Climate action pays off for businesses

When world leaders came together in December 2015 to adopt the Paris Agreement, they sent an undeniable signal to markets and businesses all over the globe: the low-carbon future is here. For some companies, this may have been a wake-up call. For others, it was an affirmation of a market trend they had already recognised — that cleaner growth was not only possible but also good for their bottom line.

There is ample evidence that renewable energy and energy efficiency are booming sectors for business. In 2016, 190 of the Fortune 500 companies toget-her saved close to $3.7 billion through their collective renew-ble energy and energy effici­ency initiatives. It is no longer a novelty to hear of major companies like Google or Apple “going green” — both, for instance, have publicly and proudly invested in renewable energy and energy efficiency initiatives.

Both have committed to using 100% renewable energy by the end of this decade, with Google on track to do so this year itself, and Apple by 2020. In India, clean energy delivered over $2 billion in foreign direct investment between 2014 and 2016. It could also yield over 300,000 much-needed jobs over the next five years.

Clean energy is just the tip of the iceberg. A recent study found that companies could unlock $12 trillion in worldwide revenue and savings by pursuing sustainable, low-carbon business models. Investors, too, are taking note, as low-carbon portfolios and green bonds are increasingly seen as smart investments.

Proctor and Gamble, the major US producer of consumer goods like cleaning supplies and personal care products, signed up to meeting science-based targets to reduce their emissions. Energy efficiency measures they have undertaken have already saved P&G $500 million, with potential for even more savings ahead. Almost 300 other major companies have also signed on to similar science-based targets, including behemoths like Coca Cola, Pfizer and Sony.

The financial sector worldwide is also steadily shifting its money to capitalise on the burgeoning market for innovative climate solutions and moving away from riskier high-carbon investments. The market for green bonds investing in renewable energy projects or other low-carbon solutions grew from $3 billion just five years ago to $81 billion last year. It will likely reach $150 billion by 2017. The shift towards clean capital is also paying off for investors. Barclays, the international investment bank, found that bond portfolios with strong sustainability attributes have outperformed those with weak environmental indices over the past seven years.

Closer home, hundreds of business leaders and investors are gathering today for the two-day Business and Climate Summit in New Delhi. In fact, Indian businesses are trailblazing in terms of how the private sector can respond to the climate threat and reap rewards from climate-smart decisions.

Over 140 leading Indian businesses — from Ambuja Cement to Jet Airways and from ITC to Godrej & Boyce — have undertaken efforts to formally measure and manage their emissions and drive more profitable, competitive and sustainable businesses through the ‘India GHG Program’.

The Tata Group, one of India’s largest and most prestigious business conglomerates comprising over 100 different companies and annual revenues upwards of $100 billion, embeds a lifecycle sustainability analysis into all of its product development.

Tata Motors, India’s largest auto manufacturer, committed to going 100% renewable beca­use it would both reduce emissions and increase financial savings. They are also planning to launch their first electric car in September this year and are trialling electric buses as well, an important step in reducing urban emissions. On this front, Tata is following the lead of the Mahindra Group, whose subsi­diary automaker was India’s fir­st major conglomerate to bring hybrid and electric vehicles to market in the subcontinent.

Another Indian conglomerate, the Aditya Birla Group, has integrated low-carbon initiatives throughout the corporate structure that oversees all 200 workplaces, and the CEO of each subsidiary chairs a sustain-
ability committee.

If there is one clear message that should emerge from the Delhi Summit, it should be this: Indian industries are moving fast and far on climate action and are reaping the benefits. Businesses all over the world, especially in developed countries, should have no excuse for lagging behind.

(The writer is Sustainability Ch­air and past president of FICCI and a member of Global Commis­sion on the Economy and Climate)