Addressing climate change is good business

Climate change is one of the most formidable challenges globally. The year 2020 has been one of the warmest years on record and over 50 million have been affected directly due to climate extremes in the form of floods, wildfires, droughts, precipitation anomalies, etc., as per the UNEP Adaptation Gap Report 2020.

Although the Paris climate agreement has set the broad blueprint and guidelines to tackle climate change, much is left to the countries to implement the agenda domestically.

India is already facing challenges of water shortages, food security issues, loss of development dividends with impacts projected to grow in coming times. Through its climate plans, largely the “nationally determined contributions” (NDCs), India is incorporating strategies in an attempt to mitigate carbon emissions while also adapting to already existing climate impacts through resilient infrastructures and coping mechanisms in the form of early warning systems, watershed structures, building river embankments, and so forth. The budgetary allocations, including in this year, signals the government’s increasing recognition of climate issues.

However, the climate agenda cannot be an exclusive government concern and other actors such as the private sector need to step up the act too. Given that the private sector generates 90 per cent of jobs in developing countries, its role in any large-scale transformational shift is crucial.

The Climate Adaptation Summit 2021 witnessed greater urgency for the private sector to usher funding in adaptation activities that fell by 10 per cent in the Covid-hit year of 2020. On the other hand, with increasing climate impacts and accompanying vulnerabilities, the annual adaptation costs in developing countries alone are currently estimated to reach $140-300 billion in 2030 and $280-500 billion in 2050.

Finance gap

As the Covid-19 pandemic is expected to aggravate, the finance gap by constraining public finances where immediate economic and health priorities stare starkest, the private sector’s role in furthering climate mitigation and adaptation agenda is crucial. In general, the private sector has been proactively engaging with governments and independently in topics of renewable energy, energy efficiency, etc.

However, their greater engagement in adaptation agenda, which is largely restricted to instruments such as insurance in a bid to transfer climate risks, needs greater attention. As a testimony to this, even though climate extremes are exposing vulnerabilities and decreasing resilience of especially developing countries, currently, only 20 per cent of climate finance goes to funding adaptation activities, a figure likely to increase in coming times.

In India, the role of the private sector is gradually increasing. Initially though, focussing on providing energy efficient technologies, engaging in carbon market projects through global climate regime and philanthropic work mostly through CSR initiatives, in the recent past global and Indian corporate giants such as Coca-Cola, Unilever, Bosch, Siemens, Tetra Pak, Nokia, Tata Group, Mahindra Group, Reliance, etc., are proactively implementing measures on energy efficiency, green mobility, water stewardship, community development around factory sites, integrated ecosystem development, promoting millets, working with Farmer Producer Organisations and setting up plastic upcycling units to develop water positive, zero waste and carbon neutral communities.

Further, several small entrepreneurs and start-ups are looking to align their activities with environmental concerns. Several companies, small and medium enterprises are part of the UN global compact, the world’s largest corporate sustainability initiatives to align their markets goals with UN sustainability agenda.

However, often such initiatives by the private sector, especially in the context of India, happen in isolation and go unnoticed or either do not receive the requisite recognition by government and larger audience, sometimes also by their own inadequate awareness of policy alignment and platforms to highlight their efforts towards sustainability.

CEO forum

A more coordinated and coherent approach can scale up contributions of the private sector towards climate goals and it is against this backdrop that the CEO forum on climate change seems an exciting opportunity.

The forum, set up in 2014, forges long standing and sustainable partnership between the government and private sector to share best practices, facilitate cross-learning on climate change issues and to cooperate with government in designing and implementation of policies and schemes for achievement of climate targets.

The India CEO Forum meeting held in November 2020 witnessed around 24 industry champions signing a declaration voluntarily on public-private partnership in tackling climate change. Through this measure, the corporate sector has shown confidence and expressed its support towards a coordinated response on climate change.

At present though, the forum comprises corporate giants, the inclusion of start-ups and small market players can also be looked at. Along with utilising the forum as a platform to showcase efforts and learning through exchanges and best practices, membership in this forum also enables global exposure through representations and exchanges with global platforms. The momentum must now drive forward for climate actions in the area of mitigation and adaptation too.

In this regard, the recent Budget push for agriculture infrastructure fund, health infrastructure, Jal Jeevan mission for improved water supply, and hydrogen energy from renewable sources could be potential areas of public-private partnerships.

Leaders at the recently concluded Davos Summit have spelt out the need for a collaborative effort. With the right push and policy orientation, the CEO forum provides that opportunity for collaborated efforts to tap its full potential to shift the immense power of the market towards sustainability.

The writers work with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on issues of Environment, Climate Change and Natural Resources Management. Views expressed are personal