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Utkarsh Majmudar, Member of the Board of Governors at IIM Raipur

In India, the number of companies announcing net targets has doubled from eight in FY 2019-20 to sixteen in FY 2020-21.

December 06, 2021 2:32 IST | India Infoline News Service
In conversation with Sheetal Agarwal, IIFL, Utkarsh Majmudar, member of the Board of Governors at IIM Raipur provides insights into India’s net zero goals and how these can be achieved. He also shares key takeaways from his latest book- Shift: Decisions for a Net Zero World.

What do you think of India's net-zero targets?

At the Glasgow Summit, the Indian Prime minister announced a slew of targets that he termed as Panchamrit or the five nectars.

1) Enhancing India’s non-fossil energy capacity to 500 GW by 2030
2) Meeting 50% of the country’s energy requirements from renewable energy by 2030
3) Reducing total projected carbon emissions by 1 billion tons by 2030
4) Reducing carbon intensity of the Indian economy by less than 45%
5) Achieving the target of net-zero by 2070

Given that India is one of the highest emitters of carbon dioxide, the five commitments are a clear signal to the world about India's seriousness towards a net-zero world. This is a clear departure from the past when India has avoided setting net-zero targets. It is also a signal to the Indian industry that they will be required to contribute to achieving these targets.

There is a criticism that India has set a target too far in the future, and one does not know what will happen by 2070. It is also argued that usually, achievements fall short of targets. The counterargument is that India is still in the development phase and has significant energy requirements that cannot be switched over quickly. The other aspect is that of financing. Achieving net-zero targets requires significant investment in technology and infrastructure. Developed nations had promised USD 100 billion per year from 2020 to the developing ones. They have not come anywhere near meeting them. It is believed that contributions will reach USD 100 billion by 2023 only. Apart from finance, developed nations need to provide technology transfer to speed up the move towards net-zero.

How are corporates contributing to the goal of net zero?

In India, the number of companies announcing net targets has doubled from eight in FY 2019-20 to sixteen in FY 2020-21. This is gratifying. Companies like L&T, Siemens, ABB, Hero Motocorp have net-zero targets. A key focus area of companies seems to be renewable energy. Other actions include improving energy efficiency and using carbon offsets. While solar has been a talking point for most companies, emerging technologies like hydrogen are also attracting attention. Corporates also need to explore other areas such as building green supply chains. This is where significant difficulties arise, and large companies need to support the small and medium-sized companies with technology and finance to achieve net-zero targets.

What role do you think carbon pricing can play in achieving net-zero targets?

Let us first understand why carbon pricing is required. The climate change problem is simply the accumulation of greenhouse gases in the atmosphere. Suppose we want to limit the amount of greenhouse gases on the planet. In that case, we need to set a total amount of greenhouse gases that can be released in the atmosphere in a year. This is known as a carbon budget. Once the limit is set, not everyone can emit as much as they want. Some will emit more than required, some less. A market is established where those who emit more need to pay, while those who emit less can make money off their efficiency. This establishes a carbon market.

Carbon pricing is an efficient tool to achieve net-zero targets. It incentivizes companies to reduce their targets. However, carbon markets suffer from several issues. Accuracy of carbon emission is critical to achieving net-zero. Unfortunately, what you don't measure doesn't get counted. While standards are coming into place, there can still be differences in the way two companies measure their emissions. This problem is more acute for scope 3 emissions (these are emissions from entities not owned by the company). Where carbon offsets are involved greenwashing is a common problem. There are also be genuine issues. For instance, if you offset your emissions against a forest, and the forest burns down later. Not only there is no offset more carbon is released due to the forest fire.

Share with us the key takeaways for you from your book Shift: Decisions for a Net Zero World.

The book, which my colleague Namrata Rana and I wrote recently, focuses on the transition that companies need to make towards a net zero and circular economy without leaving anyone behind. It covers a wide spectrum of themes – net zero transition, how ESG is transforming businesses, circular economy, addressing issues of food water and energy, leaving no one behind, green jobs, brand purpose, and scaling transformations. We talk of a development model without carbon emissions, products that can be reused and recycled, jobs that are green and an economy that is inclusive.

We believe five core actions are needed:

1. Incentivizing the transformation through financial markets
2. Involving women to increase diversity and drive change
3. Transforming key drivers of environmental impact – plastic waste, water security, clean energy and transforming food
4. Building new models for cities, healthcare, social change, and artificial intelligence
5. Defining the new drivers of value and skills 

Achieving these core actions requires many changes to the way we do business. We need a new approach to thinking – what we call shift thinking.

How can individuals contribute towards net-zero targets?

From an individual’s perspective the bulk of the emissions come from transportation, home and consumption. For now, electric vehicles have not become ubiquitous and the charging still happens over power provided by thermal power plants. In the meantime, there are several measures that can be taken. Rather than drive to short distances, walk or cycle. Make use of carpooling or public transportation rather than driving solo to work. At home we can install solar panels to reduce the use of thermal power. Switch off lights when not needed. Check the products that you consume and make sure they are produced sustainably. Fast fashion not only leads to mounds of textile waste but also contributes to carbon emissions during the manufacturing process. Being sensitive about the number of clothes in your wardrobe helps. Individuals, through their purchasing decisions, help companies shift their production to sustainable products. As an investor also, your vote at the shareholders meeting can push companies towards sustainable production and help their supply chains become greener.

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