Sustainability & ESG

Special Address –
Sustainability is Next Digital by Anjali Bansal, Immediate Past President, Bombay Chamber and
Founder, Avaana Capital

“Responsible investment is an approach to investing that aims to incorporate  Environmental, Social and Governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns.”

Environment : Relates to a company’s interaction with the physical environment (e.g. climate change, gas emissions, air and water pollution, water scarcity, deforestation.)

Social : Focuses on company’s practices that have a social impact on a community or society (e.g. working conditions including slavery and child labour, health and safety, human rights, impact on indigenous communities)

Governance : Factors that relate to how a company is governed (e.g. executive compensation, Board independence and composition, shareholder rights, transparency)

ESG is the next digital –it has already changed the rules of business; yet more disruption is coming, bringing new upsides and equally downsides

Value of a Corporation is driven only by a progressive and resilient ESG transformation path

• ESG must be embedded in the mission: Cannot do business without ESG
• Performance, not compliance: Need to show clear track record on high-materiality issues vs. credible targets (rating is not the objective)
• No-green washing or tactical actions
• ESG drives value in the middle-term: Avoids risks and creates platform for both market development and operational efficiency

Sustainability in Healthcare

It’s ironic that the health care sector, which guides medical practitioners’ actions with the ethic “first, do no harm” (“primum non nocere”), is not leaving this world unharmed. Due to health systems’ round-the-clock operations, extensive use of air conditioning and refrigerated storage, and specialist medical equipment—and because many hospitals and care facilities are aging and poorly designed for energy efficiency – health care can be seen as a major contributor to the climate crisis.

The world’s health care systems account for 4% of global carbon dioxide emissions, more than aviation or shipping. If the health sector was a country, it would be the fifth-largest emitter of greenhouse gas (GHG) emissions on the planet. According to conclusions from the study Health Care’s Global Climate Footprint:

• Health care emissions make up a varying percentage of each country’s climate footprint. They range from highs in the United States (7.6%), Switzerland (6.7%) and Japan (6.4%), to lows in India (1.5%) and Indonesia (1.9%). While China is the number one absolute greenhouse gas emitter in the world today, this study finds that the United States far surpasses it in terms of absolute health care emissions.
• Emissions emanating directly from health care facilities make up 17% of the sector’s worldwide footprint. Indirect emissions from purchased electricity, steam, cooling, and heating comprise another 12%. And the greatest share of emissions—71%— are primarily derived from the health care supply chain; the production, transport, use, and disposal of goods and services that the sector consumes. 

A recent study determined that the US health care industry is responsible for roughly 10 percent of the country’s greenhouse gas emissions.

It is time for health care leaders and their organizations to extend the “do no harm” ethic to the environment— to measure, manage, and set targets to reduce the sector’s carbon footprint to fight climate change. 

The sheer magnitude and complexity of environmental, social, and governance challenges can be overwhelming. Where should  health care organizations start, and what might the journey look like?
Mitigating and adapting to climate change presents a global opportunity to remake the foundations of health care and introduce new operational models for resilience and sustainability. An organization’s response to climate change should not be an “add-on” initiative; it should be integrated into a transparent, comprehensive planning and decision-making process.
To begin the journey, sector leaders should set aside existing frameworks and preconceptions about what the health care sector—and their organization’s place in it—should look like and assess, instead, their role in a sector that is likely to be reconfigured as it moves toward a low-carbon footing.

Among actions to consider:

Develop a business case to show the economic benefits of reducing health care’s waste and carbon footprint. Health care leaders typically focus on access, quality, and cost when identifying and assessing enterprise-level improvement opportunities. It’s time to add a fourth dimension to deliberations: environmental sustainability. While this doesn’t mean an organization will always choose the (sometimes pricier) sustainable option, there are ways to address the needs of multiple
priority areas to achieve clinical, financial, and environmental objectives. For example:
The health care ecosystem encourages healthy behaviors, such as reducing meat consumption and biking over driving, which have a positive downstream climate impact.

Micro-interventions build over time to prevent disease from developing in the first place, which reduces demand for carbon-intensive health care infrastructure. 

• Health recommendations that are personalized and extend beyond traditional care delivery improve health systems’ ability to target “hot spots” and effect greater change. 
• Right-sized care is less service- and carbon-intense due to improved baseline health across a population. Understand where value is likely to be created in a low-carbon future. Value drivers in a low-carbon health care economy include using less; emitting less; regenerating, restoring, and repairing; and measuring, verifying, disclosing, valuing, and tracking. Specific action items could include implementing energy efficiency and renewable energy to get to net-zero energy usage; reducing water consumption and reuse; investigating sustainability ratings for hospitals and other facilities; designing energy efficiency into new buildings; procuring sustainable and ethical materials and equipment; and employing models of care delivery that avoid unnecessary or duplicative testing and treatment. Creative thinking can uncover virtually limitless opportunities for value-creation in a low-carbon future.

Adopt systems thinking to address climate change. Every public and commercial health care entity has both an individual and a collective role to play in accelerating the transition to a low-carbon economy. Start with the basics of understanding your carbon footprint and identifying the major levers you can pull to introduce change. Adopting a systems-thinking approach can help leaders look beyond their organization’s carbon-reducing initiatives and answer questions that can unlock critical,
interconnected opportunities. How might emerging technologies such as virtual health and increased computing power from cloud, artificial intelligence and machine learning be combined with new business models to create more resilience in health care systems?

Organizations that put sustainability at the heart of their business strategy will be better prepared to respond to the volatility triggered by unpredictable future challenges. That’s because they will be best positioned to demonstrate and measure value in ways that matter not just to shareholders but to ALL stakeholders.

With globalisation and evolving consumer preferences, supply chains have become more complex with increased connectivity and multiple freight networks. The demand for speedier delivery and instant gratification has resulted in shorter but carbon-intensive modes of transportation. Larger vessels, frequent routes, energy inefficient logistics and cargo handling systems have all added to the environmental concerns. 

The Fourth IMO GHG Study 2020 has indicated that there has been almost a 10% increase in the greenhouse gas (GHG) emissions of total shipping between 2012 to 2018 and international shipping accounts for more than 2.2% of all global greenhouse gas emissions. There is no better time than now to make the total logistics and transportation industry more sustainable. We need to pay our attention to every part of the complex supply chains to combat the effects of carbonisation and execute our action plan towards net zero. Protecting our planet for future generations and eliminating the undesirable consequences of climate change on both economic prosperity and on natural systems is paramount. 

While decarbonisation can be challenging, we can take several steps to work with partners like freight owners, suppliers and their customers to engage in decarbonisation activities and R&D to drive sustainability across the value chain. As a global provider of smart logistics solutions, at DP World we want to be the driving force on the path limiting the global warming to well-below 2°C and aspire to achieve net zero carbon emissions by 2040. 

Some of the major ways in which we can strive towards a carbon-neutral future are outlined below: 

Making the way for sustainable fuel

Moving cargo is heavily dependent on fuel, particularly in the maritime sections of the industry. Thus, decarbonising fuel supply is crucial for zero-carbon future, yet it is filled with operational and technological complexities. It is not an easy switch to low-carbon fuel or alternate cleaner fuel like biodiesel, ammonia, carbon-neutral methanol or hydrogen. However, the International Maritime Organization has set the target to reduce CO2 emissions by 50% from the maritime industry by 2050. The new measures will require all ships to calculate their Energy Efficiency Existing Ship Index and to establish annual operational carbon intensity indicators and their ratings. This has set the stage for organisations to explore the gamut of potential low-carbon fuel options. 

On the landside, at the terminals, clean renewable energy can power port operations. DP World is building the largest rooftop solar project in the Middle East region, installing more than 157,000 solar panels across Dubai port operations. The Solar Power Programme will generate enough energy to power 4,600 homes for a year and achieve the equivalent environmental benefits as the carbon removed by 1 million trees over 10 years. In India, we have installed solar plants across our facilities in Nhava Sheva, Chennai, Cochin, Hyderabad, and others.                                                             

Onward to renewable energy 

We aim to use greener energy, procuring electricity from renewable energy or carbon-neutral sources, pursuing self-generation of renewable energy, Power Purchase Agreements (PPA) and green energy tariffs. We use biodiesel in our operations in India and a substantial portion of our electricity is sourced from solar energy. 

Not just shipping but landside operators play an important role too once the containers reach for onward distribution of cargo. Rail services connecting ports with inland terminals can substitute road transportation and further reduce emissions.  Where road movement cannot be avoided, choosing trucks that use on cleaner fuels like hydrogen or are powered by electricity can help reduce emissions.

Revolutionary new automated transport systems like Virgin’s Hyperloop technology will deploy magnetically propelled high-speed cargo pods powered by renewable energy.

Invest in Equipment Efficiency 

One important way to reduce diesel and marine fuel consumption is applying measures to increase efficiency of equipment at terminals and of fleets by evaluating upgrades, retrofitting and replacement.  Some emerging technology aims to capture Co2 from exhaust of marine equipment and ships. Technological advances like AI-enabled, automated systems for maintenance and operation continue to streamline the way ports, shipping and logistics function.

Enable Digitisation 

Digitisation of systems and processes like creating online platforms to provide end-to-end solution simplifies the cargo booking process, cargo tracking and optimise resources while enabling seamless, safe and secure movement of ocean freights. These platforms reduce inefficiencies, drive faster trade minimising unnecessary movements thereby reducing carbon footprint. 

Algorithms, such as guiding intelligent container stacking systems, demand forecasting to avoid overproduction, and optimising vehicle routing systems can also help reduce emissions.

Achieving net zero in a globalised environment of international trade is a formidable challenge but one that is possible by working together with every member of the supply chain -freight owners, logistics partners, freight forwarders and transporters. Active partnerships in creating new approaches to decarbonise will help build a more sustainable world. 

At DP World, we continue to collaborate with partners in research and development (R&D), and technology. For perspective, DP World has entered a strategic partnership with Maersk McKinney Moller Center for Zero Carbon Shipping to facilitate development and implementation of new technologies, build confidence in new concepts and mature viable strategic ways to drive the required systemic and regulatory change.

196 countries have adopted the historic Paris Agreement to reduce global warming and limit the effects of climate change, and more than 130 countries have set or are considering a target of reducing emissions to net zero sometime in this century.

According to a 2018 estimate by the Intergovernmental Panel on Climate Change (IPCC), the world will require USD 3.5 trillion annually in investment to limit temperature rise to 1.5 degrees Celsius relative to preindustrial levels by 2050. This requires massive global facilitation and transfer of technical and financial know-how between countries. The path for mobilizing trillions in green finance will require the State and the Market to align priorities through a public, private, philanthropy, policy, and partnership (PPPPP) framework.

Public: Public capital, both domestic and international, will play a vital role in offering confidence to the private market on where to ‘crowd-in’. As part of the Cancun pledge in 2009, developed countries promised to provide USD 100 billion a year of climate finance to the developing world. According to the Organisation for Economic Cooperation and Development (OECD), climate finance provided and mobilised by developed countries for developing countries totalled USD 79.6 billion in 2019, up by 2 percent from USD 78.3 billion in 2018. More directed support will be required in technology transfer and direct economic transfer of value to the developing world. The Global Climate Fund and Global Environment Facility, two of the largest sources of international public finance, deploy relatively small amounts of capital – these pools of capital need to vastly increase. India’s Union Budget 2022 underscores the intent of the Indian government to mobilize resources for financing India’s green infrastructure by leveraging tools such as sovereign green bonds, production-linked incentive schemes for solar PV, battery swapping policies, etc. Public investments will be required in transitioning and reskilling towards green jobs.

Private: In the race to net zero, private enterprises are expected to take the lead in experimenting with new technologies, with the expectation of a much larger prize if the technology achieves commercial validation. Climate Policy Initiative, a global climate-focused think-tank, estimates that private climate investments increased by 13% in 2019/2020 to USD 310 billion from 2017/2018 with corporations accounting for the largest share (40%). A transition to green requires investors, banks, insurers, and companies to adjust their business models and create sustainable transition plans in managing their portfolio. Green finance from private sources can leverage multi-fold commitments from public sources. In 2020 alone, investors poured nearly USD 500 billion into climate transition. Renewable energy and electrified transport dominated these investments.

Philanthropy: Philanthropic capital, with their long-term nature and an ability to accept lower returns or higher risks, can support the investment needs for early-stage technologies in climate related sectors. Given that the current investments in ‘green’ are essentially around renewable energy and electric transport, there may be lesser commercial capital availability for new technology deployment, especially in hard-to-abate sectors. Philanthropic pools of capital can be tapped to fund important next generation technologies which can deliver the green transition. These technologies are at various stages of development and end-user acceptance, including offshore wind, green hydrogen, and battery storage, and need nurturing to prove their commercial viability. Impact capital from philanthropic sources could absorb initial investment risk for new climate technologies.

Policy: Government policies play an important role in setting national targets and priorities for the economy. The government’s National Solar Mission launched in 2010 has played an important role in reducing solar energy costs leading to large-scale deployment and making India a market leader in solar energy. The success of India’s solar sector can be replicated across a range of new green technologies to support commercial viability. Governments have a wide range of policy levers to jumpstart new green industries ranging from carbon taxes, regulatory standards, tax rebates, research subsidies, offtake arrangements etc.

Spurring policy and business changes to drastically cut carbon emissions can pose significant costs across different segments of the society. To ensure an equitable transition to a sustainable future, policymakers are confronted with the challenge of addressing climate change aggressively enough to meet climate goals without harming communities historically reliant on or employed in fossil fuel value chains. Fair and smart policy-making, clear communication, along with open-minded and solution-oriented consultation will be critical to deliver the promise of a just, green transition and achieve economic objectives of job creation and income generation for vulnerable parts of the populations. Even with the technology and private sector commitment, policy is instrumental in incentivizing behaviour and factoring in social costs for the economy. Policymakers will be required to make informed decisions on the implications of each climate policy with respect to distributional impacts across income and geography.

Partnership: Countries and corporates have come together at an unprecedent scale during COP26 in November 2021. One Planet Sovereign Wealth Funds (OPSWF), a coalition of leading sovereign wealth funds, asset managers, and private equity investors, has been actively committed to growing a body of investment practice that accelerates the integration of climate change issues into management of large, long-term asset pools. Many other private sector coalitions are leading change in their sectors or countries. Indeed, regulators across the world are also coming together to help harmonize standards and taxonomies. The role played by global partnerships and pledges today is more crucial than ever.

To create a global sustainable investment boom, we need all these five aspects of public, private, philanthropy, policy, and partnership (PPPPP) to converge. Together they would become “factors of the green transition” and deep convergence among stakeholders along these five factors will be crucial to address this global challenge of unprecedented magnitude.

The Rationale
Corporate India’s goal should be to help the Nation achieve the target of a $.5 Trillion economy in the next four years. The goal is eminently plausible in the wake of the world economic order being completely overhauled post the Covid-19 pandemic of the last three years. The most enabling factors for India are :(i) US-China Trade stand-off; (ii) The realignment of the Global Supply Chain; (iii) Challenge to the Chinese “stranglehold” as the manufacturing headquarters of the developed world; (iv) UK exiting the EU; and (v) India’s preeminent position as the global leader in Digitization and Software development. Added to this, the availability of trained IT personnel, as well as qualified professionals at every skill and price points both in manufacturing and service sectors.

India is the only country in the world that produces over 1 million Engineers, 2 million postgraduates and over 7 million graduates every year.

Climate change and the India Commitment
At the COP26, India has committed to almost impossible targets of Net-Zero carbon emissions by 2070. This goal imposes on the Corporate and Business sectors in India some very stiff environmental targets by 2030 :

• Non fossil fuel energy capacity of 500GW;
• 50% of energy required only by renewable energy;
• CO2 emissions to be restricted to 1 million tonnes;
• Carbon intensity below 45%

The SEBI mandate
In the wake of climate change challenges and the United Nations mandated Sustainable Development Goals, SEBI has now directed the top 500 listed companies to publish an annual Business Responsibility Report (BRR) which follows the broad guidelines and framework as developed by the International Integrated Reporting Council (IIRC), covering the areas of Environment, Governance and Stakeholder Relationships. The noble and unquestionably acceptable objective of ESG reporting is to monitor Organization’s commitment to maximize shareholder value is concurrent with ensuring fairness to all Stakeholders, Customers, Vendors, Investors, Employees, Government and Society at large.

India Corporate Challenge
SEBI mandated the top 500 listed companies for ESG reporting. Of the total 5,000 listed companies in India, the top 100 companies account for more than 90% of the market capitalization. This clearly means that the 400 companies from rank 101 to 500 account for only 10% of the market capitalization. One can safely assume that investors have virtually no value for the last 200 of the SEBI mandated 500 listed companies.

This is the challenge to be tackled.

If India must become a $.5 Trillion economy, the major problems faced by the smaller listed companies are the uncertainties in doing business in India, largely due to Corruption, Nepotism and the scare of more than 26,134 imprisonment clauses of various laws in India. Some for even minor offences like forms not being submitted on time.

Challenges for Companies: Impact of Corruption on ESG reporting
ESG reporting has been derived by the compulsions of Climate Change diktats and mandates of the 17 Sustainable Development Goals (SDG) of the United Nations, ratified by all countries including India. Hence it is important to note that proper implementation and success of ESG, can only be achieved if SDG 16 and 16.5 are also implemented both in letter and spirit.

SDG 16 & 16.5
These goals pertain to provisions of justice for all by building effective, accountable institutions at all levels. It aims at substantially reducing Corruption and Bribery in all its forms across all countries by 2030. Government of India ratified the UNCAC (United Nations Coalition against Corruption) and was compelled to amend the primitive Prevention of Corruption Act 1968 by the newer legislations “Prevention of Corruption (Amendment) Act 2018”.

One of the major rationales propounded during the passing of the new Anti-corruption Act was it was designed for Business and Economy to flourish and grow at a rapid pace and substantially reduce corruption. Born of the treaty obligations, the new Act also conforms to some of the international benchmarks laid down in the United Nations Convention against Bribery (UNCA), including “Bribery of National Public Officials”, “Trading in Influence” and “Asset Recovery”. However, the introduction of the two new sections 8 & 9(i), wherein criminalization of bribery and corruption by the private sector, as laid down by the new Act has given serious apprehensions, fear of extortion and malicious prosecutions in the minds of genuine and honest businesses.

Conclusion
The top 100 listed companies in India have the resources, organization, and bandwidth to fully comply with ESG reporting. For India to truly prosper and reach the target of $.5 Trillion economy we need the smaller and less resourceful listed companies and the MSME to be supported, nurtured and enabled. They must be protected from harassment by multifarious agencies who are out to control and enforce compliance.

They need “Ease of Doing Business” and
“less of Government and more of Governance”
“ to be truly “Aatmanirbhar” and successful.”

The Glasgow Climate Pact, made at the United Nations COP26 summit last year, marked the start of a two year process. The aim is to agree a post 2025 goal to replace the existing target to mobilise at least US$ 100 billion of climate finance a year to developing countries.

As the global community agrees this new target, it’s worth bearing in mind the current state of play in the private sector. The Glasgow Financial Alliance for Net Zero saw over 450 firms across 45 countries, representing US$ 130 trillion of private capital, committing to net zero portfolios by 2050.

While the commitments of individual asset managers towards this shift across their portfolios is important, an estimated US$ 100 trillion is needed for a global transition to net zero over the next three decades. The bulk of this is needed for sustainable infrastructure in emerging and developing economies – where significant capital expenditure is needed over the coming decade to get the assets in place.

The climate crisis
The climate crisis is one of the greatest threats we face and time is running out. The Intergovernmental Panel on Climate Change’s latest report, released in February, warns that the world has a “brief and rapidly closing” window to address and adapt to climate change. What’s more, it says the risks if we fail to address the crisis are greater than originally thought.

We know that businesses in the markets where we invest are already impacted by the climate crisis. Nearly half of respondents to our Emerging Economies Climate Report 2021 said they have experienced an extreme weather event that has affected their businesses and, I think pointedly, 94 per cent of respondents said that the international community has a duty to support emerging economies respond to climate change.

Yet according to the Climate Policy Initiative, only a fraction of the capital needed to meet the challenge has been committed. And while total climate finance has steadily increased over the past ten years, capital commitments have now stalled. The increase in annual climate finance flows between 2017/2018 and 2019/2020 was only 10 per cent compared to previous periods, when it grew more than 24 per cent.

The scale of the necessary investment is undoubtedly daunting and emerging market investment often falls outside of investors strategies. However, most projects required for net zero have a positive risk-return profile. This means that for investors with a low risk appetite and those who are new to climate finance there are attractive routes for investment. The overall picture is one of huge opportunity for private investors. At the same time, there is increasing recognition of the impact potential when private and public finance is brought together to tackle the climate crisis.

The role of DFIs
COP26 was the first time we have seen a focus on the role of development finance institutions (DFIs) as partners for mobilising this scale of investment. Likewise, Glasgow Pact recognises the importance for increasing private finance for adaptation.

As the UK Government’s DFI and impact investor, CDC (soon to be British International Investment) is a long-term investor in climate finance. Tackling the climate crisis is at the heart of our new five-year strategy, with a commitment that 30 per cent of our annual investments will be into climate finance.

And at COP26 we announced our plan to invest over £3 billion to support emerging economies in Africa and Asia to tackle the climate crisis. This includes our ambition to invest £1 billion in climate finance in India. These commitments make us one of the largest climate finance investors in Africa and the countries where we invest in Asia, representing an important part of the UK’s climate finance contribution.

But we know that DFIs alone cannot meet the scale of the crisis. It is urgent to ensure a significant portion of the US$ 130 trillion committed to net zero, is directed into the assets that will decarbonise key sectors. So we are joining partnerships such as the flagship South Africa Just Energy Transition Partnership that was launched in Glasgow, committing US$ 8.5 billion to support South Africa’s transition away from coal over the next 20 years. It will see development and private finance actors bring together complementary financing resources to accelerate the phasing out of coal phase out and a just transition to cleaner energy.

Partnerships can also propel innovative thinking, such as accessing new sources of concessional resource for blended finance solutions, tapping into the carbon market and bringing much needed technical assistance. All this will help bridge the financing gap to accelerate the transition out of fossil fuels and carbon intensive sectors, into utility and distributed renewable energy, battery storage, green hydrogen and electromobility solutions. This is why we partnered with the Global Energy Alliance for People and Planet, which aims to mobilise US$ 100 billion of climate finance over the next 10 years.

I am proud of the work we have done to date to build partnerships and commit substantial capital to meeting the climate crisis, but there is much more to do. The next few months and years are critical if we are to address the causes and mitigate or adapt to the impacts of climate change.

Blurb 1
An estimated US$ 100 trillion is needed for a global transition to net zero over the next three decades. The bulk of this is needed for sustainable infrastructure in emerging and developing economies

Blurb 2
COP26 was the first time we have seen a focus on the role of development finance institutions (DFIs) as partners for mobilising this scale of investment. Likewise, Glasgow Pact recognises the importance for increasing private finance for adaptation

Blurb 3
Partnerships can also propel innovative thinking, such as accessing new sources of concessional resource for blended finance solutions, tapping into the carbon market and bringing much needed technical assistance

India is the world’s third-largest energy consuming country driven by rising incomes and varying patterns of consumption. Energy use has doubled since 2000, with 80% of demand still being met by fossil-fuel sources. This energy demand is bound to grow further as India will soon be the most populous country in the world. Since, the energy sector contributes to ~40% of India’s GHG emissions, it is imperative to adopt a systematic approach to meet the energy requirements of over 1.4 billion people while being cognizant of the associated climate impact. The world is in a climate emergency state as clearly visible in terms of erratic monsoons, frequent cyclones, extreme heat waves, wildfires etc. This thus mandates for an immediate climate action plan as nobody can afford it to be postponed to 2040-2050 timeframe. Being one of the world’s fastest growing economies, India’s choices, from a global perspective, will determine the world’s success or failure on climate change.

Decarbonizing India’s energy sector will require a multi-faceted approach with renewables replacing fossil fuels, reducing CO2 emissions from existing capacity through enhanced efficiencies & technologies and focusing on carbon sequestration for unavoidable carbon emissions. To lead the world’s energy transition agenda, Hon’ble Prime Minister Narendra Modi, at the COP26 summit at Glasgow, has committed India to an ambitious five part “Panchamrit” pledge-four of these are specific goals for 2030:
a) to reach 500GW of non-fossil electricity capacity;
b) to generate 50% of all energy requirements from renewables;
c) to reduce emissions by 1 billion tons from now to 2030; and
d) to reduce emissions intensity of GDP by 45%.

The fifth pledge in Panchamrit commits India to net zero emissions by 2070. India’s five commitments will play a critical role in world’s transition towards clean energy and to limit the overall rise in temperature to below 1.5˚C as set under the Paris agreement. But this would require a humungous investment in terms of capital and technological know-how. It demands a paradigm shift in assessing the changes required as also a robust framework to implement the sustainability roadmap and a transition to net-zero economy.

Net-zero India can save lives, catalyse new industries, create millions of jobs, drive trillions of dollars of economic value and can provide a significant heft to India’s role in the global combat against climate change. According to a recently released IEA report, the country’s transition to a net-zero economy could create over 50 million jobs and contribute more than $1 trillion in economic impact by 2030 and around $15 trillion by 2070.

India’s green transformation is an integral and promising part of the overall economic transformation of the country and there is a newfound optimism reflected at both state and central levels. The Union Budget 2022, announced by Finance Minister Nirmala Sitharaman on February 1, 2022, outlined reforms and initiatives towards boosting the domestic manufacturing of solar power equipments, battery swapping, decentralised renewable energy among others. The budget provided an additional 19,500 crore towards production-linked incentive (PLI) scheme for domestic manufacturing of solar cells and modules, raising the existing PLI scheme to 24,000 crore- thus translating into creating an additional manufacturing capacity of upto 45 GW in the country. To encourage domestic production, the budget also proposed to raise import duty on solar cells from 20% to 25% from April 1, 2022. Impetus on Green bonds for meeting the financing needs of clean energy projects and inclusion of battery storage systems under infrastructure category are some other initiatives that will augment Government’s push towards reducing India’s carbon footprint.

The green transition will be boosted by technological development, evolving regulations, consumer preferences and investor sentiment. More sophisticated renewable solutions (hybrid+ thermal, storage, bundled solutions) are emerging to address the challenges of infirm renewable power. The rise of utility-scale renewable projects is supported by evolving regulatory approaches that encourage pairing solar with other generation technologies or storage systems, to offer “round the clock” supply solutions. There is a significant work underway to promote battery storage, hydrogen and mechanical storages in the country. The government has recently announced green hydrogen policy-waiving off the inter transmission charges for the projects commissioned before 2025.

Despite these policy interventions and initiatives, there are few challenges that need to be addressed to unlock the full growth in power sector. The biggest challenge is the distribution sector that continues to be the weakest link and demands a long due reform. The Electricity (Amendment) Bill 2021 once passed in the Parliament, is targeted to strengthen the financial health of the power sector. Other challenges that need attention are related to land acquisition, regulatory approvals, contract sanctity and strengthening of transmission infrastructure in the country.

India is home to one of the youngest populations in the world and the rising consciousness on climate action is driving a significant shift in consumer preferences towards clean energy sources. India needs to mobilize large and sustained flow of domestic and global capital to meet its climate ambitions and Sustainable Developments Goals 2030. Investors are recognizing a progressive policy ecosystem that reduces risk perceptions and brings greater attention to renewable energy growth.

Tata Power is firmly committed to India’s renewable growth story and is one of the first organizations to declare its Carbon Neutrality aspiration before 2045. This entails no fresh investment in greenfield or brownfield coal plants and a significant growth in its existing non-carbon generation portfolio from 30% to 80% by 2030 to usher in an era of clean energy in the country. In addition, the company has been contributing significantly towards e-mobility with 1300+ EV charging stations already installed across country. To fuel the energy-enabled economic growth in remote villages of India, Tata Power has made significant investment in setting up microgrids across such areas. Tata Power is also setting up 4GW solar cell and module manufacturing capacity with a capital commitment of ~3400 cr and plans to complete it by next year end. With renewable focused growth trajectory, Tata Power is best positioned to enable energy transition in the country, including all the stakeholders in this momentous journey.

Climate Change is a priority and India has set ambitious plans and targets to march towards energy transition. However, all stakeholders- the government, businesses and regulators need to come together and put forward the desired policy framework and sectoral reforms in the absence of which the complete value unlock and the energy transition will be difficult to achieve.

(Dr Praveer Sinha is the CEO & Managing Director of Tata Power. Views expressed are personal.)