Indian companies may feel more pressure to disclose their effect on climate change, with the launch of the Carbon Disclosure Project (CDP) in India on 4 May, 2007.
The seven-year old CDP has been asking companies around the world to complete a questionnaire about climate change, focusing on greenhouse gas emissions. The organization is backed by institutional investors, such as banks and insurance companies. “It is a very exciting time, but the challenge—that India is well placed to address—is to match that growth with sustainable growth, reducing carbon emissions per unit of GDP,” said Paul Simpson, chief operating officer of CDP. “This is the first time for the first year that we have written to the 100 largest Indian companies…what we wanted to do here with the launch is to raise awareness of CDP and explain the benefits to business,” Simpson added.
CDP asks for information, including the amount of greenhouse gases a company emits, the effect their business has on climate change (and vice versa), opportunities for new products and services in the context of climate change, and their efforts to deal with all these issues. At the launch, hosted by the Confederation of Indian Industry (CII), representatives from CDP, environmental organization WWF India, financial institution Rabo India and cement company ACC Ltd spoke to an audience of about 80.
According to scientists, greenhouse-gas emissions, including carbon dioxide, have been the largest contributors to global warming, a phenomenon that is raising the Earth’s temperature and may have drastic long-term effects.
The most significant international action to address climate change was the Kyoto Protocol, which was put into force in 2005 and has about 170 countries behind it, including India, with notable exceptions such as the US and Australia.
Concern about climate change has gained awareness over the last decade, climaxing in recent years with questions raised from the 2004 tsunami and Hurricane Katrina in the US. The social dialogue has also increased with Academy Award-winning 2006 documentary An Inconvenient Truth by former US vice-president Al Gore, which released in India last week, and the UK Stern Review of the economic impact of climate change.
The dialogue around climate change had predominately talked about social responsibility, but has increasingly included the economic implications of climate change, which was pushed forward by the Stern Review.
CDP sees itself as part of the overall process to control climate change. While the Kyoto Protocol has requirements for reduction, CDP focuses on helping firms become aware of the impact of climate change.
“Climate change will become an increasingly significant determinant of corporate competitiveness in the 21st century,” said Creon Butler, New Delhi-based deputy high commissioner at the British High Commission.
CDP was launched in 2000, with its first survey reported in 2002. For the first three years, it focused on the world’s 500 largest companies. In its first year, 35 investors signed up and 45% participated fully. Last year, this figure increased to 225 investors with assets of more than $31 trillion (Rs1,271 lakh crore). Also, 940 out of 2,180 companies fully responded to the questionnaire. For the 2007 round, 280 investors with assets of more than $41 trillion signed and the request was sent to 2,400 companies, of which 100 were in India. The participation of Indian companies began last year. Some 19 Indian firms were asked to participate in 2006, and eight responded in varying degrees: Tata Steel Ltd, State Bank of India, NTPC Ltd, ITC Ltd, Infosys Technologies Ltd, CESC Ltd, Bharti Airtel Ltd and Hindustan Lever Ltd (through Unilever). Reliance Industries Ltd (RIL), Indian Oil Corp., Gujarat Industries Power Co. Ltd and Wipro Ltd are among the companies that did not respond, CDP said.
In previous years, Indian firms that were part of the global 500—Oil & Natural Gas Corp. and RIL—were asked to participate, but both declined. CDP has increased this effort in India fivefold by approaching top companies, including Bajaj Auto Ltd and Larsen & Toubro Ltd. The only Indian institutional investor currently on board is Yes Bank Ltd.
Industries are also growing around the issues of climate change, as shown by conference attendees that included consultants and scientists. Sunil Sinha, senior economist at Crisil Ltd, said he would launch an environmental, social and governance index that will rate companies based on public information.
Only 70 companies participated as audience, though 600 had been invited.