Carbon Disclosure Project
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Transcript of Carbon Disclosure Project
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CARBON DISCLOSURE PROJECT (CDP)
Akshat Dhaval Mohan Sudhanshu
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What is CDP?
A project to facilitate a dialogue between investors and corporations, supported by high quality information
from which a rational response to climate change will emerge
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Overview
It is often said that a business can only manage what it measures
The disclosure brings out the challenges companies are facing and on how they have integrated the long-term value and cost of climate change impacts into their assessment of financial health and the future prospects of their business.
Largest investor coalition in the world
More than 385 signatory investors, with a combined asset base of $57 trillion
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Principal Areas
Risk and opportunities presented by climate change
Greenhouse gas emissions accounting
Strategies to reduce emissions
Corporate governance w.r.t. climate change
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Securing a Green Future
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Missions of Indian NAPCC
Solar Energy Energy η
Sustainable Habitat
Water Himalayan Ecosystem
Green India
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Energy η
•Energy Benchmarks•Facilitate Least Cost Method•9 sectors•$2 bn Potential yet to be tapped
Carbon Ch
arge
•Adding Carbon Charge•Promote Efficient Technologies•Restructuring Subsidy Portfolios• Low Carbon Economy
Renew
able
Energy
•Opportunities through Expanded Markets•Large Scale Production•Technology Transfer•Key Role of Private Sector
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Clean
Technologi
es
•Differential Taxation Method•Allowance for Accelerated Depreciation & Reduced VAT•“Window of Opportunity”
Green Buildings
•Significant Energy Demand of Buildings•Lower Operating Costs• 30% decrease in Energy Use•1 bn sqft of Green Building Space
Othe
r C
hallenges
•Rise in Consumer Pressure to go Greener•Impact of International Developments •Access to Technology & Financial Support
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Responding to the Change
Exposure to rapidly evolving & complex Regulations
Importance & Inexorability of Low Carbon Economy
Pace of Adaptation to Climate Change
Need for a Structured, Concerted approach
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Response Overview
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Expansion of CDP in 2007
Information requested from top 200 companies (95 from Energy Intense Sectors)
The opportunities and risks perceived from climate change and the strategies being contemplated to manage these opportunities and risks
Direct and Indirect GHG emissions with Emission Intensity, Energy Consumption and cost thereof
Emission Reduction Strategy and Emission Trading
Performance Monitoring and Forecasting Plan
Corporate-level Climate Change Management and
Governance
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Willingness of India Inc.
51
10
139
Sales
Answered QuestionnaireDeclined to ParticipateNo Response
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Cont…
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The Risks Identified
Regulatory Risk: Current or Expected National
Policies International, national, regional
or state regulation of emissions
Carbon taxation Mandatory energy efficiency
standardsPhysical Risk:• Change in Temperature and
Precipitation• Drought, floods and Increased
storm & hurricane activity• Rising sea levels• Higher incidence of diseases.
General Risk:• Commercial and competitive risk due
to loss and delay in production &
sale scarcity of resources
• Reputation loss associated with company’s action
• Disruption in the transportation of raw materials and finished products
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Opportunities IdentifiedRegulatory Opportunities:• The introduction of emissions trading
programmes• Technology incentives and imposition
of process and product standards
Physical Opportunities:• Increased sales of particular products
and services• Opportunities arising from measures
to adapt to the physical consequences of climate change
• Better market reputation and improved export potential
General Opportunities:• Change in the consumer behaviour in
terms of demand for more energy efficient products
• Introducing new products that withstand natural calamities
• Carbon trading and finance, financing renewable energy projects, financing infrastructure projects and promoting alternate energy systems
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Opportunities Identified
Regulatory
Opportunities: The introduction of emissions
trading programmes Technology incentives and
imposition of process and product standards
Physical
Opportunities:• Increased sales of particular
products and services• Opportunities arising from
measures to adapt to the physical consequences of climate change
• Better market reputation and improved export potential
General Opportunities:• Change in the consumer behaviour
in terms of demand for more energy efficient products
• Introducing new products that withstand natural calamities
• Carbon trading and finance, financing renewable energy projects, financing infrastructure projects and promoting alternate energy systems
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Methodologies Adopted
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Sector Analysis
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Analysis of climate change impacts shows variance in vulnerability of
sectors. Insight of responses at sectoral level
and breaks down the responses to industry level to compare and contrast how each sector performs with respect
to their climate vulnerabilities
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Sector Analysis Methodology The 200 companies contacted for the CDP6
India Report have been broadly classified into energy intensive industries non-energy intensive industries
Based on the designated consumer criteria defined by the Environmental Conservation Act, 2001
CDP6 had identified 9 energy intensive sectors and grouped the remaining 8 sectors under the non-energy intensive sectors.
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Sector Analysis Methodology
involves a comparison of energy intensive versus non-energy intensive industries;
individual sectors as well as the respondent companies that constitute these sectors
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Energy Intensive-Auto Mobile sector
In 2008, out of 8 companies contacted, 2 responded – Mahindra & Mahindra and Tata Motors.
They acknowledge the possibility of regulatory risks in the future
Emission regulations are expected to change manufacturing processes as well as GHG targets.
The increase in fuel prices will have a significant bearing on the market demand for automobiles
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CC as Opportunity
Regulatory policy as an opportunity to invest in clean technologies and to tap into the carbon markets and markets for alternative-fuel engines and vehicles
Rising trend of manufacturing of alternative-fuel based vehicles
Tata Motors has successfully introduced CNG buses, Light Commercial Vehicles, LPG versions of Indica and a CNG version of ACE
Mahindra & Mahindra, on the other hand, has also launched the CRDe biodiesel Scorpio and 5% bio-diesel B5 tractor
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Capital Goods
Consists : Cement, Construction & Engineering, diversified industrials, Industrial Conglomerate, Industrial Machinery, Industrial products & services
E.g. ABB, Areva T&D, Cummins India,GMR Infrastructure ltd,Hindustan Machine Tools (HMT) and Thermax
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Responses
Regulatory Risk : Majority of companies do not perceive that any regulatory risks to their businesses.
Physical Risk: As this sector is heavily reliant on its industrial operations so climate change related natural calamities may jeopardize construction sites
Likelihood of stringent future emission laws presents a lucrative opportunity for engineering companies with a portfolio of products and services designed to mitigate GHG emissions and save energy
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Energy
Consists: Oil & Gas exploration, production and refining & distribution.
Respondents are Cairn and Castrol , BPCL, GAIL, HPCL &nd ONGC
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Risks & Opportunities
Public sector companies consider that their operations are not exposed to regulatory risks
Sector heavily reliant on logistical networks, oil & gas companies can suffer considerable losses in the event of disruption of their supply chain
As part of their risk management process, HPCL has accounted for physical risks in the design, development and operation of its facilities, and GAIL has drafted disaster management plans
BPCL have already begun setting up green fuel (LPG/CNG) terminals and are conducting R&D for alternate fuels, specifically bio-fuels and hydrogen cells
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Materials
Aluminium, Cement, Chemicals and Diversified Chemicals, Metals and Mining and Steel
E.g. Ambuja Cement, Asian Paints, Godrej Industries, Hindustan Copper, Hindustan Zinc, JSW Steel, Sesa Goa, Sterlite Industries, Tata Steel and Ultra-Tech Cement.
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Various Risks
Only Tata Steel perceived regulatory risks as being of concern given the energy intensive nature of this sector
The materials sector is more concerned about the physical risks with Ambuja Cements and JSW Steel listing availability of water thers on SCs
The dependence of steel industries on coal has been listed as a financial challenge as coal price
Risk management plan, JSW Steel has identified long-term agreement with international coal suppliers to ensure energy security.
The integration of new technologies to improve energy efficiency and resource conservation
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New Leads
CDM Opportunities EMS, LCA, Energy Efficiency Resource Recovery Recycling Technological Innovation
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Non Energy Intensive Industries Banks
Financial Services sector has been segregated into two subsectors: Banks and Diversified Financials
Indian financial institutions perceive no immediate regulatory risks, banks expressed concern about the indirect effect of new climate policy regulations on organisations operating in carbon intensive sectors
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Need for informational transparency with regard to GHG emission disclosures
Banks also state that climate change related damage to bank-owned properties and assets is a physical risk in terms of financial valuation and insurance claims
Risk management in the financial services sector is largely concerned with spreading climate change awareness and its role as a responsible lender. Like SBI’s Green Banking Policy and Yes Bank’s Environment & Social Policy
CDM has created opportunities for banks to partake in the carbon market see regulatory opportunities in financing clean technologies, CDM projects and servicing loans to the renewable energy sector
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Commercial Services and Supplies
Diversified Consumer Services, Financial Services, IT Consulting & Services and Software.
Infosys Technologies, Tata consultancy Services and Wipro – to the information request.
Whereas other three companies -
Firstsource Solutions, HCL Infosystems, and HCL Technologies - declined to participate.
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Risks Due to CC
Regulatory Risk:GHG emissions within this sector are largely a by-product of employees’ travel and electricity consumption at service outlets, corporate offices and ,As per WIPRO it may loose some Businesses. carbon duties/tax that may be levied on the import of carbon heavy .
Market risks associated with climate change events, like in insurances payoffs
Opportunities identified as its ability to provide business solutions that can drive sustainable development. Tata Consultancy Services is actively pursuing business opportunities to help clients assess their carbon footprints, carry out energy audits and pursue sustainable initiatives
Wipro now plans to invest in renewable energy solutions to help companies switch from fossil fuel dependency towards biogas, solar, wind, biomass cogeneration and geothermal power
Infosys Technologies and Wipro have expressed an interest in becoming carbon neutral in the near future
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Conclusion
Indian companies encouragingly are responding to measure and
disclose their carbon emissions and integrate the long-term value
and cost of climate change into their assessment of the financial health
and prospects of their business, but there is still lot of spade work to
be undertaken to beef-up their capacities.
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Positive Signs
Proactive approach to share information voluntarily with stakeholders
Improvement in the quality of disclosure
Need for more awareness
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Thank you