India’s Rise as a Global Sustainability Leader – ESG

India's Emergence in the Global Sustainability Landscape!

Overview

India’s economy is projected to grow to $10 trillion by 2035, India is focused on creating a sustainable and inclusive future for its citizens. India is working towards achieving Net Zero by 2070 - making strides on all fronts like renewable energy, ESG regulations, emission reduction, etc.

  • India's greenhouse emissions have dropped by 33% in the last 14 years. This puts India well on its way to achieving its 2030 commitment to the UNFCCC to reduce the country’s emissions intensity by 45% compared to the 2005 base level.
  • India’s Per capita CO₂ emissions have increased in recent decades, climbing from 0.39 metric tons in 1970 to a high of 1.91 metric tons in 2022. However, it is significantly lower than the global average of 4.84, rendering it a testament to India's sustained efforts to reduce emissions and promote sustainable development.
  • According to a report by Standard Chartered, India has a high potential for growth in sustainable investing with an opportunity to mobilize $1 trillion towards top ESG priorities, particularly for financing the climate transition by 2030. The two primary fronts where India is showing the most growth are renewable energy and ESG integration in reporting and investment.

 

Measures to encourage sustainable consumption practices among Indians as of December 2023

According to a survey conducted by Rakuten Insight, 30 percent of respondents in India stated that increasing the availability of sustainable and environmentally friendly products would encourage them to adopt more sustainable consumption practices. By contrast, 20 percent of consumers stated that making sustainable products more affordable would motivate them to adopt sustainable consumption practices.

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Renewable energy

The ethos of a sustainable way of life is integral to the Indian subconscious. The bounty of natural resources and the geographical location puts India in a favorable position for embracing renewable energy. Here are some of the natural resources at India’s disposal.

  • India’s natural location along the equator provides a strategic advantage in solar energy production, where parts of the country receive over 300 days of sunshine yearly
  • India’s 8,000-kilometre coastline and great plateaus provide excellent sites for wind energy projects
  • Additionally, India's vast hydropower potential is over 100,000 MW

India has also set ambitious targets to increase the share of renewable energy in its total energy mix - to achieve 450 GW of renewable energy capacity by 2030. Moreover, renewable energy capacity in India increased by 250% between 2014 and 2021, with the non-conventional energy sector receiving an FDI inflow of $12.57 bn between April 2000 and June 2022.

ESG Reporting Integration

  • Though still in ESG infancy, India has a stringent set of rules with many laws that predate ESG. These rules ensure the welfare and protection of stakeholders from environmental, social, and economic aspects.
  • The Securities and Exchange Board of India (SEBI) has also made ESG disclosures mandatory for the top 1,000 listed companies, starting FY 2023, under its Business Responsibility and Sustainability Reporting (BRSR) initiative. Companies are mandated to include BRSR as a part of their annual reporting.
  • Furthermore, SEBI has also introduced BRSR Core, a subset of the comprehensive BRSR, consisting of a set of Key Performance Indicators under 9 ESG attributes. Applicable to the top 150 listed companies for now, these entities are mandated to disclose data and obtain assurance as per guidelines.
  • India also has a defined set of CSR mandates for companies with ₹5 bn net worth, ₹10 bn turnover, or ₹50 mn net profit. These companies are required to spend at least 2% of their profits on CSR activities and disclose their impact.
  • While BRSR is standardizing ESG reporting, many forward-looking organizations have started reporting their ESG performances to comply with globally accredited frameworks such as CDP, GRI, TCFD, and IR. Many unlisted companies have voluntarily begun disclosing their ESG performance based on the BRSR-lite format.

 

ESG Investment Integration

  • Many prominent Indian investors have adopted well-defined ESG policies in their due diligence and monitoring processes. Across India, 46% of investors want to help restore the environment, nearly 40% of investors want to put their money to hedge against ESG risks, and 33% want to make a positive social impact - according to a report by Standard Chartered.
  • India’s banking and non-banking sectors have also switched focus to sustainable development post-pandemic. The RBI entered the Network for Greening the Financial System (NGFS) to contribute to global green finance and drive India’s financial sector towards policy formation and climatic risk resilience development. Moreover, the State Bank of India formulated ESG-compliant lending policies for companies, pushing them to act more responsibly.

The Role of Technology

  • With the increasing importance placed on transparency and accountability, digital tools and platforms enable companies to collect, analyse, and communicate ESG data efficiently. Automation streamlines the process of data collection, reducing errors and enhancing the accuracy of reports. Artificial intelligence and machine learning algorithms help identify patterns and trends within large datasets, providing deeper insights into a company's environmental impact, social initiatives, and governance practices.
  • Digital platforms facilitate real-time reporting, enabling organizations to respond promptly to emerging ESG challenges.
  • The integration of blockchain technology ensures the integrity and traceability of ESG data, enhancing credibility in reporting. Overall, technology simplifies the complex task of ESG reporting and empowers businesses to embrace sustainable practices, adapt to changing global expectations, and contribute to a more transparent and responsible corporate landscape.

Conclusion

India's rise as a sustainability leader is undeniable. By embracing innovation and leveraging its vast population, India can become a model for balancing development with environmental responsibility. However, challenges like scaling clean energy solutions and managing waste effectively remain. Through continued investment and global collaboration, India can not only secure its future but also inspire a more sustainable path for the entire world.

Technology, indisputably, plays a pivotal role in advancing ESG and sustainability and building a greener future for India.

- Sushma Biradar (Crispidea Analyst)

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