Achieving Net Zero: A Roadmap for Corporates in India

Introduction

India’s pledge to achieve net zero emissions by 2070, announced at the COP26 summit, has placed the country on a challenging but necessary path toward sustainability. With the corporate sector accounting for nearly half of India’s energy consumption, it is clear that businesses must lead the charge in reducing carbon emissions. However, this journey is fraught with challenges, including a lack of clear policy frameworks, evolving technologies, and financial constraints.

In this comprehensive article, we’ll unpack the “Net Zero Roadmap for Corporates in India” report by WWF-India. We’ll explore the current state of corporate decarbonization, viable strategies for achieving net zero, the role of government policy, and the steps companies can take to create an actionable roadmap. The article is designed to be straightforward and easy to understand, providing a practical guide for businesses committed to achieving sustainability.

1. The Urgency for Corporate Action

1.1 India’s Climate Imperative

India’s rapid industrialization and urbanization have driven economic growth, but they have also significantly increased the country’s carbon footprint. With its vast population and vulnerability to climate change, India is at a critical juncture. The transition to a low-carbon economy is not just a necessity for environmental sustainability; it is essential for long-term economic resilience.

1.2 The Role of Corporates

Corporations in India have a unique responsibility in this transition. The corporate sector’s energy consumption patterns, supply chain influence, and financial capabilities make it a key player in the decarbonization process. Companies that proactively embrace sustainability can gain a competitive advantage, attract investment, and enhance their reputation.

1.3 Challenges and Barriers

Despite the growing awareness and commitment among Indian businesses, several barriers hinder progress:

Lack of Clear Policy Guidelines: The absence of standardized guidelines and regulations makes it difficult for companies to chart a clear path toward net zero.
Financial Constraints: The high upfront costs associated with clean technology adoption can be prohibitive, especially for small and medium-sized enterprises (SMEs).
Technological Uncertainty: Many emerging technologies, such as green hydrogen and carbon capture, are still in the early stages of development and are not yet commercially viable.
Supply Chain Complexities: Decarbonizing supply chains, especially in sectors like manufacturing and agriculture, requires collaboration with multiple stakeholders, which can be challenging.

2. Current Status of Corporate Decarbonization in India

2.1 Corporate Commitments to Climate Action

Indian corporates have made significant strides in committing to climate action. As of June 2022, 89 companies have aligned with science-based targets, committing to reduce their carbon emissions in line with global climate goals. These companies are also participating in global initiatives such as RE100, which focuses on renewable energy adoption, and EV100, which promotes the transition to electric vehicles.

2.2 The Gap Between Commitment and Action

While commitments are a positive first step, translating them into tangible actions remains a challenge. A survey of 21 leading companies revealed that while there is strong motivation to act—driven by competitive pressures, investor demands, and reputational concerns—companies face numerous obstacles in implementation.

2.3 Analysis of NSE 100 Companies

An analysis of the NSE 100 companies shows a mixed picture of corporate climate action in India:

46% of these companies have made formal climate commitments.
70% report their carbon emissions, but the quality and consistency of reporting vary widely.
A smaller percentage have set specific targets for carbon neutrality, and even fewer have detailed plans on how to achieve these targets.

Case Reference: Tata Group’s Climate Strategy: Tata Group, one of India’s largest conglomerates, has set ambitious targets for carbon neutrality across its diverse business sectors. The company’s approach includes significant investments in renewable energy, energy efficiency, and sustainable product innovation. Tata’s strategy demonstrates how large corporates can lead by example, but it also highlights the complexities involved in implementing a multi-sector decarbonization plan.

2.4 Sectoral Differences

Different sectors face different challenges in the journey to net zero. For instance:

Energy-intensive industries such as steel and cement have high emissions and limited options for immediate decarbonization.
Service-oriented industries like IT and finance have lower emissions profiles but can influence sustainability through their operations and investments.

3. Strategies for Achieving Net Zero

Achieving net zero is a multi-faceted challenge that requires a combination of strategies tailored to specific sectors and companies. Below are the key strategies identified in the report:

3.1 Resource Intensity Reduction

Reducing the intensity of resource use is a fundamental step in decarbonization. This can be achieved through:

Energy Efficiency: Implementing energy-efficient technologies and practices can significantly reduce energy consumption. This includes upgrading machinery, optimizing processes, and improving building designs.
Material Efficiency: Reducing material waste, improving recycling processes, and adopting circular economy principles can lower the carbon footprint of production.

Case Reference: Infosys’ Energy Efficiency Programs: Infosys, a leading IT services company, has implemented several energy efficiency measures across its campuses, including smart building technologies, energy-efficient HVAC systems, and renewable energy installations. These efforts have resulted in substantial energy savings and have positioned Infosys as a leader in corporate sustainability.

3.2 Renewable Energy Adoption

Transitioning to renewable energy is a key pillar of any net zero strategy. Indian corporates have several options for integrating renewable energy into their operations:

On-site Renewable Energy Generation: Companies can install solar PV systems, wind turbines, or bioenergy plants on their premises to generate clean energy.
Power Purchase Agreements (PPAs): For companies unable to generate their own renewable energy, PPAs offer a way to procure green energy from external providers.
Renewable Energy Certificates (RECs): RECs allow companies to offset their carbon emissions by supporting renewable energy projects.

3.3 Green Hydrogen and Emerging Technologies

Green hydrogen, produced using renewable energy, is seen as a game-changer for decarbonizing hard-to-abate sectors such as steel, cement, and chemicals. However, the technology is still nascent, and widespread adoption will require:

Investment in R&D: Significant investment is needed to bring down the costs of green hydrogen production and improve its efficiency.
Infrastructure Development: Developing the infrastructure for hydrogen production, storage, and distribution is crucial for scaling up its use.
Government Support: Policy incentives, subsidies, and pilot projects will be essential to drive the adoption of green hydrogen.

3.4 Carbon Capture, Utilization, and Storage (CCUS)

CCUS technologies capture carbon dioxide emissions from industrial processes and either store it underground or use it in various applications. While promising, CCUS is still in the early stages of commercialization and faces several challenges:

High Costs: CCUS technologies are currently expensive, making them less attractive to companies unless supported by government incentives.
Technical Complexity: The process of capturing, transporting, and storing carbon dioxide requires specialized infrastructure and expertise.
Policy and Regulatory Support: Clear policies and regulations are needed to promote the deployment of CCUS technologies.

Case Reference: Reliance Industries’ CCUS Initiatives: Reliance Industries, one of India’s largest conglomerates, has initiated several projects to explore the potential of CCUS technologies. These projects aim to capture carbon emissions from the company’s petrochemical operations and use them in the production of clean fuels and chemicals.

3.5 Offsetting and Carbon Credits

For emissions that cannot be eliminated through efficiency improvements or renewable energy, companies can invest in carbon offsets. This involves:

Purchasing Carbon Credits: Companies can buy credits from projects that reduce or remove carbon emissions, such as reforestation or renewable energy projects.
In-house Offset Projects: Some companies may choose to develop their own offset projects, such as afforestation or carbon capture initiatives.

4. The Role of Government Policy determining Net Zero Roadmap for corporates in India

4.1 Existing Policy Framework

The Indian government has introduced several initiatives to promote corporate decarbonization. These include:

The National Action Plan on Climate Change (NAPCC): Launched in 2008, the NAPCC outlines India’s strategy for climate mitigation and adaptation, with a focus on renewable energy, energy efficiency, and sustainable agriculture.
Perform, Achieve, and Trade (PAT) Scheme: This market-based mechanism encourages energy-intensive industries to improve their energy efficiency. Companies that exceed their targets can trade their energy savings with others that fall short.
Renewable Energy Certificates (RECs): The REC mechanism allows companies to meet their renewable energy obligations by purchasing certificates from accredited renewable energy generators.

4.2 Policy Gaps and Recommendations

Despite these initiatives, there are several gaps in the current policy framework that need to be addressed:

Long-Term Policy Stability: Companies need long-term visibility and stability in policies to make informed investment decisions. This includes clear guidelines on carbon pricing, renewable energy targets, and incentives for emerging technologies.
Financial Incentives: The government should provide more financial incentives, such as tax breaks, subsidies, and low-interest loans, to encourage the adoption of clean technologies.
Expanding Scope and Participation: Expanding the scope of existing policies to include more sectors and companies, and making participation mandatory for large emitters, can accelerate progress toward net zero.
Investment in R&D: Increased government investment in research and development, particularly in areas like green hydrogen, CCUS, and battery storage, will be crucial for overcoming technical and cost barriers.
Encouraging Public-Private Partnerships: Collaboration between the government and private sector can help build shared infrastructure, reduce costs, and accelerate the deployment of new technologies.

5. Developing a Net Zero Roadmap for corporates in India

Creating an actionable roadmap to net zero requires a strategic approach that takes into account the unique challenges and opportunities of each company. The following steps provide a guide for corporates to develop their own decarbonization strategies:

5.1 Emission Profiling and Baseline Assessment

The first step is to conduct a comprehensive assessment of the company’s carbon emissions across all operations, including direct emissions (Scope 1), energy-related emissions (Scope 2), and supply chain emissions (Scope 3). This baseline assessment provides the foundation for setting realistic and achievable targets.

Case Reference: Mahindra & Mahindra’s Emission Profiling: Mahindra & Mahindra, a leading Indian multinational, conducted a detailed assessment of its emissions across its entire value chain. This profiling allowed the company to identify the most carbon-intensive areas of its operations and prioritize them in its decarbonization strategy.

5.2 Setting Targets and Milestones

Once the emission profile is established, companies should set clear and science-based targets for reducing emissions. These targets should be aligned with global climate goals and include interim milestones to track progress over time.

Short-Term Targets (1-5 years): Focus on quick wins, such as energy efficiency improvements and renewable energy adoption.
Medium-Term Targets (5-10 years): Plan for the integration of emerging technologies, such as green hydrogen and CCUS, as they become more viable.
Long-Term Targets (10+ years): Aim for full decarbonization of operations, including the transition to net zero supply chains.

5.3 Building Internal Capacity and Expertise

Achieving net zero requires a deep understanding of new technologies, business models, and regulatory requirements. Companies should invest in building internal capacity through:

Training and Reskilling: Implement training programs to equip employees with the skills needed to adapt to new technologies and processes.
Pilot Projects: Conduct pilot projects to test and refine new approaches before scaling them up across the organization.
External Partnerships: Collaborate with external experts, industry bodies, and research institutions to stay informed about the latest developments in decarbonization.

Case Reference: Wipro’s Sustainability Training Programs: Wipro, a leading IT services company, has developed a comprehensive sustainability training program for its employees. The program covers topics such as energy efficiency, renewable energy, and sustainable procurement, ensuring that all employees are equipped to contribute to the company’s net zero goals.

5.4 Monitoring and Reporting Progress

Regular monitoring and reporting are essential for tracking progress and ensuring accountability. Companies should establish robust systems for measuring emissions, tracking the impact of decarbonization initiatives, and reporting results to stakeholders.

Internal Reporting: Set up regular internal reporting mechanisms to review progress against targets and adjust strategies as needed.
External Reporting: Participate in global reporting initiatives, such as the Carbon Disclosure Project (CDP), to demonstrate transparency and accountability.

5.5 Engaging Stakeholders

The transition to net zero requires the support and engagement of a wide range of stakeholders, including employees, customers, suppliers, investors, and regulators. Companies should:

Communicate Clearly: Develop clear and consistent messaging around the company’s net zero goals and progress.
Collaborate with Suppliers: Work with suppliers to reduce emissions across the supply chain, providing support and incentives where needed.
Engage Customers: Educate customers about the company’s sustainability efforts and encourage them to support low-carbon products and services.
Investor Relations: Engage with investors to highlight the financial benefits of the company’s sustainability strategy and attract investment in green initiatives.

6. Conclusion

The path to net zero is challenging, but it is also a tremendous opportunity for Indian corporates to lead in the global transition to a low-carbon economy. By adopting a comprehensive and strategic approach, companies can reduce their carbon footprint, enhance their competitive edge, and contribute to India’s climate goals.

Source of Article: Bridge to India Report: Net Zero Roadmap for corporates in India