The industry Antonio Guterres called on leaders from transition track will be based on the private sector and civil societies to three central pillars: public-private challenge governments to make clear collaboration, industry commitments economic development policies that will and innovation and technology enable companies to invest decisively in exchange. a net-zero future.7 Industries contribute approximately In September, at the UN Climate Action one-fourth of India’s total greenhouse Summit, several initiatives towards gas (GHG) emissions.9 The estimated promoting low-carbon economy were consumption of raw coal by industry launched. With India and Sweden in has increased from 502.82 MT during the lead, a host of nations including 2007-08 to 841.56 MT during 2016- Argentina, Finland, France, Germany, 17 with a CAGR of 5.89%.10 Total Ireland, Luxembourg, the Netherlands, final energy consumption in India in South Korea and the UK -- and with the 2016 was 572 Mtoe, with industry participation of a group of companies demanding 193 Mtoe, or a 34% share.11 4 ANNUAL REPORT The manufacturing industries and The number of companies engaging construction sector together account with CDP has seen a steady increase for 18.4% of total emissions from the and in 2019 we saw a 13% hike with 59 energy sector.12 With all this data in companies responding as compared to hand, decarbonization of the industry 52. sector, especially the hard-to-abate sectors, is imminent. These sectors are We are seeing many companies already particularly challenging to decarbonise playing their part through setting because of their requirements of high- emissions reduction targets in line with temperature heat and/or the production climate science, committing to using of process emissions. 100% renewable electricity or working to remove commodity-driven deforestation “Governments must urgently step up from supply chains. They are showing their ambition to give business the that all types of businesses – including clarity and confidence they need to carbon-intensive industries such as invest in the zero-carbon transition,” Paul energy, chemicals and mining – can Simpson, CEO, CDP said.