NEW DELHI (Thomson Reuters Foundation) - A key international programme that encourages businesses to release environmental information is not making much headway in India, with many of the biggest companies choosing not to participate.
The UK-based Carbon Disclosure Project (known as CDP) says it provides the only global system for companies and cities to measure, publish, manage and share vital environmental information. The non-profit organisation works to motivate businesses to disclose their impacts on the environment and natural resources, including their greenhouse gas emissions, and take action to reduce them.
In India, CDP - the world's largest publisher of corporate climate change information - is supported by WWF India, the Confederation of Indian Industry and SGS, a standards assurance provider.
The CDP Global Report, released last month, examines the performance of the world’s top 500 companies measured by market capitalisation over the past five years. An India-specific report is due to be published in November.
There are 14 Indian corporations in the Global 500 list, of whom only six responded to the CDP questionnaire this year. Of these, some have done work that compares with best practice around the world.
They are global software giants Infosys and TCS (Tata Consultancy Services), State Bank of India, the banking division of the HDFC (Housing Development Finance Corporation), construction and engineering firm Larsen & Toubro (L&T) and ITC Ltd, a conglomerate encompassing sectors such as hotels, paper and tobacco.
“Those companies that are globally integrated want to be seen as responsive to global best practices on carbon issues,” said Damandeep Singh, director of CDP-India. Some scored better than others, he added.
“Let us not name the ones who have fared poorly. The important thing is that they tried. We are helping them improve their scores,” he said.
Yet Singh readily revealed some of the corporate behemoths that have refused disclosure: Reliance Industries Ltd, India’s richest corporation; Bharti Airtel, an Indian telecom giant; the housing division of HDFC; ICICI Bank; and three state-owned energy firms - Oil and Natural Gas Corporation, Coal India Ltd and National Thermal Power Corporation.
Indian energy companies seem to be underperforming their global counterparts on disclosure. According to the CDP Global Report, 69 percent of the largest multinational firms in the energy sector responded to the questionnaire.
There are two main aspects of the CDP report card: the Carbon Disclosure Leadership Index (CDLI) and the Carbon Performance Leadership Index (CPLI).
“Whatever your core activity, the CDLI shows how much of your carbon load you have disclosed, and the CPLI shows how well your company has performed in meeting targets for controlling emissions,” Singh explained.
In India, industry bodies are directly involved with the CDP. Besides the Confederation of Indian Industry, partners include the Bombay Stock Exchange, which publishes a carbon index of companies based on CDP-India data.
Research by Bloomberg suggests that in Western countries, this kind of information makes a difference to financial markets, Singh said. “Global research over the last five years shows that the companies that make disclosures out-march those who do not by a significant percentage - sometimes 20 percent or so. And that is the case we are trying to make in India. But so far it has not happened,” he said.
“Most Indian companies do not want to share data,” he noted. They often say they do not have experts who deal with environmental and sustainability issues. “It is a bit of a stretch convincing them,” he added.
ITC Ltd, which claims to be carbon positive (meaning it offsets more carbon emissions than it contributes to the atmosphere), said its decision to be open about its environmental performance had nothing to do with attracting investors.
“The need to disclose did not emanate from an ‘investment benefits’ perspective. It has been solely guided by the company’s vision and values, and by its sustainability strategy,” ITC’s Vice President Sanjib Bezbaruah said in an emailed response to questions. “At the current moment, markets seldom reward sustainability performance.”
CDP’s Singh agreed there has been little positive investor sentiment that would serve to entice the big guns of Indian industry into the disclosure programme.
Bezbaruah stressed the company was responding to domestic interests. “ITC believes that climate change is an important issue which will significantly impact India, particularly the vulnerable agricultural sector and the rural poor,” he said. “The company believes that Corporate India's response must be shaped by the Indian reality and not merely as reactions to international initiatives.”
BLAZING A TRAIL
There is evidence that more Indian businesses are becoming aware of the need for action to curb global warming. In July, over 20 major companies signed up to the India Greenhouse Gas (GHG) Program, a voluntary initiative that will help them set targets for reducing their emissions and measure their progress, including by reporting through the CDP.
A handful of firms are already leading the way, such as Larsen & Toubro (L&T), which performed impressively in the 2013 CDP.
According to Ajit Singh, the company’s executive vice president for corporate infrastructure and services, L&T decided to report on its triple bottom line - its economic, environmental and social performance – in a sustainability report. It released the first of these in 2008, following Global Reporting Initiative (GRI) guidelines.
“The sustainability report acted as a platform to respond to the CDP questionnaire as well. We anticipated that carbon disclosure would become an important criterion in years to come, so we formulated an organisation-level carbon strategy,” Singh explained.
The mapping of L&T’s carbon footprint began in 2009. The company also set up a carbon audit team, made up of representatives from various parts of the business and experts from the environmental and social fields. It consulted internally and externally to draw up a “sustainability roadmap” that has mitigating climate change impacts as a key objective.
Singh said there are early signs of a linkage between its sustainability efforts and investor confidence. L&T’s performance in carbon management and other green practices has received “significant international and national recognition”, he added.
Despite this, it is too soon to comment on how much weight investors are giving to the company’s non-financial performance, Singh emphasised.
But L&T’s growing business abroad is an added incentive to be green. “With the increase in the international order inflows, there is also an increased demand for disclosures on our GHG (greenhouse gas) performance as well as other non-financial parameters,” Singh said.
Sujit Chakraborty is a science and environmental journalist based in New Delhi.