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More Indian Corporates Made Voluntary Climate Disclosures In 2021, Says CDP

85 Indian companies responded to CDP's Climate Change questionnaire in 2021, higher than 67 in 2020.

A flock of birds flies by smokestacks and cooling towers emitting smoke and water vapor next to wind turbines at the RWE AG owned coal-fired Weisweiler power station near Aachen, Germany.(Photographer: Wolfgang von Brauchitsch/Bloomberg)
A flock of birds flies by smokestacks and cooling towers emitting smoke and water vapor next to wind turbines at the RWE AG owned coal-fired Weisweiler power station near Aachen, Germany.(Photographer: Wolfgang von Brauchitsch/Bloomberg)

The number of Indian companies making voluntary climate-related disclosures went up 27% in 2021, according to CDP India.

85 Indian companies responded to CDP's Climate Change questionnaire last year, higher than 67 in 2020, it said in its annual report. The disclosures were sought by institutional investors for a total of 257 companies.

The Carbon Disclosure Project is a global non-profit that urges corporates to voluntarily disclose emissions data and environmental impact at the behest of the company's institutional investors. It runs similar programmes for cities, states and public authorities.

From the 85 companies that disclosed, CDP said climate issues had become a core element of the international management of businesses. In 2021, nearly all of the responding companies had board-level oversight on climate issues, with 71% of them even reporting to the board about these issues at least once a quarter.

Targets for reducing emissions and energy usage were the two most widely adopted climate-related activities of these companies in the year, CDP said. 72 were also engaging at different levels across their value chain on climate issues.

"Businesses recognise the importance of involving supply-chain players to achieve their ambitious climate targets, and this view is reinforced by the data collected by CDP," it said.

Recognising Risk

A vast majority of the companies are either evaluating or have confirmed the influence of climate change on their operations.

According to disclosures made to CDP, the financial impact of climate risks is estimated to be Rs 3.28 lakh crore for such companies.

"The largest identified and financially impactful climate-related risk is acute physical risks valued at Rs 1.43 lakh crore. These are extreme weather events that are a direct threat to the livelihood of people and organisations," it said.

Science-Based Targets

The Science-Based Target initiative is one of the largest emissions reporting programme where companies are provide a clearly defined path for reducing carbon footprint. These pathways have to be in-line with the Paris Agreement goals.

In 2021, CDP said the number of companies with SBTi increased to 64 from a mere 4 in 2017. Of these, 28 have already set concrete targets while the rest have committed to do so. 17 companies have set a target SBTi target in-line with a scenario where the earth heats not more than 1.5 degrees Celsius.

Still, CDP said that this progress in disclosures is the tip of the iceberg. More work is yet to be done.

"Progress is visible, but the pace is very slow and thus the targets are at risk of being too ambitious and not being achieved in the given timeframe," it said.

CDP expects the Securities and Exchange Board of India's mandatory disclosure policy, which kicks in from 2023, to provide a significant push to ESG disclosures. "Indian companies must adopt climate friendly policies and global climate targets or else risk their survival in the coming years."