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Moving Towards Net Zero
The series comes ahead of the Leaders Summit on Climate to explore the role that our private sector plays in achieving new levels of climate leadership and unpack what net-zero goals for key sectors look like.
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Industry leaders who have committed to net-zero goals speak one-on-one about their decarbonizing journey.
India is one of the 40 countries that have been invited to the Leaders Summit on Climate hosted by President Biden on April 22nd and 23rd. President Biden will be encouraging world leaders to move towards more ambitious climate policies in pursuit of achieving the 1.5-degree goal of the Paris Agreement, particularly towards a net-zero GHG emission goal. While there will be great scrutiny of India’s climate goals in the run-up to COP 26 in October, the focus will be on the visionaries in India’s private sector who have already made pathbreaking goals for their companies in an effort to go net zero. As Indian telecom companies commit to solar data centers, and power companies move towards cleaner energy for consumers, it is clear that this transformation cannot happen without India Inc.
The Moving Towards Net Zero webinar series is brought to you by the Center for Responsible Business and Climate Voices. The series comes ahead of the Leaders Summit on Climate to explore the role that our private sector plays in achieving new levels of climate leadership and unpack what net-zero goals for key sectors look like.
The series kicked off with a conversation with PS Narayan, the Global Head of Sustainability and Social Initiatives at Wipro Limited on April 19th, followed by Anirban Ghosh, Chief Sustainability Officer, Mahindra Group on Tuesday, April 20th.
Both speakers spoke about the impetus to set sustainability goals, and advice for companies at the beginning of the journey
● Wipro decided to join the ‘Transform to Net Zero Coalition’ to decarbonize their supply chains and processes. For them, it was not just about getting to net-zero specifically.
● They emphasized that for businesses, there are many goals that do not contribute directly to net-zero but are important to adopt for corporate sustainability.
● For Mahindra, it was a natural decision as they considered their position in a carbon-intensive economy. Further, a commitment to carbon neutrality was being led from the top by the CMD
● Both speakers advised companies to start today, saying that once they start, companies will find much more is possible than they otherwise might have thought, and get a high return on investment.
Both speakers touched on the doubts that many companies have around decarbonizing or greening their businesses, particularly around the financial burden
● The speakers reminded listeners that if it was a burden on business, they wouldn’t have been able to do as much as they have, and wouldn’t have committed to it.
● This may sound nothing short of an industrial revolution, there will be challenges and impediments, but the journey overall will be fantastic.
● From the perspective of business owners and operators, cost savings as a result of shifting to energy efficiency and buying RE are compelling arguments. The return on investment period is also relatively short.
● A factory head within a company often doesn’t have full control of his operational costs. However, a shift to RE would help her/him to save energy costs by 30% or more. Hence, a factory head would always support such a transition.
In terms of specific decarbonizing goals, both speakers had advice for companies on the kinds of goals they could set:
● Offsetting GHG emission should be considered as the last resort and only until absolutely necessary. Until then, focus will be on decarbonizing operations and supply chains.
● One of the risks of a ‘net zero goal’ is that it may push companies to consider to offset early. The cost of offsetting is much less than the cost of decarbonizing operations. However, this will not pay off in the long run. For example in the case of afforestation (as an offsetting activity), the deciding factor would be availability of land.
● Businesses do well in setting targets, and working backward. So, businesses should focus on setting GHG emission reduction targets focused on decarbonising their operations. Even if aspirational, considerable help and support from within different components of the business can be galvanizesd once such target(s) are set
● Small decarbonization steps (targets) spread out over a long period of time can have a substantial overall impact
Both speakers touched on the responsibilities of larger companies to work with their supply chains and smaller vendors:
● Speaking of supply chains, the responsibility of larger companies to encourage and support (build capacity) their SMEs suppliers to switch to clean energy options for example, was an imperative.
● This may work in favour of SMEs, which are looking constantly for business partnerships and access to capital by enhancing their visibility as sustainable enterprises especially in competitive markets.
● The key will be converting India’s energy grid to RE, to ensure that SMEs are also able to convert, and this will allow many industry players to decarbonize their products and supply chains.
On the need for collective action and opportunities/risks around a net-zero goal by India Inc. towards sustainability, they both agreed that this could not happen alone. They highlighted the policy and financing tools that would be required for conversion:
● The challenges ahead to get to the net-zero goal cannot be tackled alone by a business, experience of other people will have to be leveraged and coalitions built
● The role of policy support will be to accelerate technology adoption and support new technology to become accessible and affordable through demand signals and financing. Policy should help fast track technologies that otherwise may require a long period of time to be economically viable (in the market)
● For climate finance, they touched on the trend of banks and investors starting to use ESG metrics when lending.