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The invention of the combustion engine in the late 1700s transformed the world beyond people’s perceptions.
Fast forward to 2015, 195 countries signed the Paris Agreement with the goal to limit global temperature rise to below two degrees Celsius. To help achieve this, India has committed to generate at least 40 per cent of its electricity from non-fossil fuel sources and decrease carbon emission intensity of GDP by 33 to 35 per cent by 2030.
Like the combustion engine, the transition to a low-carbon economy also has the potential to revolutionise the world. However, the private sector needs to take the lead by bringing in innovations to cut emissions significantly.
Indian companies and multinationals operating in India have an opportunity to play a major role in accelerating the global transition to a low-carbon economy.
The transition to low-carbon
Many companies — both in India and internationally — are already demonstrating the skills, expertise and ingenuity to drive the low-carbon transition. However, only some have incorporated emissions reduction targets into their overall business strategies to ensure their transformational action is aligned with current climate science.
Science Based Targets, an initiative to drive corporate climate actions globally, has given companies a clear roadmap for how much they need to shrink their carbon footprint to realise the Paris Agreement goals. The initiative champions ‘science-based target setting’ as a powerful way of boosting companies’ competitive advantage in the transition to the low-carbon economy.
Unique to this initiative is the criterion that companies need to commit to setting supply chain or ‘scope 3’ targets. That is, if more than 40 per cent of a company’s emissions occur in its supply chain, then the company has to commit to reducing those emissions as well as its direct emissions. This has the potential to rapidly escalate the impact of science-based target setting on global emissions, since all companies operate within a value chain.
Sixteen Indian companies that have committed to set science-based targets and secured themselves competitive advantage in the transition include Aditya Birla Chemicals, Banka BioLoo, Hindustan Zinc, Wipro and 12 Mahindra group companies. Some of the world’s biggest companies — with significant supply chains in India, including Kering, Walmart and others — have also committed.
Business case
The business case for setting science-based targets hinges on the fact that it ensures sustainability as well as the future needs of businesses. The companies that take up ambitious emission reduction targets believe that climate action is not a burden; on the contrary, not taking action holds a far greater risk.
On March 14, Mahindra Sanyo Steel became the first Indian company to set its science-based target. Globally, it is also the first steel company to set a target.
Today, over 100 companies from 28 sectors across 23 countries, with a market cap of $3.4 trillion and total of 404 megatons of CO2 equivalent have approved targets. With Anand Mahindra, Chairman, Mahindra Group, calling on his business peers to commit to the Science Based Targets initiative, there are encouraging signs that it is becoming a truly global movement.
The writer is a senior climate researcher at World Resources Institute, India.
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