India has recently gained recognition as the sixth-ranked nation globally for corporate climate action, with 127 companies pledging to achieve net-zero targets under the Science-Based Target Initiative (SBTi). A report from ICRA ESG Ratings has highlighted this significant development, showcasing the proactive stance Indian firms are taking toward addressing climate change.
The majority of these companies are from sectors typically regarded as having lower to medium carbon footprints, such as textiles, software, and pharmaceuticals. These industries stand in stark kontrast to high-emission sectors like construction materials and mining, where only about 7 percent of pledged commitments arise.
Notable shifts within the renewable energy sector have been documented, especially among companies aligning with SBTi's net-zero commitments. This transition is pivotal, leading to reductions in overall emissions across various sectors, particularly power generation. SBTi itself is set as a voluntary framework through which companies can establish climate targets assessed and validated independently according to sector-specific guidelines. This suggests not just ambition, but also accountability.
When taking the global stage, the United Kingdom leads in the number of companies committed to SBTi net-zero goals. Conversely, India's ranking emphasizes its growing influence on the world’s climate agenda. Surprisingly, China, the world’s largest emitter, holds the lowest share of corporate net-zero commitments compared to other nations.
While India is making strides, there are still hurdles to overcome. The report notes persisting concerns within high-emission sectors—less than 10 percent of firms from industries like power, energy, and cement, which cumulatively contribute to approximately 55 percent of India’s emissions, have adopted net-zero targets via SBTi. This apparent lack of larger-scale commitments from substantial polluters raises questions about the feasibility of achieving national net-zero objectives.
The report also sheds light on specific practices being adopted within high-emission industries. For example, coal-based power generation continues to dominate India's energy mix. Yet, there is clear evidence of increasing interest and investment in renewable energies among companies with net-zero commitments. Companies like Adani Energy Solutions have managed to achieve noteworthy reductions, reporting about 11 percent less absolute emissions. This achievement has been facilitated through renewable energy sourcing and innovative carbon capture initiatives.
The cement sector faces its challenges, particularly with emissions resulting from clinker production. Nonetheless, alternative fuels and advanced carbon capture technologies are gradually being implemented to mitigate these environmental impacts. The metal and mining sectors, too, are beginning to adopt more sustainable practices, though results vary between companies.
It’s worth noting the broader picture: over the past six years, only a handful of corporates realized any significant decline in their absolute emissions levels. Only 11 percent reduction has been achieved. Nevertheless, many companies have stabilized or slightly decreased their emission intensities, which reflects some degree of progress, albeit incremental.
Looking to the future, experts are eager to see advancements. Sheetal Sharad, Chief Ratings Officer of ICRA ESG Ratings, emphasized the role of regulatory support and continued innovation as key elements for shifting these commitments from aspiration to real action. “Committing to net-zero targets,” she explained, “is not just beneficial for climate strategies but also promotes transparency and accountability.”
Sharad also indicates the necessity of developing guidelines for these target-setting processes, particularly as they apply to developing nations like India, which are pursuing infrastructure-led growth. “This could encourage additional entities to align with such ambitious targets,” she said.
Yet, as optimism grows, the complexity of transitioning from coal and other polluting sources to sustainable alternatives remains significant. Commitment from larger entities can spark substantial changes within these high-emission sectors. The data indicating what steps have been taken, and the degree of commitment—whether it be through technology, sustainable practices, or reduced emissions—affirms the potential for achieving net-zero targets.
With 127 Indian companies now on record for their net-zero commitments, the call for action doesn’t merely reside within these businesses; it invokes leadership from various sectors and at all levels of the economy. Indian companies and their governing bodies are under pressure not only to commit to greenhouse gas reductions but also to maintain transparency and actively demonstrate progress.
